Village Resort/Embassy TOT 06AGREEMENT TO SHARE TRANSIENT OCCUPANCY TAX REVENUE
This AGREEMENT TO SHARE TRANSIENT OCCUPANCY TAX REVENUE (the
"Agreement") is entered into this'3 1 day of ovi v S i" , 2006, by and between the CITY OF
LA QUINTA, a California municipal corporation ("City"), and VILLAGE RESORT, LLC, a
California limited liability company ("Village Resort") (individually a "Party" and collectively
the "Parties").
RECITALS
A. Village Resort, an affiliate of Chicago Title Insurance Company ("Chicago
Title"), owns fee title to that certain real property consisting of approximately 6.81 acres of land
area located at 50-777 Santa Rosa Plaza, in the City of La Quinta, County of Riverside, State of
California, which is more particularly described in the legal description attached hereto as
Exhibit "A" (the "Site").
B. Village Resort has developed on the Site a hotel containing 146 guest rooms, a
conference center and other related amenities (the "Hotel"). Village Resort has obtained the
necessary rights and intends to operate the Hotel under the flagship name "Embassy Suites."
The Hotel, as defined herein, does not include the 144 adjacent casitas.
C. In consideration for Village Resort's conveyance to City of the interest in the Site
set forth in the "Covenant" (as defined hereinbelow), City has agreed to make certain periodic
payments to Village Resort in an amount equal to a portion of the transient occupancy tax
generated by the Hotel (the "Transient Occupancy Tax"), subject to and in accordance with the
other terms and conditions set forth in this Agreement and the Covenants, Conditions, and
Restrictions Affecting Interests in Real Property attached hereto as Exhibit "B" (the
"Covenant").
D. By its approval of this Agreement, the City Council of City has found and
determined as follows: (i) the value to the City, of Village Resort's performance of its
obligations set forth in the Covenant in each fiscal year during which City payments are to be
made (in terms of economic revitalization, generation of additional local tax revenues that will
help to fund vital public services, provision of expanded and more accessible hotel guest rooms
and related amenities for persons wishing to visit the City for business or pleasure, and job
growth and retention) will be not less than the amount of such payments; and (ii) that the
imposition of the covenants and use restrictions upon the Site pursuant to the Covenant in
exchange for the payments to be made by City constitutes a valid public purpose.
COVENANTS
Based upon the foregoing Recitals, which are incorporated herein by this reference, and
for other good and valuable consideration, the receipt and sufficiency of which is acknowledged
by both Parties, City and Village Resort hereby agree as follows:
1. Defined Terms. Any capitalized terms contained in this Agreement, which are
not defined in this Agreement, shall have the meanings ascribed to such terms in the Covenant.
2. Execution and Recordation of Covenant. Concurrently with City's and Village
Resort's execution of this Agreement, Village Resort shall fill in the blanks, date, and execute
the Covenant in recordable form and Village Resort shall record the Covenant against the Site
and provide a copy of the recorded Covenant to City. City agrees to cooperate in the recordation
of the Covenant against the Site, at no cost to City, and the City Manager or his designee is
hereby authorized on behalf of City to execute all documents and take all actions necessary or
appropriate to implement this Agreement.
3. Termination of Aueement. This Agreement shall automatically terminate and be
of no further force or effect upon termination of the Covenant, in accordance with the terms
thereof.
4. Assignment. Village Resort shall not assign, hypothecate, encumber, or otherwise
transfer its rights and obligations set forth in this Agreement and the Covenant to any other
person or entity without the City's prior written consent, which consent the City may grant or
withhold in its sole and absolute discretion.
5. Cooperation in the Event of Legal Challenge; Validation Action. In the event any
third party files an action seeking to invalidate this Agreement or the Covenant or seeking any
equitable remedy that would prevent the full performance hereof or thereof, City and Village
Resort agree to cooperate in the defense of such action. Village Resort shall pay all of the City's
costs and expenses (including attorneys' fees) and the City shall have the sole right to select its
legal counsel. Such cooperation shall include, without limitation: (i) an agreement by each
Party to not default or allow a compromise of said action without the prior written consent of the
other Party; (ii) an agreement by each Party to make available to the other Party all non -
privileged information necessary or appropriate to conduct the defense of the action; and (iii) an
agreement by each Party to make available to the other Party, without charge, any witnesses
within the control of the first Party upon reasonable notice who may be called upon to execute
declarations or testify in said action.
In addition to the foregoing, if Village Resort delivers a written request for such action to
City (c/o the City Manager) not later than thirty (30) days after the date the City Council of City
approves this Agreement at a public meeting, City shall file an action in Riverside County
Superior Court pursuant to California Code of Civil Procedure Section 860 et seq. to validate this
Agreement and the Covenant and each and every one of its and their provisions. In such event,
City and Village Resort shall reasonably cooperate in drafting the complaint, briefs, the proposed
judgment of validation, and such other pleadings, documents, and filings as may be required or
desirable in connection with the validation action. City and its legal counsel shall file and
prosecute the validation action, but shall reasonably coordinate and cooperate with Village
Resort concerning the drafting of pleadings and other documents and with regard to the litigation
strategy to be employed. Village Resort and/or Chicago Title shall reimburse City within fifteen
(15) days after written demand therefor for all costs ("Costs") of the validation action. Costs
include without limitation, attorney's fees, filing fees and court reporter fees (if any), costs of
publication and to effectuate service of process, reasonable photocopying and other reproduction
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charges, travel time and mileage expenses, and other costs and expenses reasonably incurred by
City. In the event of an appeal of such action, the Parties shall cooperate with respect to the
appeal to the same extent as at the Superior Court level of the proceedings.
Upon the entry of a final non -appealable judgment of any court with jurisdiction
invalidating or enjoining the performance of any material covenant set forth in this Agreement or
the Covenant, this Agreement and the Covenant shall automatically terminate without the need
of further action by either Party.
6. Compliance with Laws. During the entire Operating Period, Village Resort shall
operate the Hotel on the Site in conformity with all valid and applicable federal, state (including
without limitation the California Civil Code, the California Government Code, the California
Health & Safety Code, the California Labor Code, the California Public Resources Code, and the
California Revenue & Taxation Code), and local laws, ordinances, and regulations, provided that
Village Resort does not waive its right to challenge the validity or applicability thereof to Village
Resort or the Site. The operation of the Hotel shall be in compliance with the requirements of
the Conditional Use Permit issued by the City for the Hotel.
Nothing herein constitutes a representation or warranty by City that the construction of
the Hotel is not a "public work" or otherwise subject to California Health and Safety Code
Sections 33423 through 33426, or Chapter I of Part 7 of the California Labor Code
(commencing with section 1720), and all applicable statutory and regulatory provisions related
thereto, and Village Resort expressly waives any right of reimbursement for any "increased
costs" under California Labor Code Section 1781 or otherwise with respect to the Hotel or
Village Resort's development thereof. Village Resort shall indemnify, defend, and hold the City
and the City's representatives, volunteers, officers, officials, members, employees, and agents
harmless, including, but not limited to, litigation costs, expert witness fees, and reasonable
attorneys' fees, from and against any and all claims pertaining to the payment of wages in
connection with Village Resort's development of the Hotel on the Site or failure to comply with
federal or state labor laws, regulations, or standards.
7. Integration and Amendment. This Agreement and the Covenant attached hereto
constitute the entire Agreement by and between the Parties pertaining to the specific subject
matter hereof, and supersede all prior agreements and understandings of the Parties with respect
thereto. This Agreement may not be modified, amended, or otherwise changed except by a
writing executed by both Parties.
8. Notices. Notices to be given by City or Village Resort hereunder may be
delivered personally or may be delivered by certified mail or by reputable overnight delivery
service providing a delivery confirmation receipt, with mailed notices to be addressed to the
appropriate address(es) hereinafter set forth or to such other address(es) that a Party may
hereafter designate by written notice. If served by overnight delivery service or certified mail,
service will be considered completed and binding on the Party served on the date set forth in the
confirmation or certification receipt.
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If notice is to City: City of La Quinta
78-495 Calle Tampico
P.O. Box 1504
La Quinta, CA 92253
Attention: Tom Genovese, City Manager
with a copy to: Rutan & Tucker
611 Anton Boulevard, Suite 14000
Costa Mesa, CA 92626
Attention: M. Katherine Jenson, City Attorney
and to: Stowell, Zeilenga, Ruth, Vaughn & Treiger LLP
2815 Townsgate Road, Suite 330
Westlake Village, CA 91361
Attention: James D. Vaughn, Esq.
If notice to Village Resort: Village Resort, LLC
601 Riverside Avenue
Jacksonville, FL 32204
Attention: Fred Parvey, Managing Member
with a copy to: Christensen, Glaser, Fink, Jacobs, Weil & Shapiro
10250 Constellation Blvd., Nineteenth Floor
Los Angeles, CA 90067
Attention: Timothy B. McOsker, Esq.
and to: Christensen, Glaser, Fink, Jacobs, Weil & Shapiro
10250 Constellation Blvd., Nineteenth Floor
Los Angeles, CA 90067
Attention: Roger H. Howard, Esq.
9. Counterparts. This Agreement may be executed in two or more counterparts,
each of which when so executed and delivered shall be deemed an original and all of which,
when taken together, shall constitute one and the same instrument.
10. Legal Actions. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of California without regard to conflict of law
principles.
In addition to any other rights or remedies and subject to the restrictions in Section 5,
either Party may institute legal action to seek specific performance of the terms of this
Agreement, or to cure, correct or remedy any default, or to obtain any other legal or equitable
remedy consistent with the purpose of this Agreement. City shall also have the right to pursue
damages for Village Resort's defaults but in no event shall Village Resort be entitled to damages
of any kind from City, except for damages for out-of-pocket costs incurred by Village Resort
paid or payable to attorneys, third party consultants, contractors, and similar parties resulting
from nonperformance by City of its covenants under this Agreement but excluding damages for
economic loss, lost profits, or any other economic or consequential damages of any kind. Such
legal actions must be instituted in the Superior Court of the County of Riverside, State of
California, or in the Federal District Court in the Central District of California. In the event of
any litigation between the parties hereto, the prevailing party shall be entitled to receive, in
addition to the relief granted, its reasonable attorney's fees and costs and such other costs
incurred in investigating the action and prosecuting the same, including costs for expert
witnesses, costs on appeal, and for discovery.
11. Nonliability of City Officials. No member, official or employee of the City shall
be personally liable to Village Resort, or any successor in interest, in the event of any Default or
breach by the City or for any amount which may become due to Village Resort or its successors,
or on any obligations under the terms of this Agreement.
IN WITNESS WHEREOF, City and Village Resort have executed this Agreement to be
effective as of the date first set forth above.
ATTEST:
By:7D�ylL-! -
DEBORAH H. POWELL, Interim City Clerk
APPROVED AS TO FORM:
IIn
G
Wes D. Vaug pedal Counsel
Zeilenga, Rpffi, Vaughn & Treiger LLP
"Cit}:�'
CITY OF LA QUINTA,
a California municipal corporation
ay:
Thomas P. Genovese, City Manager
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APPROVED AS TO FORM:
"Village Resort"
VILLAGE RESORT, LLC,
a California limited liability company
n
By:
Fred arvey, Managing Me ber
By:
Timothy B. McOsker
Christensen, Glaser, Fink, Jacobs, Weil & Shapiro
in
"Village Resort"
VILLAGE RESORT, LLC,
a California limited liability company
Fred Parvey, Managing Member
APPRO D AS TO FORM:
Y�
'Timothy B. McOsk
Christensen, Glaser, Fink, Jacobs, Weil & Shapiro
10
EXHIBIT "A"
LEGAL DESCRIPTION OF SITE
PARCEL 6 OF PARCEL MAP 29909, IN THE CITY OF LA QUINTA,
COUNTY OF RIVERSIDE, AS PER MAP RECORDED IN BOOK 200, PAGES
84 AND 85 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY
RECORDER.
EXHIBIT `B"
RECORDING REQUESTED BY AND WHEN
RECORDED MAIL TO:
Stowell, Zeilenga, Ruth, Vaughn & Treiger LLP
2815 Townsgate Road, Suite 330
Westlake Village, CA 91361
Attention: James D. Vaughn, Esq.
[Space above for recorder.]
EXEMPT FROM RECORDER'S FEE PER GOV. CODE §27383
EXEMPT FROM DOCUMENTARY TRANSFER TAX PER REV. & TAX. CODE § 11922
Signature of Declarant arc Agent determining tax — Firm Name
COVENANTS, CONDITIONS, AND RESTRICTIONS
AFFECTING INTERESTS IN REAL PROPERTY
This COVENANTS, CONDITIONS, AND RESTRICTIONS AFFECTING INTERESTS
IN REAL PROPERTY (the "Covenant") is entered into as of this day of
2006, by and between the CITY OF LA QUINTA, a California municipal corporation ("City"),
and Village Resort, LLC, a California limited liability company ("Owner") (individually a
"Party" and collectively the "Parties").
RECITALS
A. Owner is the owner of that certain real property consisting of approximately 6.81
acres of land area located at 50-777 Santa Rosa Plaza, in the City of La Quinta, County of
Riverside, State of California, which is more particularly described in the legal description
attached hereto as Exhibit "A" and incorporated herein by this reference (the "Site").
B. Owner has developed on the Site a hotel containing 146 guest rooms, a spa,
conference center, and other related amenities (the "Hotel"). Owner has obtained the necessary
rights to operate the Hotel under the flagship name of "Embassy Suites." The Hotel, as defined
herein, does not include the 144 adjacent casitas.
C. Concurrently herewith, City and Owner have entered into that certain unrecorded
Agreement to Share Transient Occupancy Tax Revenue (the "Agreement") which provides for
the recordation of this Covenant against the Site.
D. Owner shall operate the Hotel on the Site, pursuant to all applicable laws,
ordinances, and regulations.
E. In consideration for Owner's rights and obligations set forth in the Agreement and
within this Covenant, City has agreed to make certain payments to Owner, the amount of which
is measured by the "Transient Occupancy Tax" (as that term is defined below) generated by the
operation of the Hotel on the Site. City and Owner have agreed that the portion of Transient
Occupancy Tax required to be paid by City to Owner hereunder during each Quarter of the
Operating Period provided for herein is a fair exchange for the consideration to be furnished by
Owner to City in that Quarter.
COVENANTS
Based upon the foregoing Recitals, which are incorporated herein by this reference, and
for other good and valuable consideration, the receipt and sufficiency of which is acknowledged
by both Parties, City and Owner hereby agree as follows:
1. DEFINED TERMS.
The following terms when used in this Covenant shall have the meanings set forth below:
The term "Agreement" shall have the meaning ascribed in Recital C of this Covenant.
The term "Commencement Date" shall have the meaning ascribed in Section 2 of this
Covenant.
The term "Covenant Payments" shall mean the amounts to be paid by City to Owner
with respect to each Quarter of the Operating Period.
The term "Covenant Payments Cap Amount" shall have the meaning ascribed in
Section 4.1.1(b) of this Covenant.
The term "Default" shall have the meaning ascribed in Section 5.1 of this Covenant.
The term "Effective Date" shall mean the date this Covenant is executed by the latter of
the two Parties to sign, which date shall be inserted in the preamble to this Covenant.
The term "Fiscal Year" shall mean City's fiscal year, which commences on July 1 and
ends on the next succeeding June 30.
The term "Holder" shall have the meaning ascribed in Section 5.1(b) of this Covenant.
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The term "Hotel" shall have the meaning described in Recital B.
The term "Operating Period" refers to the period between the Commencement Date and
the Termination Date.
The term "Quarter" shall mean any of the three (3) month periods during a Fiscal Year
commencing July 1, October 1, January 1, or April 1.
The term "Transient Occupancy Tax" means, for a given month, or part thereof, during
the Operating Period, that portion of transient occupancy taxes reported and remitted by Owner
to City pursuant to Chapter 3.24 of the U Quinta Municipal Code, that are generated from the
use and occupancy of guest rooms in the Hotel.
Notwithstanding anything herein to the contrary, Transient Occupancy Tax shall not
include any interest or penalty that has been paid by Owner pursuant to Chapter 3.24 of the
City's Municipal Code, and any costs the City incurs in enforcing Chapter 3.24 of the City's
Municipal Code or any provision of this Agreement shall be deducted from the amount of
Transient Occupancy Tax that is received by the City prior to calculating the amount of a
Covenant Payment.
The term "Site" shall have the meaning ascribed in Recital A of this Covenant.
The term "Termination Date" shall mean the date that is the earliest of (i) the date that
is five (5) years following the Commencement Date; (ii) the date that the Covenant Payments
Cap Amount is paid in full; or (iii) the date on which this Covenant is terminated pursuant to
Sections 2, 5.2 or 5.3, as applicable.
2. CONDITION TO OWNER'S RIGHT TO RECEIVE COVENANT PAYMENTS.
As a condition to Owner's right to receive the Covenant Payments, Owner shall be
required to (i) complete construction of the Hotel in accordance with all applicable requirements,
as evidenced by City's issuance of a permanent and final certificate of occupancy, and (h) open
the Hotel and commence operations. The obligations set forth in clauses (i) and (ii) above are
hereinafter referred to as the "City's Conditions to Payment." The day on which the City's
Conditions to Payment are satisfied shall constitute the "Commencement Date" (unless such date
occurs before the execution of this Covenant, in which case the Commencement Date shall
constitute the date upon which this Covenant is fully executed by both parties) at which time
Owner's obligations pursuant to Section 3 of this Covenant and City's obligations pursuant to
Section 4 of this Covenant shall commence.
Notwithstanding any other provision set forth in this Covenant, and subject to extension
for events of force majeure as provided in Section 6.7, if, by September 15, 2006, Owner has not
satisfied the City's Conditions to Payment, either party may terminate this Covenant by delivery
of written notice of termination to the other Party and, in such event, neither Party shall have any
further rights against or obligations to the other Party arising out of this Covenant. Owner's
obligations to continuously operate the Hotel until the Termination Date, as described in Section
3.1 below, shall be a condition to the receipt of Covenant Payments during the Operating Period.
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3. OWNER'S OBLIGATIONS.
3.1 Continuous Operation. During the first three (3) years of the Operating Period,
Owner covenants and agrees to continuously operate the Hotel on the Site (subject to temporary
interruptions for casualty losses, repairs, and the like, provided, however, that no such
interruptions shall continue for more than five days without the City's prior written consent,
which consent may be withheld in City's sole and absolute discretion during the entire Operating
Period).
3.2 Use Restriction. During the entire Operating Period, the Site shall not be put to
any use other than the operation of the Hotel, and such use shall qualify as a transient occupancy
use under Chapter 3.24 of the City's Municipal Code.
3.3 Maintenance and Repair of Site and Hotel: Landscaping.
(a) During the entire Operating Period, Owner, at its sole cost and expense,
shall keep and maintain the Site and the improvements thereon and all facilities appurtenant
thereto in first class condition and repair, in accordance with the "Maintenance Standards" (as
that term is hereinafter defined). Said improvements shall include, but not be limited to,
buildings, sidewalks, pedestrian lighting, landscaping, irrigation of landscaping, architectural
elements identifying the Site owner and any and all other improvements on the Site.
(b) To accomplish the maintenance, Owner shall either staff or contract with
and hire licensed and qualified personnel to perform the maintenance work, including the
provision of labor, equipment, materials, support facilities, and any and all other items necessary
to comply with the requirements of this Covenant.
(c) The following standards ("Maintenance Standards") shall be complied
with by Owner and its maintenance staff, contractors or subcontractors:
1. Landscape maintenance shall include, but not be limited to:
watering/irrigation; fertilization; mowing; edging; trimming of grass; tree and shrub
pruning; trimming and shaping of trees and shrubs to maintain a _ healthy, natural
appearance, safe road conditions and visibility, and irrigation coverage; replacement, as
needed, of allplant materials; control of weeds in all planters, shrubs, lawns, ground
covers, or other planted areas; and staking for support of trees.
2. Clean-up maintenance shall include, but not be limited to:
maintenance of all sidewalks, paths 'and other paved areas in clean and weed -free
condition; maintenance of all such areas clear of dirt, mud, trash, debris or other matter
which is unsafe or unsightly; removal of all trash, litter and other debris from
improvements and landscaping prior to mowing; clearance and cleaning of all areas
maintained prior to the end of the day on which the maintenance operations are
performed to ensure that all cuttings, weeds, leaves and other debris are properly
disposed of by maintenance workers.
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3. All maintenance work shall conform to all applicable federal and
state Occupational Safety and Health Act standards and regulations for the performance
of maintenance.
4. Any and all chemicals, unhealthful substances, and pesticides used
in and during maintenance shall be applied in strict accordance with all governing
regulations. Precautionary measures shall be employed recognizing that all areas are open
to public access.
5. The Site and Hotel shall be maintained in conformance and in
compliance with the approved Site construction and architectural plans and design
scheme, and reasonable commercial development maintenance standards for similar
projects, including but not limited to: painting and cleaning of all exterior surfaces and
other exterior facades comprising all private improvements and public improvements to
the curbline.
6. The Site and Hotel shall be maintained as required by this Section
in good condition and in accordance with the custom and practice generally applicable to
comparable business hotels located in Riverside County.
During the Operating Period, Owner shall not abandon any portion of the Site or leave
the Site unguarded or unprotected, and shall not otherwise act or fail to act in such a way as to
unreasonably increase the risk of any damage to the Site or of any other impairment of City's
interest set forth in this Covenant.
3.4 Failure to Maintain Site and Hotel. In the event Owner does not maintain the Site
or the Hotel in the manner set forth herein and in accordance with the Maintenance Standards,
City shall have the right, but not the obligation, to maintain such private and/or public
improvements, or to contract for the correction of such deficiencies, after written notice to
Owner. However, prior to taking any such action, City agrees to notify Owner in writing if the
condition of said improvements do not meet with the Maintenance Standards and to specify the
deficiencies and the actions required to be taken by Owner to cure the deficiencies. Upon
notification of any maintenance deficiency, Owner shall have thirty (30) days within .which to
correct, remedy or cure the deficiency. If the written notification states the problem is urgent
relating to the public health and safety of the City, then Owner shall have forty-eight (48) hours
to rectify the problem.
In the event Owner fails to correct, remedy, or cure or has not commenced correcting,
remedying or curing such maintenance deficiency after notification and after the period of
correction has lapsed, then City shall have the right to maintain such improvements. Owner
agrees to pay City such charges and costs. Until so paid, City shall have a lien on the Site for the
amount of such charges or costs, which lien shall be perfected by the recordation of a "Notice of
Claim of Lien" against the Site. Upon recordation of a Notice of a Claim of Lien against the
Site, such lien shall constitute a lien on the fee estate in and to the Site prior and superior to all
other monetary liens except: (i) all taxes, bonds, assessments, and other levies which, by law,
would be superior thereto; (ii) the lien or charge of any mortgage, deed of trust, or other security
interest then of record made in good faith and for value, it being understood that the priority of
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any such lien for costs incurred to comply with this Covenant shall date from the date of the
recordation of the Notice of Claim of Lien. Any lien in favor of City created or claimed
hereunder is expressly made subject and subordinate to any mortgage or deed of trust made in
good faith and for value, recorded as of the date of the recordation of the Notice of Claim of Lien
describing such lien as aforesaid, and no such lien shall in any way defeat, invalidate, or impair
the obligation or priority of any such mortgage or deed of trust', unless the mortgage or
beneficiary thereunder expressly subordinates his interest, of record, to such lien. Upon
foreclosure of any mortgage or deed of trust made in good faith and for value and recorded prior
to the recordation of any unsatisfied Notice of Claim of Lien, the foreclosure -purchaser shall
take title to the Site free of any lien imposed by City that has accrued up to the time of the
foreclosure sale, and upon taking title to the Site, such foreclosure -purchaser shall only be
obligated to pay costs associated with this Covenant accruing after the foreclosure -purchaser
acquires title to the Site. Owner acknowledges and agrees City may also pursue any and all other
remedies available in law or equity. Owner shall be liable for any and all attorneys' fees, and
other legal costs or fees incurred in collecting said maintenance costs.
3.5 Compliance with Laws. During the entire Operating Period, Owner shall operate
the Hotel on the Site in conformity with all valid and applicable federal, state (including without
limitation the California Civil Code, the California Government Code, the California Health &
Safety Code, the California Labor Code, the California Public Resources Code, and the
California Revenue & Taxation Code), and local laws, ordinances, and regulations, provided that
Owner does not waive its right to challenge the validity or applicability thereof to Owner or the
Site. The operation of the Hotel shall be in compliance with the requirements of the Conditional
Use Permit issued by the City for the Hotel.
. Nothing herein constitutes a representation or warranty by City that the construction of
the Hotel is not a "public work" or otherwise subject to California Health and Safety Code
Sections 33423 through 33426, or Chapter 1 of Part 7 of the California Labor Code
(commencing with section 1720), and all applicable statutory and regulatory provisions related
thereto, and Owner expressly waives any right of reimbursement for any "increased costs" under
California Labor Code Section 1781 or otherwise with respect to the Hotel or Owner's
development thereof. Owner shall indemnify, defend, and hold the City and the City's
representatives, volunteers, officers, officials, members, employees,. and agents harmless,
including, but not limited to, litigation costs, expert witness fees, and reasonable attorneys' fees,
from and against any and all claims pertaining to the payment of wages in connection with
Owner's development of the Hotel on the Site or failure to comply with federal or state labor
laws, regulations, or standards.
3.6 Non -Discrimination. In the opening and operation of the Hotel, Owner agrees not
to violate applicable laws that prohibit discrimination against any person or class of persons by
reason of gender, marital status, race, color, creed, mental or physical disability, religion, age,
ancestry, or national origin.
3.7 Indemnification of City. Owner shall defend, indemnify, assume all
responsibility for, and hold the City, and the City's representatives, volunteers, officers, officials,
members, employees and agents, harmless from any and all claims, demands, damages, defense
costs or liability of any kind (including attorneys' fees and costs), that arise from Owner's
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operation of the Hotel on the Site or which may be caused by any acts or omissions of the Owner
under this Covenant, whether such activities or performance thereof be by Owner or by anyone
directly or indirectly employed or contracted with by Owner and whether such damage shall
accrue or be discovered before or after termination of this Covenant.
4. OBLIGATIONS OF CITY.
4.1 Covenant Payments to Owner.
4.1.1 Amount of Covenant Payments; Cam. In consideration for Owner's
undertakings pursuant to this Covenant, City shall make the following payments (each, a
"Covenant Payment") to Owner at the end of each Quarter (or part thereof) during the Operating
Period:
(a) Subject to subparagraph (b) below, the Covenant Payments with
respect to each Quarter shall be in an amount equal to forty percent (40%) of the Transient
Occupancy Tax for that Quarter, except that in the Quarter during which the Termination Date
occurs, the Covenant Payment shall be prorated such that City shall only pay to Owner 40% of
Transient Occupancy Tax for the period between the first day of such Quarter and the
Termination Date.
(b) Notwithstanding any other provision set forth in this Covenant to
the contrary, in no event shall the total amount of Covenant Payments made by City to Owner
exceed the sum of One Million Dollars ($1,000,000) (the "Covenant Payments Cap Amount").
In this regard, it is understood and agreed that the Covenant Payments are in consideration of
Owner's performance during each Quarter of the Operating Period and are not repayments of a
loan.
(c) Notwithstanding any other provision set forth in this Covenant to
the contrary, even in the event the Covenant Payments Cap Amount has not been reached at the
end of the Operating Period, City shall have no further obligation after that time to make
additional Covenant Payments.
4.1.2 Source of Payments. The Covenant Payments shall be payable from any
source of funds legally available to City, including City's general fund. In this regard, it is
understood and agreed that the Transient Occupancy Tax that is generated from the Hotel on the
Site is being used merely as a measure' of the amount of the Covenant Payments that are
periodically owing by City to Owner, and that City is not pledging any portion of the Transient
Occupancy Tax generated from the Site to Owner.
4.1.3 Payment Procedure. Not later than thirty (3 0) days after the Transient
Occupancy Tax for the Hotel is reported and remitted to City by Owner for the final month in
each Quarter, or portion thereof, during the Operating Period, City shall pay the Covenant
Payment for said Quarter, or portion thereof, to Owner. Each such payment shall be
accompanied by a statement identifying (i) the amount of Transient Occupancy Tax upon which
the Covenant Payment amount was calculated; and (iii) a cumulative total comparing how the
Covenant Payment in question, together with all prior Covenant Payments, relate to the
Covenant Payment Cap Amount. For example, if Owner files a report and remits the Transient
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Occupancy Tax generated during the month of December, 2006, on January 15, 2007, then City
shall provide the quarterly Covenant Payment for the October -November -December 2006
Quarter by February 14, 2007.
It is understood that the amount of City's quarterly Covenant Payments to Owner
shall be based upon the amount of Transient Occupancy Tax that City shall have actually
received from Owner. In addition, if after any such quarterly payment is made, either City or
Owner obtains information that the amount of City's payment was in error, including, without
limitation, by reason of overpayment of tax, or by erroneous or illegal collection or receipt by the
City, the Party obtaining such information shall promptly notify the other Party and shall provide
such detailed information as may be necessary to explain the discrepancy. The discrepancy then
shall be taken into consideration by means of an adjustment to the next quarterly payment to be
made by City (either an additional payment in the event City has underpaid a prior Covenant
Payment that is due or a credit against the subsequent Covenant Payment in the event City has
overpaid); provided, however, that in the event an adjustment needs to be made in excess of Ten
Thousand Dollars ($10,000), the Party entitled to said sum shall be entitled to deliver a written
notice to the other Party requesting an immediate adjustment and in such event the other Party
shall make an appropriate payment within fifteen (15) days from receipt of said notice.
4.1.4 Books and Records. Upon the written request of either Party, the other
Party shall make available for inspection (at City Hall in the event of a review of City records
and at Owner's place of business in La Quinta in the event of a review of Owner's records) such
of its books and records as the requesting Party may reasonably determine must be reviewed in
order to determine whether the correct amount of Covenant Payments have been made or are
being made hereunder. Notwithstanding the foregoing, City shall not be required to produce any
books or records that it is prohibited from producing by law and Owner shall not be required to
produce information that violates the statutorily prescribed privacy rights of individual
customers.
4.1.5 No Acceleration. Prepayment. It is acknowledged by the Parties that any
payments by City provided for in this Covenant are in consideration for the performance by
Owner during the time period(s) for which payments are due. Therefore, City's failure to timely
make any payments or City's failure to perform any of its other obligations hereunder shall not
cause the acceleration of any anticipated future Covenant Payments by City to Owner. To the
maximum extent permitted by law, City shall be permitted to prepay any of the Covenant
Payments without penalty.
4.2 Additional Condition Precedent to City's Obligations. In addition to the
provisions set forth in Section 2 of this Covenant, City's obligation to make the Covenant
Payments pursuant to Section 4.1 of this Covenant for any Quarter during the Operating Period
shall be contingent and conditional upon Owner's performance of its obligations set forth in
Section 3 of this Covenant during such Quarter.
5. DEFAULTS AND REMEDIES.
5.1 Defaults.
(a) Subject to Section 6.7 of this Covenant, the occurrence of any of
the following shall constitute a Default:
(i) the failure by either Parry to perform any obligation of such
Party for the payment of money under this Covenant if such failure is not cured within
fifteen (15) calendar days after the nonperforming Party's receipt of written notice from
the other Party that such obligation was not performed when due; or
(ii) the failure by either Party to perform any of its obligations
(other than obligations described in clause (i) of this Section 5.1) set forth in this
Covenant, if such failure is not cured within thirty (30) days or, if such failure is of a
nature that cannot reasonably be cured within thirty (30) days, the failure by such Party to
commence such cure within thirty (30) days and thereafter diligently prosecute such cure
to completion; or
(iii) any material representation or warranty by a Party set forth
in this Covenant proves to have been incorrect in any material respect when made; or
(iv) the Hotel is materially damaged or destroyed by fire or
other casualty during the Operating Period and Owner fails to commence restoration of
the improvements within a reasonable time or thereafter fails to diligently proceed to
complete such restoration in accordance with this Covenant; or
(v) Owner makes any total or partial sale, transfer, conveyance,
assignment, subdivision, or lease of the whole or any part of the Site, the Hotel, and/or
the Agreement or this Covenant without the City's prior written consent, which consent
the City may grant or withhold in its sole and absolute discretion, or if any voluntary or
involuntary successor -in -interest of the Owner acquires any rights or powers under the
Agreement or this Covenant without the City's prior written consent, which consent the
City may grant or withhold in its sole and absolute discretion; or
(vi) Owner refinances any existing construction, permanent, or
other loans encumbering the Site without the City's prior written consent, which consent
the City may grant or withhold in its sole and absolute discretion; or
(vii) Owner, or any Constituent member of Owner, is the subject
of an order for relief for a bankruptcy court, or is unable or admits its inability to pay its
debts as they mature, or makes an assignment for the benefit of creditors; or Owner
applies for or consents to the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer for it or any part of its property; or any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed
without the application or consent of Owner and the appointment continues undischarged
or unstayed for ninety (90) days; or Owner institutes or consents to any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, dissolution, custodianship,
M
conservatorship, liquidation, rehabilitation or similar proceeding relating to it or any part
of its property; or any similar proceeding is instituted without the consent of Owner and
continues undismissed or unstayed for ninety (90) days; or any judgment, writ, warrant of
attachment or execution, or similar process is issued or levied against the Site and is not
released, vacated, or fully bonded within ninety (90) days after its issue or levy.
(viii) Owner is enjoined or otherwise prohibited by any
governmental agency from occupying the Site during the Operating Period and such
injunction or prohibition continues unstayed for ninety (90) days or more for any reason.
(b) In the event Owner fails to perform any of its obligations under
this Covenant and City sends a notice of such failure to Owner, concurrently therewith City shall
send a copy of such notice to any mortgagee or deed of trust holder with respect to the Site
(herein the "Holder") (the name and address of which Holder shall be furnished by Owner or
such Holder to City) and the Holder shall have the same period of time as is available to Owner
to remedy such breach or failure under this Covenant. City shall accept any proper cure of a
breach or failure tendered by the Holder.
5.2 City's Remedies Upon Default by Owner. Upon the occurrence of any Default by
Owner, and after Owner's receipt of written notice of default and expiration of the time for
Owner to cure such Default as provided in Section 5.1, City may at its option:
(i) suspend the payment of Covenant Payments otherwise due
and payable to Owner hereunder for the period that Owner remains in Default. If City
has so suspended its payments in accordance with the terms of this clause Ci), then upon
Owner's cure of such Default, City shall resume its payment obligations, but shall have
no obligation to make payments for any Quarter or portion thereof during which City's
obligation to make payments was so suspended; or
(ii) if the Default continues uninterrupted for a period of six (6)
months, City may terminate this Covenant, in which case City's obligation to make
payments to Owner for any period of time after the occurrence of the Default shall be
finally terminated and discharged.
5.3 Owner's Remedies Upon Default by City. Upon the occurrence of any Default by
City, and after City's receipt of written notice of Default from Owner and expiration of the time
for City to cure such Default as provided in Section 5.1, Owner may terminate this Covenant by
written notice to City and/or seek whatever legal or equitable remedies may be available to
Owner, subject to the provisions of Sections 4.1.5 and 6.5.
5.4 Cumulative Remedies: No Waiver. Except as expressly provided herein, the
nondefaulting Party's rights and remedies hereunder are cumulative and in addition to all rights
and remedies provided by law from time to time and the exercise by the nondefaulting Party of
any right or remedy shall not prejudice such Parry in the exercise of any other right or remedy.
None of the provisions of this Covenant shall be considered waived by either Parry except when
such waiver is delivered in writing. No waiver of any Default shall be implied from any
omission by City to take action on account of such Default if such Default persists or is repeated.
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No waiver of any Default shall affect any Default other than the Default expressly waived, and
any such waiver shall be operative only for the time and to the extent stated. No waiver of any
provision of this Covenant shall be construed as a waiver of any subsequent breach of the same
provision. A Party's consent to or approval of any act by the other Party requiring further
consent or approval shall not be deemed to waive or render unnecessary the consenting Party's
consent to or approval of any subsequent act. A Party's acceptance of the late performance of
any obligation shall not constitute a waiver by such Party of the right to require prompt
performance of all further obligations. A Party's acceptance of any performance following the
sending or filing of any notice of Default shall not constitute a waiver of that Party's right to
proceed with the exercise of its remedies for any unfulfilled obligations. A Party's acceptance of
any partial performance shall not constitute a waiver by that Party of any rights relating to the
unfulfilled portion of the applicable obligation.
5.5 Limitations on City's Liability. Owner acknowledges and agrees that: (i) this
Covenant shall not be deemed or construed as creating a partnership, joint venture, or similar
association between Owner and City, the relationship between Owner and City pursuant to this
Covenant is and shall remain solely that of contracting Parties, that the development and
operation of the Hotel is a private undertaking, and City neither undertakes nor assumes any
responsibility pursuant to this Covenant to review, inspect, supervise, approve, or inform Owner
of any matter in connection with the development or operation of the Hotel on the Site other than
as expressly provided for herein, including matters relating to architects, designers, suppliers, or
the materials used by any of them; and Owner shall rely entirely on its own judgment with
respect to such matters; provided, that nothing herein is intended to release City from whatever
obligations it may have pursuant to applicable laws independent of this Covenant; (ii) by virtue
of this Agreement, City shall not be directly or indirectly liable or responsible for any loss or
injury of any kind to any person or property resulting from any construction on, or occupancy or
use of, the Site, whether arising from: (a) any defect 'in any building, grading, landscaping, or
other onsite or offsite improvement; (b) any act or omission of Owner or any of Owner's agents,
employees, independent contractors, licensees, lessees, or invitees; or (c) any accident on the Site
or any fire or other casualty or hazard thereon; and (iii) by accepting or approving anything
required to be performed or given to City under this Covenant, including any certificate, survey,
appraisal, or insurance policy, City shall not be deemed to have warranted or represented the
sufficiency or legal effect of the same, and no such acceptance or approval shall constitute a
warranty or representation by City to anyone.
6. GENERAL PROVISIONS.
6.1 Integration and Amendment. This Covenant and the Agreement constitute the
entire agreement by and between the Parties pertaining to the subject matter hereof, and
supersede all prior agreements and understandings of the Parties with respect thereto. This
Covenant may not be modified, amended, supplemented, or otherwise changed except by a
writing executed by both Parties.
6.2 Captions. Section headings used in this Covenant are for convenience of
reference only and shall not affect the construction of any provisions of this Covenant.
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6.3 Binding _Effect.• Successors and Assigns; Assignments. This Covenant shall run
with the land and shall be binding upon and inure to the benefit of, the Parties hereto and their
respective successors and assigns, as limited by this Section 6.3. Except as such assignment
relates to Holder, the Owner shall not assign, hypothecate, encumber or otherwise transfer its
rights or obligations as set forth in this Covenant without first obtaining the City's written
consent, which may be given or denied or conditioned in the City's sole discretion. Owner may
assign its right to receive the Covenant Payments to any Holder for security purposes. In the
event of an assignment for security purposes to a Holder, City agrees that this Covenant be
subordinated to the lien of said Holder's deed of trust or mortgage and City agrees to cooperate
with Owner in executing an appropriate subordination agreement. In the event that the Holder
forecloses on its deed of trust or mortgage or accepts a deed in lieu of foreclosure, then upon the
request of such Holder or its successor or assignee, City agrees to enter into a new Covenant on
the same terms and conditions set forth herein for the balance of the Operating Period.
In the event of any assignment that is consented to in writing by the City, the references
in this Covenant to "Owner" shall be deemed to refer to the assignee.
6.4 Counterparts. This Covenant may be executed in two or more counterparts, each
of which when so executed and delivered shall be deemed an original and all of which, when
taken together, shall constitute one and the same instrument.
6.5 Legal Actions. This Covenant shall be governed by and construed in accordance
with the internal laws of the State of California without regard to conflict of law principles.
In addition to any other rights or remedies and subject to the restrictions in Section 5,
either Party may institute legal action to seek specific performance of the terms of this Operating
Covenant, or to cure, correct or remedy any default, or to obtain any other legal or equitable
remedy consistent with the purpose of this Covenant. City shall also have the right to pursue
damages for Owner's defaults but in no event shall Owner be entitled to damages of any kind
from City, except for damages for out-of-pocket costs incurred by Owner paid or payable to
attorneys, third parry consultants, contractors, and similar parties resulting from nonperformance
by City of its covenants under this Covenant but excluding damages for economic loss, lost
profits, or any other economic or consequential damages of any kind. Such legal actions must be
instituted in the Superior Court of the County of Riverside, State of California, or in the Federal
District Court in the Central District of California. In the event of any litigation between the
parties hereto, the prevailing parry shall be entitled to receive, in addition to the relief granted, its
reasonable attorneys fees and costs and such other costs incurred in investigating the action and
prosecuting the same, including costs for expert witnesses, costs on appeal, and for discovery.
6.6 Effect of Violation of the Terms and Provisions of this Covenant. The covenants
established in this Covenant shall, without regard to technical classification and designation, be
binding for the benefit and in favor of the City, its successors and assigns, as to those covenants
which are for its benefit. The covenants contained in this Covenant shall remain in effect for the
periods of time specified therein. The City is deemed the beneficiary of the terms and provisions
of this Covenant and of the covenants running with the land, for and in its own rights and for the
purposes of protecting the interests of the community and other parties, public or private, in
whose favor and for whose benefit this Covenant and the covenants running with the land have
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been provided. The Covenant and the covenants shall run in favor of the City, without regard to
whether the City has been, remains, or is an owner of any land or interest therein in the Site. The
City shall have the right, if the Covenant or covenants are breached, to exercise all rights and
remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to
enforce the curing of such breaches to which it or any other beneficiaries of this Covenant and
covenants may be entitled.
6.7 Force Ma eure. Notwithstanding any other provision set forth in this Covenant to
the contrary, in no event shall a Parry be deemed to be in Default of its obligations set forth
herein where delays or failures to perform are caused by circumstances without the fault and
beyond the reasonable control of such Party, which circumstances shall include, without
limitation, firetca.sualty losses; strikes; litigation; unusually severe weather; inability to secure
necessary labor, materials, or tools; delays of any contractor, subcontractor, or supplier;
unjustified acts or failure to act by City or other governmental agency; litigation by third parties
challenging the validity or enforceability of the Agreement .or this Covenant; and acts of God
(collectively, "force maj euro"). Adverse market conditions or Owner's inability to obtain
financing or approval to operate the Hotel shall not constitute events of force majeure. In the
event of an event of force majeure, the Party so delayed shall notify the other Party of the
circumstances and cause of the delay within a reasonable time period after commencement of the
delay, it shall keep the other Party informed at reasonable intervals upon request regarding the
status of its efforts to overcome said delay, and it shall exercise commercially reasonable
diligence to perform as soon as practicable thereafter.
6.8 Notices. Notices to be given by City or Owner hereunder may be delivered
personally or may be delivered by certified or registered mail, postage prepaid, or by reputable
overnight delivery service providing a delivery confirmation receipt with time and date of
delivery, with mailed notices to be addressed to the appropriate address(es) hereinafter set forth
or to such other address(es) that a Parry may hereafter designate by written notice. If served by
overnight delivery service or certified mail, service will be considered completed and binding on
the Party served on the date set forth in the confirmation or certification receipt.
If notice is to City: City of La Quinta
78-495 Calle Tampico
P.O. Box 1504
La Quinta, CA 92253
Attention: Mr. Tom Genovese, City Manager
with a copy to: City of La Quinta
78-495 Calle Tampico
P.O. Box 1504
La Quinta, CA 92253
Attention: M. Katherine Jenson, City Attorney
and to: Stowell, Zeilenga, Ruth, Vaughn & Treiger LLP
2815 Townsgate Road, Suite 330
Westlake Village, CA 91361
Attention: James D. Vaughn, Esq.
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If notice to Owner: Village Resort, LLC
601 Riverside Avenue
Jacksonville, FL 32204
Attention: Fred Parvey, Managing Member
with a copy to: Christensen, Glaser, Fink, Jacobs, Weil & Shapiro
10250 Constellation Blvd., Nineteenth Floor
Los Angeles, CA 90067
Attention: Timothy B. McOsker, Esq.
and to: Christensen, Glaser, Fink, Jacobs, Weil & Shapiro
10250 Constellation Blvd., Nineteenth Floor
Los Angeles, CA 90067
Attention: Roger H. Howard, Esq.
6.9 Further Acts. Each Party agrees to take such" further actions and to execute such
other documents as may be reasonable and necessary in the performance of its obligations
hereunder; reserving to City, however, its lawful discretionary and police power authority.
Without limiting the generality of the foregoing, upon the expiration or termination of the
Operating Period, City will execute and deliver such instruments as may be prepared by Owner
at Owner's expense to release the cloud upon title to the Site created by this Covenant; provided,
however, that any such document shall be in a form reasonably acceptable to the City Attorney
of City.
6.10 Third Party Beneficiaries. With the exception of the specific provisions set forth
in this Covenant for the benefit of Holder, there are no intended third party beneficiaries under
this Covenant and no such other third parties shall have any rights or obligations hereunder
[Remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, the Parties have executed this Covenant to be effective as of
the Effective Date.
ATTEST:
"CITY"
CITY OF LA QUINTA,
a California municipal corporation
By:
Thomas P. Genovese, City Manager
By:
DEBORAH H. POWELL, Interim City Clerk
APPROVED AS TO FORM:
By:
James D. Vaughn, Special Counsel
Stowell, Zeilenga, Ruth, Vaughn & Treiger LLP
APPROVED AS TO FORM:
"VILLAGE RESORT"
VILLAGE RESORT, LLC,
a California limited liability company
By:
Fred Parvey, Managing Member
By:
Timothy B. McOsker, Esq.
Christensen, Glaser, Fink, Jacobs, Weil & Shapiro
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STATE OF FLORIDA )
) ss
COUNTY OF )
On
personally appeared
before me,
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal.
[SEAL]
STATE OF CALIFORNIA )
) ss
COUNTY OF
On
personally appeared
Notary Public
before me,
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal.
[SEAL]
Notary Public
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STATE OF CALIFORNIA )
) ss
COUNTY OF
On
personally appeared
before me,
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal.
[SEAL]
Notary Public
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PLEASE COMPLETE THIS INFORMATION
RECORDING REQUESTED BY:
Veronica J. Montecino, City Clerk
AND WHEN RECORDED MAIL TO:
CITY OF LA QUINTA
Attn: Veronica J. Montecino
P. 0. Box 1504
La Quinta, CA 92247-1504
0/24 2006�
-0781811
106
08 00A Fee:NC
0 Page 1 of 20
Recorded in official
f icial Records
County
Larry W. Ward
Assessor, County Clerk &Recorder
IIIIIIIIIII 11
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EXAM
COVENANTS, CONDITIONS, AND RESTRICTIONS
AFFECTING INTERESTS IN REAL PROPERTY
Village Resort, LLC 3'
(Embassy Suites)
i ryryr
U�
Title of Document
THIS AREA FOR
RECORDER'S
USE ONLY
THIS PAGE ADDED /
RECORDING REQUESTED BY AND WHEN
Deborah H. Powell
CITY OF LA QUINTA
P. O. Box 1504
La Quinta, CA 92247-1504
EXEMPT FROM RECORDER'S FEE PER GOV. CODE
EXEMPT FROM DOCUMENTARY TRANSFER TAX PER REV. & TAX. CODE
SigaOm ofDedarant m Agmt ddamining tax— Firm Name
COVENANTS, CONDITIONS, AND RESTRICTIONS
AFFECTING INTERESTS IN REAL PROPERTY
This COVENANTS, CONDITIONS, AND RESTRICTIONS s AFFECTING ��`
IN REAL PROPERTY (the "Covenant') is entered into as of thiday of,
2006, by and between the CITY OF LA.QUINTA, a California municipal corporation ( City"),
and Village Resort, LLC, a California limited liability company ("Owner") (individually a
"Party" and collectively the "Parties").
RECITALS
A. Owner is the owner of that certain real property consisting of approximately 6.81
acres of land area located at 50-777 Santa Rosa Plaza, in the City of La Quinta, County of
Riverside, State of California, which is more particularly described in the legal description
attached hereto as Exhibit "A" and incorporated herein by this reference (the "Site").
B. Owner has developed on the Site a hotel containing 146 guest rooms, a spa,
conference center, and other related amenities (the "Hotel"). Owner has obtained the necessary
rights to operate the Hotel under the flagship name of "Embassy Suites." The Hotel, as defined
herein, does not include the 144 adjacent casitas.
C. Concurrently herewith, City and Owner have entered into that certain unrecorded
Agreement to Share Transient Occupancy Tax Revenue (the "Agreement") which provides for
the recordation of this Covenant against the Site.
D. Owner shall operate the Hotel on the Site, pursuant to all applicable laws,
ordinances, and regulations.
E. In consideration for Owner's rights and obligations set forth in the Agreement and
within this Covenant, City has agreed to make certain payments to Owner, the amount of which
is measured by the "Transient Occupancy Tax" (as that term is defined below) generated by the
operation of the Hotel on the Site. City and Owner have agreed that the portion of Transient
Occupancy Tax required to be paid by City to Owner hereunder during each Quarter of the
Operating Period provided for herein is a fair exchange for the consideration to be furnished by
Owner to City in that Quarter.
COVENANTS
Based upon the foregoing Recitals, which are incorporated herein by this reference, and
for other good and valuable consideration, the receipt and sufficiency of which is acknowledged
by both Parties, City and Owner hereby agree as follows:
1. DEFINED TERMS.
The following terms when used in this Covenant shall have the meanings set forth below:
The term "Agreement" shall have the meaning ascribed in Recital C of this Covenant.
The term "Commencement Date" shall have the meaning ascribed in Section 2 of this
Covenant.
The term "Covenant Payments" shall mean the amounts to be paid by City to Owner
with respect to each Quarter of the Operating Period.
The term "Covenant Payments Cap Amount" shall have the meaning ascribed in
Section 4.1.1(b) of this Covenant.
The term "Default" shall have the meaning ascribed in Section 5.1 of this Covenant.
The term "Effective Date" shall mean the date this Covenant is executed by the latter of
the two Parties to sign, which date shall be inserted in the preamble to this Covenant.
The term "Fiscal Year" shall mean City's fiscal year, which commences on July I and
ends on the next succeeding June 30.
The term "Holder" shall have the meaning ascribed in Section 5.1(b) of this Covenant.
-2-
The term "Hotel" shall have the meaning described in Recital B.
The term "Operating Period" refers to the period between the Commencement Date and
the Termination Date.
The term "Quarter" shall mean any of the three (3) month periods during a Fiscal Year
commencing July 1, October 1, January 1, or April 1.
The term "Transient Occupancy Tax" means, for a given month, or part thereof, during
the Operating Period, that portion of transient occupancy taxes reported and remitted by Owner
to City pursuant to Chapter 3.24 of the La Quinta Municipal Code, that are generated from the
use and occupancy of guest rooms in the Hotel.
Notwithstanding anything herein to the contrary, Transient Occupancy Tax shall not
include any interest or penalty that has been paid by Owner pursuant to Chapter 3.24 of the
City's Municipal Code, and any costs the City incurs in enforcing Chapter 3.24 of the City's
Municipal Code or any provision of this Agreement shall be deducted from the amount of
Transient Occupancy Tax that is received by the City prior to calculating the amount of a
Covenant Payment.
The term "Site" shall have the meaning ascribed in Recital A of this Covenant.
The term "Termination Date" shall mean the date that is the earliest of (i) the date that
is five (5) years following the Commencement Date; (ii) the date that the Covenant Payments
Cap Amount is paid in full; or (iii) the date on which this Covenant is terminated pursuant to
Sections 2, 5.2 or 5.3, as applicable.
2. CONDITION TO OWNER'S RIGHT TO RECEIVE COVENANT PAYMENTS.
As a condition to Owner's right to receive the Covenant Payments, Owner shall be
required to (i) complete construction of the Hotel in accordance with all applicable requirements,
as evidenced by City's issuance of a permanent and final certificate of occupancy; and (ii) open
the Hotel and commence operations. The obligations set forth in clauses (i) and (ii) above are
hereinafter referred to as the "City's Conditions to Payment." The day on which the City's
Conditions to Payment are satisfied shall constitute the "Commencement Date" (unless such date
occurs before the execution of this Covenant, in which case the Commencement Date shall
constitute the date upon which this Covenant is fully executed by both parties) at which time
Owner's obligations pursuant to Section 3 of this Covenant and City's obligations pursuant to
Section 4 of this Covenant shall commence.
Notwithstanding any other provision set forth in this Covenant, and subject to extension
for events of force majeure as provided in Section 6.7, if, by September 15, 2006, Owner has not
satisfied the City's Conditions to Payment, either party may terminate this Covenant by delivery
of written notice of termination to the other Party and, in such event, neither Party shall have any
further rights against or obligations to the other Party arising out of this Covenant. Owner's
obligations to continuously operate the Hotel until the Termination Date, as described in Section
3.1 below, shall be a condition to the receipt of Covenant Payments during the Operating Period.
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3. OWNER'S OBLIGATIONS.
3.1 Continuous Operation. During the first three (3) years of the Operating Period,
Owner covenants and agrees to continuously operate the Hotel on the Site (subject to temporary
interruptions for casualty losses, repairs, and the like, provided, however, that no such
interruptions shall continue for more than five days without the City's prior written consent,
which consent may be withheld in City's sole and absolute discretion during the entire Operating
Period).
3.2 Use Restriction. During the entire Operating Period, the Site shall not be put to
any use other than the operation of the Hotel, and such use shall qualify as a transient occupancy
use under Chapter 3.24 of the City's Municipal Code.
3.3 Maintenance and Repair of Site and Hotel; Landscaping.
(a) During the entire Operating Period, Owner, at its sole cost and expense,
shall keep and maintain the Site and the improvements thereon and all facilities appurtenant
thereto in first class condition and repair, in accordance with the "Maintenance Standards" (as
that term is hereinafter defined). Said improvements shall include, but not be limited to,
buildings, sidewalks, pedestrian lighting, landscaping, irrigation of landscaping, architectural
elements identifying the Site owner and any and all other improvements on the Site.
(b) To accomplish the maintenance, Owner shall either staff or contract with
and hire licensed and qualified personnel to perform the maintenance work, including the
provision of labor, equipment, materials, support facilities, and any and all other items necessary
to comply with the requirements of this Covenant.
(c) The following standards ("Maintenance Standards") shall be complied
with by Owner and its maintenance staff, contractors or subcontractors:
1. Landscape maintenance shall include, but not be limited to:
watering/irrigation; fertilization; mowing; edging; trimming of grass; tree and shrub
pruning; trimming and shaping of trees and shrubs to maintain a healthy, natural
appearance, safe road conditions and visibility, and irrigation coverage; replacement, as
needed, of all plant materials; control of weeds in all planters, shrubs, lawns, ground
covers, or other planted areas; and staking for support of trees.
2. Clean-up maintenance shall include, but not be limited to:
maintenance of all sidewalks, paths and other paved areas in clean and weed -free
condition; maintenance of all such areas clear of dirt, mud, trash, debris or other matter
which is unsafe or unsightly; removal of all trash, litter and other debris from
improvements and landscaping prior to mowing; clearance and cleaning of all areas
maintained prior to the end of the day on which the maintenance operations are
performed to ensure that all cuttings, weeds, leaves and other debris are properly
disposed of by maintenance workers.
B
3. All maintenance work shall conform to all applicable federal and
state Occupational Safety and Health Act standards and regulations for the performance
of maintenance.
4. Any and all chemicals, unhealthful substances, and pesticides used
in and during maintenance shall be applied in strict accordance with all governing
regulations. Precautionary measures shall be employed recognizing that all areas are open
to public access.
5. The Site and Hotel shall be maintained in conformance and in
compliance with the approved Site construction and architectural plans and design
scheme, and reasonable commercial development maintenance standards for similar
projects, including but not limited to: painting and cleaning of all exterior surfaces and
other exterior facades comprising all private improvements and public improvements to
the curbline.
6. The Site and Hotel shall be maintained as required by this Section
in good condition and in accordance with the custom and practice generally applicable to
comparable business hotels located in Riverside County.
During the Operating Period, Owner shall not abandon any portion of the Site or leave
the Site unguarded or unprotected, and shall not otherwise act or fail to act in such a way as to
unreasonably increase the risk of any damage to the Site or of any other impairment of City's
interest set forth in this Covenant.
3.4 Failure to Maintain Site and Hotel. In the event Owner does not maintain the Site
or the Hotel in the manner set forth herein and in accordance with the Maintenance Standards,
City shall have the right, but not the obligation, to maintain such private and/or public
improvements, or to contract for the correction of such deficiencies, after written notice to
Owner. However, prior to taking any such action, City agrees to notify Owner in writing if the
condition of said improvements do not meet with the Maintenance Standards and to specify the
deficiencies and the actions required to be taken by Owner to cure the deficiencies. Upon
notification of any maintenance deficiency, Owner shall have thirty (30) days within which to
correct, remedy or cure the deficiency. If the written notification states the problem is urgent
relating to the public health and safety of the City, then Owner shall have forty-eight (48) hours
to rectify the problem.
In the event Owner fails to correct, remedy, or cure or has not commenced correcting,
remedying or curing such maintenance deficiency after notification and after the period of
correction has lapsed, then City shall have the right to maintain such improvements. Owner
agrees to pay City such charges and costs. Until so paid, City shall have a lien on the Site for the
amount of such charges or costs, which lien shall be perfected by the recordation of a "Notice of
Claim of Lien" against the Site. Upon recordation of a Notice of a Claim of Lien against the
Site, such lien shall constitute a lien on the fee estate in and to the Site prior and superior to all
other monetary liens except: (i) all taxes, bonds, assessments, and other levies which, by law,
would be superior thereto; (ii) the lien or charge of any mortgage, deed of trust, or other security
interest then of record made in good faith and for value, it being understood that the priority of
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any such lien for costs incurred to comply with this Covenant shall date from the date of the
recordation of the Notice of Claim of Lien. Any lien in favor of City created or claimed
hereunder is expressly made subject and subordinate to any mortgage or deed of trust made in
good faith and for value, recorded as of the date of the recordation of the Notice of Claim of Lien
describing such lien as aforesaid, and no such lien shall in any way defeat, invalidate, or impair
the obligation or priority of any such mortgage or deed of trust, unless the mortgage or
beneficiary thereunder expressly subordinates his interest, of record, to such lien. Upon
foreclosure of any mortgage or deed of trust made in good faith and for value and recorded prior
to the recordation of any unsatisfied Notice of Claim of Lien, the foreclosure -purchaser shall
take title to the Site free of any lien imposed by City that has accrued up to the time of the
foreclosure sale, and upon taking title to the Site, such foreclosure -purchaser shall only be
obligated to pay costs associated with this Covenant accruing after the foreclosure -purchaser
acquires title to the Site. Owner acknowledges and agrees City may also pursue any and all other
remedies available in law or equity. Owner shall be liable for any and all attorneys' fees, and
other legal costs or fees incurred in collecting said maintenance costs.
3.5 Compliance with Laws. During the entire Operating Period, Owner shall operate
the Hotel on the Site in conformity with all valid and applicable federal, state (including without
limitation the California Civil Code, the California Government Code, the California Health &
Safety Code, the California Labor Code, the California Public Resources Code, and the
California Revenue & Taxation Code), and local laws, ordinances, and regulations, provided that
Owner does not waive its right to challenge the validity or applicability thereof to Owner or the
Site. The operation of the Hotel shall be in compliance with the requirements of the Conditional
Use Permit issued by the City for the Hotel.
Nothing herein constitutes a representation or warranty by City that the construction of
the Hotel is not a "public work" or otherwise subject to California Health and Safety Code
Sections 33423 through 33426, or Chapter 1 of Part 7 of the California Labor Code
(commencing with section 1720), and all applicable statutory and regulatory provisions related
thereto, and Owner expressly waives any right of reimbursement for any "increased costs" under
California Labor Code Section 1781 or otherwise with respect to the Hotel or Owner's
development thereof. Owner shall indemnify, defend, and hold the City and the City's
representatives, volunteers, officers, officials, members, employees, and agents harmless,
including, but not limited to, litigation costs, expert witness fees, and reasonable attorneys' fees,
from and against any and all claims pertaining to the payment of wages in connection with
Owner's development of the Hotel on the Site or failure to comply with federal or state labor
laws, regulations, or standards.
3.6 Non -Discrimination. In the opening and operation of the Hotel, Owner agrees not
to violate applicable laws that prohibit discrimination against any person or class of persons by
reason of gender, marital status, race, color, creed, mental or physical disability, religion, age,
ancestry, or national origin.
3.7 Indemnification of City. Owner shall defend, indemnify, assume all
responsibility for, and hold the City, and the City's representatives, volunteers, officers, officials,
members, employees and agents, harmless from any and all claims, demands, damages, defense
costs or liability of any kind (including attorneys' fees and costs), that arise from Owner's
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operation of the Hotel on the Site or which may be caused by any acts or omissions of the Owner
under this Covenant, whether such activities or performance thereof be by Owner or by anyone
directly or indirectly employed or contracted with by Owner and whether such damage shall
accrue or be discovered before or after termination of this Covenant.
4. OBLIGATIONS OF CITY.
4.1 Covenant Payments to Owner.
4.1.1 Amount of Covenant Payments; Cap. In consideration for Owner's
undertakings pursuant to this Covenant, City shall make the following payments (each, a
"Covenant Payment") to Owner at the end of each Quarter (or part thereof) during the Operating
Period:
(a) Subject to subparagraph (b) below, the Covenant Payments with
respect to each Quarter shall be in an amount equal to forty percent (40%) of the Transient
Occupancy Tax for that Quarter, except that in the Quarter during which the Termination Date
occurs, the Covenant Payment shall be prorated such that City shall only pay to Owner 40% of
Transient Occupancy Tax for the period between the first day of such Quarter and the
Termination Date.
(b) Notwithstanding any other provision set forth in this Covenant to
the contrary, in no event shall the total amount of Covenant Payments made by City to Owner
exceed the sum of One Million Dollars ($1,000,000) (the "Covenant Payments Cap Amount").
In this regard, it is understood and agreed that the Covenant Payments are in consideration of
Owner's performance during each Quarter of the Operating Period and are not repayments of a
loan.
(c) Notwithstanding any other provision set forth in this Covenant to
the contrary, even in the event the Covenant Payments Cap Amount has not been reached at the
end of the Operating Period, City shall have no further obligation after that time to make
additional Covenant Payments.
4.1.2 Source of Payments. The Covenant Payments shall be payable from any
source of funds legally available to City, including City's general fund. In this regard, it is
understood and agreed that the Transient Occupancy Tax that is generated from the Hotel on the
Site is being used merely as a measure of the amount of the Covenant Payments that are
periodically owing by City to Owner, and that City is not pledging any portion of the Transient
Occupancy Tax generated from the Site to Owner.
4.1.3 Payment Procedure. Not later than thirty (30) days after the Transient
Occupancy Tax for the Hotel is reported and remitted to City by Owner for the final month in
each Quarter, or portion thereof, during the Operating Period, City shall pay the Covenant
Payment for said Quarter, or portion thereof, to Owner. Each such payment shall be
accompanied by a statement identifying (i) the amount of Transient Occupancy Tax upon which
the Covenant Payment amount was calculated; and (iii) a cumulative total comparing how the
Covenant Payment in question, together with all prior Covenant Payments, relate to the
Covenant Payment Cap Amount. For example, if Owner files a report and remits the Transient
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Occupancy Tax generated during the month of December, 2006, on January 15, 2007, then City
shall provide the quarterly Covenant Payment for the October -November -December 2006
Quarter by February 14, 2007.
It is understood that the amount of City's quarterly Covenant Payments to Owner
shall be based upon the amount of Transient Occupancy Tax that City shall have actually
received from Owner. In addition, if after any such quarterly payment is made, either City or
Owner obtains information that the amount of City's payment was in error, including, without
limitation, by reason of overpayment of tax, or by erroneous or illegal collection or receipt by the
City, the Party obtaining such information shall promptly notify the other Party and shall provide
such detailed information as may be necessary to explain the discrepancy. The discrepancy then
shall be taken into consideration by means of an adjustment to the next quarterly payment to be
made by City (either an additional payment in the event City has underpaid a prior Covenant
Payment that is due or a credit against the subsequent Covenant Payment in the event City has
overpaid); provided, however, that in the event an adjustment needs to be made in excess of Ten
Thousand Dollars ($10,000), the Party entitled to said sum shall be entitled to deliver a written
notice to the other Party requesting an immediate adjustment and in such event the other Party
shall make an appropriate payment within fifteen (15) days from receipt of said notice.
4.1.4 Books and Records. Upon the written request of either Party, the other
Party shall make available for inspection (at City Hall in the event of a review of City records
and at Owner's place of business in La Quinta in the event of a review of Owner's records) such
of its books and records as the requesting Party may reasonably determine must be reviewed in
order to determine whether the correct amount of Covenant Payments have been made or are
being made hereunder. Notwithstanding the foregoing, City shall not be required to produce any
books or records that it is prohibited from producing by law and Owner shall not be required to
produce information that violates the statutorily prescribed privacy rights of individual
customers.
4.1.5 No Acceleration; Prepayment. It is acknowledged by the Parties that any
payments by City provided for in this Covenant are in consideration for the performance by
Owner during the time period(s) for which payments are due. Therefore, City's failure to timely
make any payments or City's failure to perform any of its other obligations hereunder shall not
cause the acceleration of any anticipated future Covenant Payments by City to Owner. To the
maximum extent permitted by law, City shall be permitted to prepay any of the Covenant
Payments without penalty.
4.2 Additional Condition Precedent to City's Obligations. In addition to the
provisions set forth in Section 2 of this Covenant, City's obligation to make the Covenant
Payments pursuant to Section 4.1 of this Covenant for any Quarter during the Operating Period
shall be contingent and conditional upon Owner's performance of its obligations set forth in
Section 3 of this Covenant during such Quarter.
In
5. DEFAULTS AND REMEDIES.
5.1 Defaults.
(a) Subject to Section 6.7 of this Covenant, the occurrence of any of
the following shall constitute a Default:
(i) the failure by either Party to perform any obligation of such
Party for the payment of money under this Covenant if such failure is not cured within
fifteen (15) calendar days after the nonperforming Party's receipt of written notice from
the other Party that such obligation was not performed when due; or
(ii) the failure by either Party to perform any of its obligations
(other than obligations described in clause (i) of this Section 5.1) set forth in this
Covenant, if such failure is not cured within thirty (30) days or, if such failure is of a
nature that cannot reasonably be cured within thirty (30) days, the failure by such Party to
commence such cure within thirty (30) days and thereafter diligently prosecute such cure
to completion; or
(iii) any material representation or warranty by a Party set forth
in this Covenant proves to have been incorrect in any material respect when made; or
(iv) the Hotel is materially damaged or destroyed by fire or
other casualty during the Operating Period and Owner fails to commence restoration of
the improvements within a reasonable time or thereafter fails to diligently proceed to
complete such restoration in accordance with this Covenant; or
(v) Owner makes any total or partial sale, transfer, conveyance,
assignment, subdivision, or lease of the whole or any part of the Site, the Hotel, and/or
the Agreement or this Covenant without the City's prior written consent, which consent
the City may grant or withhold in its sole and absolute discretion, or if any voluntary or
involuntary successor -in -interest of the Owner acquires any rights or powers under the
Agreement or this Covenant without the City's prior written consent, which consent the
City may grant or withhold in its sole and absolute discretion; or
(vi) Owner refinances any existing construction, permanent, or
other loans encumbering the Site without the City's prior written consent, which consent
the City may grant or withhold in its sole and absolute discretion; or
(vii) Owner, or any Constituent member of Owner, is the subject
of an order for relief for a bankruptcy court, or is unable or admits its inability to pay its
debts as they mature, or makes an assignment for the benefit of creditors; or Owner
applies for or consents to the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer for it or any part of its property; or any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed
without the application or consent of Owner and the appointment continues undischarged
or unstayed for ninety (90) days; or Owner institutes or consents to any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, dissolution, custodianship,
conservatorship, liquidation, rehabilitation or similar proceeding relating to it or any part
of its property; or any similar proceeding is instituted without the consent of Owner and
continues undismissed or unstayed for ninety (90) days; or any judgment, writ, warrant of
attachment or execution, or similar process is issued or levied against the Site and is not
released, vacated, or fully bonded within ninety (90) days after its issue or levy.
(viii) Owner is enjoined or otherwise prohibited by any
governmental agency from occupying the Site during the Operating Period and such
injunction or prohibition continues unstayed for ninety (90) days or more for any reason.
(b) In the event Owner fails to perform any of its obligations under
this Covenant and City sends a notice of such failure to Owner, concurrently therewith City shall
send a copy of such notice to any mortgagee or deed of trust holder with respect to the Site
(herein the "Holder") (the name and address of which Holder shall be furnished by Owner or
such Holder to City) and the Holder shall have the same period of time as is available to Owner
to remedy such breach or failure under this Covenant. City shall accept any proper cure of a
breach or failure tendered by the Holder.
5.2 City's Remedies Upon Default by Owner. Upon the occurrence of any Default by
Owner, and after Owner's receipt of written notice of default and expiration of the time for
Owner to cure such Default as provided in Section 5.1, City may at its option:
(i) suspend the payment of Covenant Payments otherwise due
and payable to Owner hereunder for the period that Owner remains in Default. If City
has so suspended its payments in accordance with the terms of this clause (i), then upon
Owner's cure of such Default, City shall resume its payment obligations, but shall have
no obligation to make payments for any Quarter or portion thereof during which City's
obligation to make payments was so suspended; or
(ii) if the Default continues uninterrupted for a period of six (6)
months, City may terminate this Covenant, in which case City's obligation to make
payments to Owner for any period of time after the occurrence of the Default shall be
finally terminated and discharged.
5.3 Owner's Remedies Upon Default by City. Upon the occurrence of any Default by
City, and after City's receipt of written notice of Default from Owner and expiration of the time
for City to cure such Default as provided in Section 5.1, Owner may terminate this Covenant by
written notice to City and/or seek whatever legal or equitable remedies may be available to
Owner, subject to the provisions of Sections 4.1.5 and 6.5.
5.4 Cumulative Remedies, No Waiver. Except as expressly provided herein, the
nondefaulting Party's rights and remedies hereunder are cumulative and in addition to all rights
and remedies provided by law from time to time and the exercise by the nondefaulting Party of
any right or remedy shall not prejudice such Party in the exercise of any other right or remedy.
None of the provisions of this Covenant shall be considered waived by either Party except when
such waiver is delivered in writing. No waiver of any Default shall be implied from any
omission by City to take action on account of such Default if such Default persists or is repeated.
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No waiver of any Default shall affect any Default other than the Default expressly waived, and
any such waiver shall be operative only for the time and to the extent stated. No waiver of any
provision of this Covenant shall be construed as a waiver of any subsequent breach of the same
provision. A Party's consent to or approval of any act by the other Party requiring further
consent or approval shall not be deemed to waive or render unnecessary the consenting Party's
consent to or approval of any subsequent act. A Party's acceptance of the late performance of
any obligation shall not constitute a waiver by such Party of the right to require prompt
performance of all further obligations. A Party's acceptance of any performance following the
sending or filing of any notice of Default shall not constitute a waiver of that Party's right to
proceed with the exercise of its remedies for any unfulfilled obligations. A Party's acceptance of
any partial performance shall not constitute a waiver by that Party of any rights relating to the
unfulfilled portion of the applicable obligation.
5.5 Limitations on City's Liability. Owner acknowledges and agrees that: (i) this
Covenant shall not be deemed or construed as creating a partnership, joint venture, or similar
association between Owner and City, the relationship between Owner and City pursuant to this
Covenant is and shall remain solely that of contracting Parties, that the development and
operation of the Hotel is a private undertaking, and City neither undertakes nor assumes any
responsibility pursuant to this Covenant to review, inspect, supervise, approve, or inform Owner
of any matter in connection with the development or operation of the Hotel on the Site other than
as expressly provided for herein, including matters relating to architects, designers, suppliers, or
the materials used by any of them; and Owner shall rely entirely on its own judgment with
respect to such matters; provided, that nothing herein is intended to release City from whatever
obligations it may have pursuant to applicable laws independent of this Covenant; (ii) by virtue
of this Agreement, City shall not be directly or indirectly liable or responsible for any loss or
injury of any kind to any person or property resulting from any construction on, or occupancy or
use of, the Site, whether arising from: (a) any defect in any building, grading, landscaping, or
other onsite or offsite improvement; (b) any act or omission of Owner or any of Owner's agents,
employees, independent contractors, licensees, lessees, or invitees; or (c) any accident on the Site
or any fire or other casualty or hazard thereon; and (iii) by accepting or approving anything
required to be performed or given to City under this Covenant, including any certificate, survey,
appraisal, or insurance policy, City shall not be deemed to have warranted or represented the
sufficiency or legal effect of the same, and no such acceptance or approval shall constitute a
warranty or representation by City to anyone.
6. GENERAL PROVISIONS.
6.1 Integration and Amendment. This Covenant and the Agreement constitute the
entire agreement by and between the Parties pertaining to the subject matter hereof, and
supersede all prior agreements and understandings of the Parties with respect thereto. This
Covenant may not be modified, amended, supplemented, or otherwise changed except by a
writing executed by both Parties.
6.2 Captions. Section headings used in this Covenant are for convenience of
reference only and shall not affect the construction of any provisions of this Covenant.
6.3 Binding Effect; Successors and Assigns; Assignments. This Covenant shall run
with the land and shall be binding upon and inure to the benefit of, the Parties hereto and their
respective successors and assigns, as limited by this Section 6.3. Except as such assignment
relates to Holder, the Owner shall not assign, hypothecate, encumber or otherwise transfer its
rights or obligations as set forth in this Covenant without first obtaining the City's written
consent, which may be given or denied or conditioned in the City's sole discretion. Owner may
assign its right to receive the Covenant Payments to any Holder for security purposes. In the
event of an assignment for security purposes to a Holder, City agrees that this Covenant be
subordinated to the lien of said Holder's deed of trust or mortgage and City agrees to cooperate
with Owner in executing an appropriate subordination agreement. In the event that the Holder
forecloses on its deed of trust or mortgage or accepts a deed in lieu of foreclosure, then upon the
request of such Holder or its successor or assignee, City agrees to enter into a new Covenant on
the same terms and conditions set forth herein for the balance of the Operating Period.
In the event of any assignment that is consented to in writing by the City, the references
in this Covenant to "Owner" shall be deemed to refer to the assignee.
6.4 Counterparts. This Covenant may be executed in two or more counterparts, each
of which when so executed and delivered shall be deemed an original and all of which, when
taken together, shall constitute one and the same instrument.
6.5 Legal Actions. This Covenant shall be governed by and construed in accordance
with the internal laws of the State of California without regard to conflict of law principles.
In addition to any other rights or remedies and subject to the restrictions in Section 5,
either Party may institute legal action to seek specific performance of the terms of this Operating
Covenant, or to cure, correct or remedy any default, or to obtain any other legal or equitable
remedy consistent with the purpose of this Covenant. City shall also have the right to pursue
damages for Owner's defaults but in no event shall Owner be entitled to damages of any kind
from City, except for damages for out-of-pocket costs incurred by Owner paid or payable to
attorneys, third party consultants, contractors, and similar parties resulting from nonperformance
by City of its covenants under this Covenant but excluding damages for economic loss, lost
profits, or any other economic or consequential damages of any kind. Such legal actions must be
instituted in the Superior Court of the County of Riverside, State of California, or in the Federal
District Court in the Central District of California. In the event of any litigation between the
parties hereto, the prevailing party shall be entitled to receive, in addition to the relief granted, its
reasonable attorney's fees and costs and such other costs incurred in investigating the action and
prosecuting the same, including costs for expert witnesses, costs on appeal, and for discovery.
6.6 Effect of Violation of the Terms and Provisions of this Covenant. The covenants
established in this Covenant shall, without regard to technical classification and designation, be
binding for the benefit and in favor of the City, its successors and assigns, as to those covenants
which are for its benefit. The covenants contained in this Covenant shall remain in effect for the
periods of time specified therein. The City is deemed the beneficiary of the terms and provisions
of this Covenant and of the covenants running with the land, for and in its own rights and for the
purposes of protecting the interests of the community and other parties, public or private, in
whose favor and for whose benefit this Covenant and the covenants running with the land have
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been provided. The Covenant and the covenants shall run in favor of the City, without regard to
whether the City has been, remains, or is an owner of any land or interest therein in the Site. The
City shall have the right, if the Covenant or covenants are breached, to exercise all rights and
remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to
enforce the curing of such breaches to which it or any other beneficiaries of this Covenant and
covenants may be entitled.
6.7 Force Majeure. Notwithstanding any other provision set forth in this Covenant to
the contrary, in no event shall a Party be deemed to be in Default of its obligations set forth
herein where delays or failures to perform are caused by circumstances without the fault and
beyond the reasonable control of such Party, which circumstances shall include, without
limitation, fire/casualty losses; strikes; litigation; unusually severe weather; inability to secure
necessary labor, materials, or tools; delays of any contractor, subcontractor, or supplier;
unjustified acts or failure to act by City or other governmental agency; litigation by third parties
challenging the validity or enforceability of the Agreement or this Covenant; and acts of God
(collectively, "force majeure"). Adverse market conditions or Owner's inability to obtain
financing or approval to operate the Hotel shall not constitute events of force majeure. In the
event of an event of force majeure, the Party so delayed shall notify the other Party of the
circumstances and cause of the delay within a reasonable time period after commencement of the
delay, it shall keep the other Party informed at reasonable intervals upon request regarding the
status of its efforts to overcome said delay, and it shall exercise commercially reasonable
diligence to perform as soon as practicable thereafter.
6.8 Notices. Notices to be given by City or Owner hereunder may be delivered
personally or may be delivered by certified or registered mail, postage prepaid, or by reputable
overnight delivery service providing a delivery confirmation receipt with time and date of
delivery, with mailed notices to be addressed to the appropriate address(es) hereinafter set forth
or to such other address(es) that a Party may hereafter designate by written notice. If served by
overnight delivery service or certified mail, service will be considered completed and binding on
the Party served on the date set forth in the confirmation or certification receipt.
If notice is to City: City of La Quinta
78-495 Calle Tampico
P.O. Box 1504
La Quinta, CA 92253
Attention: Mr. Tom Genovese, City Manager
with a copy to: City of La Quinta
78-495 Calle Tampico
P.O. Box 1504
La Quinta, CA 92253
Attention: M. Katherine Jenson, City Attorney
and to: Stowell, Zeilenga, Ruth, Vaughn & Treiger LLP
2815 Townsgate Road, Suite 330
Westlake Village, CA 91361
Attention: James D. Vaughn, Esq.
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If notice to Owner: Village Resort, LLC
601 Riverside Avenue
Jacksonville, FL 32204
Attention: Fred Parvey, Managing Member
with a copy to: Christensen, Glaser, Fink, Jacobs, Weil & Shapiro
10250 Constellation Blvd., Nineteenth Floor
Los Angeles, CA 90067
Attention: Timothy B. McOsker, Esq.
and to: Christensen, Glaser, Fink, Jacobs, Weil & Shapiro
10250 Constellation Blvd., Nineteenth Floor
Los Angeles, CA 90067
Attention: Roger H. Howard, Esq.
6.9 Further Acts. Each Party agrees to take such further actions and to execute such
other documents as may be reasonable and necessary in the performance of its obligations
hereunder; reserving to City, however, its lawful discretionary and police power authority.
Without limiting the generality of the foregoing, upon the expiration or termination of the
Operating Period, City will execute and deliver such instruments as may be prepared by Owner
at Owner's expense to release the cloud upon title to the Site created by this Covenant; provided,
however, that any such document shall be in a form reasonably acceptable to the City Attorney
of City.
6.10 Third Party Beneficiaries. With the exception of the specific provisions set forth
in this Covenant for the benefit of Holder, there are no intended third party beneficiaries under
this Covenant and no such other third parties shall have any rights or obligations hereunder
[Remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, the Parties have executed this Covenant to be effective as of
the Effective Date.
ATTEST:
"CITY"
CITY OF LA QUINTA,
a California municipal corporation
Thomas P. Genovese, City Manager
DEBORAH H,POWELL; Interim City Clerk
APPROVED AS TO FORM:
By:
James D. Vaughn, Special Counsel
Stowell, Zeilenga, Ruth, Vaughn & Treiger LLP
APPROVED AS TO FORM:
"VILLAGE RESORT"
VILLAGE RESORT, LLC,
a California limited liability company
Fred Parvey, Managing Member
By:
Timothy B. McOsker, Esq.
Christensen, Glaser, Fink, Jacobs, Weil & Shapiro
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IN WITNESS WHEREOF, the Parties have executed this Covenant to be effective as of
the Effective Date.
ATTEST:
"CITY"
CITY OF LA QUINTA,
a California municipal corporation
Thomas P. Genovese, City Manager
By:
DEBORAH H. POWELL, Interim City Clerk
APPROVED AS TO FORM:
By:
James D. Vaughn, Special Counsel
Stowell, Zeilenga, Ruth, Vaughn & Treiger LLP
,APPROVED AS TO ORM:
!i�
By:
"VILLAGE RESORT"
VILLAGE RESORT, LLC,
a California limited liability company
Fred Parvey, Managing Member
" Timothy B. McOsker, Esq. —1
Christensen, Glaser, Fink, Jacobs, Weil & Shapiro
-15-
STATE OF FLORIDA )
ss
COUNTY OF ' )
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" r before me
personally appeared
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal.
dotary Publir. State of Hod&
Kerry Rukah
i
My C0MM1U-0r1:)1A1003i � � �--.�_-
oF Expires 03r22i200�, Notary Public
[SEAL]
STATE OF CALIFORNIA )
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COUNTY OF
On E, , �t t before me �`� �, < �, i .�v ,��,�
personally appeared r: •. 1 K
personally knowntome (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal.
"_.
RANDY B, NOLIMSi'E�►Li
COMM. # 14�95490
QMY
UOT4RYPu8llC•CAItFt�RMR Notary Public �
Venture Canattyy
COMM, Expires r IRfLH,2CC8
[SEAL]
-16-
STATE OF FLORIDA
COUNTY OF
On
personally appeared
ss
before me,
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/sh ey executed the same in his/hefAheir authorized capacity(ies), and that by his/herAheir
signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal.
Notary Public
STATE OF CALIFORNIA )
4 ) ss
COUNTY OF, L 1
On
personally appeared 111 L J,
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
persons whose name($) is/are, subscribed to the within instrument and acknowledged to me that
he/4w/they executed the same in his/l Jthoir authorized capacity(ics), and that by his/hex/their
signature(s) on the instrument the person(j) or the entity upon behalf of which the personN)
acted, executed the instrument.
Witness my hand and official seal.
•Notary PWic
r t al 9
-16-
EXHIBIT "A"
LEGAL DESCRIPTION OF SITE
PARCEL 6 OF PARCEL MAP 29909, IN THE CITY OF LA QUINTA,
COUNTY OF RIVERSIDE, AS PER MAP RECORDED IN BOOK 200, PAGES
84 AND 85 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY
RECORDER.
AMENDMENT NO.1 TO AGREEMENT TO SHARE
TRANSIENT OCCUPANCY TAX REVENUE
This AMENDMENT NO.1 TO AGREEMENT TO SHARE TRANSIENT
OCCUPANCY TAX REVENUE ("Amendment No. 1") is entered into this :k3 day of
aufsuS`f , 2012 ("Amendment No. 1 Effective Date"), by and between the CITY OF LA
QUINTA, a California municipal corporation and charter city ("City'), and VILLAGE
RESORT, LLC, a California limited liability company ("Village Resort') (individually a "Party"
and collectively the "Parties").
RECITALS
A. On or about August 31, 2006, City and Village Resort entered into that certain
Agreement to Share Transient Occupancy Tax Revenue, pursuant to which the City agreed to
make certain periodic payments to Village Resort to assist Village Resort to operate a hotel at
50-777 Santa Rosa Plaza, in the City of La Quints (the "Agreement'). Unless otherwise
specified herein, all capitalized terms not defined herein shall have the meanings ascribed thereto
in the Agreement.
B. Pursuant to the Agreement, City and Village Resort entered into that certain
Covenants, Conditions, and Restrictions Affecting Interests in Real Property, which was
recorded on October 24, 2006, as Instrument No. 2006-0781811, in the Official Records of the
County of Riverside (the "Covenant Agreement").
C. The Covenant Agreement provided that the City's obligation to make payments
to Village Resort would terminate on the earliest of (i) September 26, 2011, (ii) the date that the
City has paid to Village Resort the sum of One Million Dollars ($1,000,000), which amount is
identified in the Covenant Agreement as the "Covenant Payments Cap Amount," or (iii) the date
the Covenant Agreement is terminated by City pursuant to any of Sections 2, 5.2, or 5.3 thereof.
D. As of the initial termination date of September 26, 2011, and as of the
Amendment No. 1 Effective Date, City's payments to Village Resort have not reached the
Covenant Payments Cap Amount. Village Resort has requested that the City reinstate this
Agreement and the Covenant Agreement, and extend the Covenant Agreement for one (1)
additional year, until October 31, 2012. Village Resort has informed the City that in the absence
of said reinstatement and extension Village Resort may be unable to operate the Hotel during the
summer months of 2012.
E. The City is willing to agree to the requested reinstatement and one-year extension
(the "Extension Year"), subject to (i) the Covenant Payments Cap Amount, which amount shall
(a) remain at One Million Dollars ($1,000,000), (b) apply to all payments made to Village Resort
pursuant to the Covenant Agreement, including, without limitation, payments made with respect
to operations occurring prior to the date of this Amendment No. 1, and (ii) subject to the terms
and conditions of this Amendment No. 1.
F. By its approval of this Amendment No. 1, the City Council of City has found and
determined as follows: (i) that the value to the City of Village Resort's continued performance
143532
-1-
of its obligations set forth in the Covenant Agreement during the Extension Year (in terms of
economic revitalization, generation of additional local tax revenues that will help to fund vital
public services, provision of expanded and more accessible hotel guest rooms and related
amenities for persons wishing to visit the City for business or pleasure, and job growth and
retention) will be not less than the amount of the payments to be made by City with respect to
said Extension Year; and (ii) that the continued imposition of the covenants and use restrictions
upon the Site pursuant to the Covenant Agreement, in exchange for the payments to be made by
City with respect to the Extension Year, constitutes a valid public purpose.
COVENANTS
Based upon the foregoing Recitals, which are incorporated herein by this reference, and
for other good and valuable consideration, the receipt and sufficiency of which is acknowledged
by both Parties, City and Village Resort hereby reinstate the Agreement and further agree as
follows:
1. Execution and Recordation of Amendment No 1 to Covenant Agreement.
Concurrently with City's and Village Resort's execution of this Amendment No. 1, Village
Resort shall fill in the blanks, date, and execute, with signatures notarized, an amendment to the
Covenant Agreement substantially in the form attached hereto and incorporated herein as Exhibit
"A" ("Amendment No. 1 to Covenant Agreemem'), and Village Resort shall record Amendment
No. 1 to Covenant Agreement against the Site and provide a copy of the recorded Amendment
No. 1 to Covenant Agreement to City. City agrees to cooperate in the recordation of
Amendment No. 1 to Covenant Agreement against the Site, at no cost to City, and the City
Manager or his or her designee is hereby authorized on behalf of City to execute all documents
and take all actions necessary or appropriate to implement this Amendment No. 1.
2. R_,pe resentation and Warranty Reg ding Hotel. Village Resort represents and
warrants to the City that (i) Village Resort continues to retain the necessary rights to operate the
Hotel under the flagship name "Embassy Suites," (ii) Village Resort is not in default of any of its
obligations under its franchise and/or loan documents and agreements, and (iii) Village Resort is
current in its reporting and payment of the City's Transit Occupancy Tax (as defined in the
Covenant Agreement) through at least April 30, 2012.
3. Effectiveness of Agreement. Except as otherwise expressly provided in this
Amendment No. 1, all of the terms and conditions of the Agreement, including, without
limitation, Village Resort's obligations thereunder, shall remain in full force and effect.
4. Attorney's Fees. In the event of any action between City and Village Resort
seeking enforcement of any of the terms and conditions of this Amendment No. 1, the prevailing
Party in such action shall be awarded, in addition to the relief granted, its reasonable costs and
expenses, including without limitation its expert witness fees and reasonable attorrey's fees.
5. Intermywdon. This Amendment No. 1 shall be construed according to its fair
meaning and as if prepared by both Parties hereto.
6. Governing Law. Any legal action with respect to this Amendment No. 1 shall be
subject to the requirements and limitations set forth in Section 10 of the Agreement.
143532
EPAI
7. Time of Essence. Time is of the essence of this Amendment No. 1 and of each
and every term and provision hereof.
8. Counterparts. This Amendment No. I may be executed in counterparts, each of
which, when this Amendment No. 1 has been signed by all the Parties hereto, shall be deemed an
original, and such counterparts shall constitute one and the same instrument.
9. Authori The person(s) executing this Amendment No. 1 on behalf of each of
the Parties hereto represent and wan -ant that (i) such Party is duly organized and existing, (ii)
they are duly authorized to execute and deliver this Amendment No. 1 on behalf of said Party,
(iii) by so executing this Amendment No. 1 such Party is formally bound to the provisions of this
Amendment No. 1, and (iv) the entering into this Amendment No. 1 does not violate any
provision of any other agreement to which such Party is bound.
IN WITNESS WHEREOF, City and Village Resort have executed this Amendment No. I
to be effective as of the date first set forth above.
"City"
CITY OF LA QUINTA,
a California municipal cgs
Date: 91 Z3 2012 y _
Frank J. Sp�va ek, City Manager
ATTEST:
11
Susan Maysels, City Clerk;
APPROVED AS T F
';'
B:
Y
es D. Vau Special Counsel
ell, Zeilenga, uth, Vaughn & Treiger LLP
143532
-3-
Date: J �) 2012
143532
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`Village Resort"
VILLAGE RESORT, LLC, a California
limited liability company
By: Ai / —
Al Stinson, President
EXHIBIT "A"
AMENDMENT NO. I TO COVENANT AGREEMENT
[See following document]
143532
EXHBIT "A"
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of La Quinta
P.O. Box 1504
La Quinta, CA 92247
Attn: City Clerk
[SPACE ABOVE FOR RECORDER.)
ExEMPT FROM RECORDER'S FEE PER GOV. CODE §27383
AMENDMENT NO. I TO COVENANTS, CONDITIONS, AND
RESTRICTIONS AFFECTING INTERESTS IN REAL PROPERTY
This AMENDMENT NO. 1 TO COVENANTS, CONDITIONS, AND RESTRICTIONS
AFFECTING INTERESTS IN REAL PROPERTY ("Amendment No. 1') is entered into as of
this 7-3 day of Ay&usT , 2012 ("Amendment No. 1 Effective Date"), by and between the
CrrY OF LA QUINTA, a California municipal corporation and charter city ("City'), and
VILLAGE RESORT, LLC, a California limited liability company ("Owner') (individually a
"Party" and collectively the "Parties").
RECITALS
A. On or about September 26, 2006, Owner and the City executed that certain
Covenants, Conditions, and Restrictions Affecting Interests in Real Property, which was
recorded against the real property identified therein as the "Site" on October 24, 2006, as
Instrument No. 2006-0781811, in the Official Records of the County of Riverside (the
"Covenant Agreement'). All terms not otherwise defined herein shall have the meanings
ascribed thereto in the Covenant Agreement.
B. Prior to the execution of the Covenant Agreement, City and Owner entered into
that certain unrecorded Agreement to Share Transient Occupancy Tax Revenue (the
"Agreerent') which provided for the recordation of the Covenant Agreement against the Site.
C. Pursuant to the Covenant Agreement and Agreement, City agreed to make certain
payments to Owner, the amount of which were to be measured by the Transient Occupancy Tax
generated by the operation of the Hotel on the Site during the Operating Period. The Covenant
Agreement provided that the City's obligation to make payments to Owner would terminate on
the earliest of (i) September 26, 2011, (ii) the date that the City has paid to Owner the Covenant
Payments Cap Amount, or (iii) the date the Covenant Agreement is terminated by City pursuant
to any of Sections 2, 5.2, or 5.3 thereof.
D. As of the initial termination date of September 26, 2011, the City's payments to
Owner had not reached the Covenant Payments Cap Amount. Owner has requested that the City
reinstate the Agreement and the Covenant Agreement, and extend the Covenant Agreement for
one (1) additional year, until October 31, 2012, subject to the Covenant Payments Cap Amount.
City and Owner have negotiated an amendment to the Agreement that would provide for such
reinstatement and extension, subject to the Covenant Payments Cap Amount (Amendment No. 1
143532
-1-
to Agreement'). Concurrently with the execution hereof, City and Owner are executing
Amendment No. 1 to Agreement.
E. City and Owner now wish to make conforming revisions to the Covenant
Agreement, subject to the terms and conditions of this Amendment No. 1.
F. City and Owner have agreed that the portion of Transient Occupancy Tax
required to be paid by City to Owner hereunder during each additional Quarter of the Operating
Period provided for by this Amendment No. 1 is a fair exchange for the consideration to be
famished by Owner to City in that Quarter.
COVENANTS
Based upon the foregoing Recitals, which are incorporated herein by this reference, and
for other good and valuable consideration, the receipt and sufficiency of which is acknowledged
by both Parties, City and Owner hereby reinstate the Covenant Agreement and amend the
Covenant Agreement as follows:
1. Revised Termination Date. The definition of the term "Termination Date" in
Section 1 of the Covenant Agreement is hereby revised to replace the Phrase "(i) the date that is
five (5) years following the Commencement Date," with the date: "(i) October 31, 2012".
2. No Change to Covenant Payments Cap Amount. Owner acknowledges and
agrees that the Covenant Payments Cap Amount (i) is not changed by this Amendment No. 1, (ii)
remains at One Million Dollars ($1,000,000), (iii) applies to all payments made to Owner with
respect to Owner's operation of the Hotel during the entire Operating Period, as the Operating
Period has been extended pursuant to this Amendment No. 1.
3. Operating Covenant. During the remainder of the Operating Period, as the
Operating Period has been extended by this Amendment No. 1, Owner covenants and agrees to
continuously operate the Hotel on the Site (subject to temporary interruptions for casualty losses,
repairs, and the like, provided, however, that no such interruptions shall continue for more than
five (5) days without the City's prior written consent, which consent may be withheld in City's
sole and absolute discretion). Owner's failure to comply with the requirements of this Section 3,
after written notice by the City and expiration of a 30 day cure period, shall constitute a Default
under the Covenant Agreement. Notwithstanding Section 5.2(u) of the Covenant Agreement to
the contrary, upon the occurrence of such a Default, City may terminate the Covenant Agreement
and this Amendment No. 1 by providing written notice thereof to Owner.
4. Extended Covenant Payments. Within fifteen (15) days of recordation of this
Amendment No. 1, City shall pay Owner the Covenant Payments for the period September 27,
2011 through December 31, 2011. For the remainder of the extended term of the Covenant
Agreement, City shall make the Covenant Payments within thirty (30) days after the Transient
Occupancy Tax for the Hotel is reported and remitted to the City by Owner for the final month in
each quarter, consistent with the terms of Section 4 of the Covenant Agreement.
5. Effectiveness of Agreement. Except as otherwise expressly provided in this
Amendment No. 1, all of the terms and conditions of the Covenant Agreement, including,
143532
-2-
without limitation, Owner's and City's obligations thereunder, shall remain in full force and
effect.
6. Attomey's Fees. In the event of any action between City and Village Resort
seeldng enforcement of any of the terms and conditions to this Amendment No. 1, the prevailing
Party in such action shall be awarded, in addition to the relief granted, its reasonable cests and
expenses, including without limitation its expert witness fees and reasonable attorney's fees.
7. Interpretation. This Amendment No. 1 shall be construed according to its fair
meaning and as if prepared by both Parties hereto.
8. Governing Law. Any legal action with respect to this Amendment No. 1 shall be
subject to the requirements and limitations set forth in Section 6.5 of the Covenant Agreement.
9. Time of Essence. Time is of the essence of this Amendment No. I and of each
and every term and provision hereof.
10. Counterparts. This Amendment No. 1 may be executed in counterparts, each of
which, when this Amendment No. 1 has been signed by all the Parties hereto, shall be deemed an
original, and such counterparts shall constitute one and the same instrument.
11. Authority. The person(s) executing this Amendment No. 1 on behalf of each of
the Parties hereto represent and warrant that (i) such Party is duly organized and existing, (ii)
they are duly authorized to execute and deliver this Amendment No. 1 on behalf of said Party,
(iii) by so executing this Amendment No. 1 such Party is formally bound to the provisions of this
Amendment No. 1, and (iv) the entering into this Amendment No. 1 does not violate any
provision of any other agreement to which such Party is bound.
[End - Signature page follows]
143532
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IN WITNESS WHEREOF, the Parties have executed this Amendment No. l to be
effective as of the Amendment No. 1 Effective Date.
Date: 3 2012
ATTEST.:
By:
Susan Maysels, City Clerk
0
AS
pecial Counsel
Vaughn & Treiger LLP
S F NEW CALIF.
et _FORW,,
ATTACHED 3. X,
Date: V. 2012
"City"
CITY OF LA QUINTA,
Frank J.
"der„
Village Resort"
City Manager
VILLAGE RESORT, LLC, a California
limited liability company
By. `N// .
Al Stinson, President
143532
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State of C^alifefaia /K )
County of Riverside P -fxt s 7
On 7/ZLol "I Zi before me, �ti✓1 � .Gi • �QI G(N lW
J. I I (inset name and tide of the officer)
Notary Public, personally appeared ft l to G. J 6`+Jr _
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)i /are
sub •bed to the within instrument and aclmowledg to me thatd?Se he/they executed the same
iner/their authorized capacity(ies), and that by iw er/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
oaw
RENAM SAUNTER
NOTARY PUBLICfor tM�/to MontanaSignature ResidU'& ispeli, Montana
My Com ssion Expires
September 22, 2012 ,
State of California
County of Riverside
On before me,
(loses tmme and Utb of she olrtca)
Notary Public, personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and aclmowledged to me that he/shelthey executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(Seal)
143532
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State of California
County of Riverside
On August 23, 2012, before me, SUSAN MAYSELS, Notary Public,
personally appeared FRANK J. SPEVACEK who proved to me on the basis of
satisfactory evidence to be the person whose name is .subscribed to the
within instrument, and.acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the
instrument.
I certify under PENALTY OF PERJURY under the laws of the State of
California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal. wYwwwYww
WTMY
iuuCo►
Signature Gamin man Ma
(seal)
DOCUMENT:
AMENDMENT NO. 1 TO COVENANTS, CONDITIONS, AND RESTRICTIONS
AFFECTING INTERESTS IN REAL PROPERTY between City of LQ & Village
Resort, LLC dated 8/23/2012
ACKNOWLEDGMENT
State of California
County of Los Angeles )
On August 16, 2012 before me, John P. Tata - Notary Public
(insert name and title of the officer)
personally appeared James D. Vaughn---------------------------------- ,
who proved to me on the basis of satisfactory evidence to be the person( ) whose name( War
subscribed to the within instrument and acknowledged tom that he/sh� he�i executed the same in
his/h+tft "qr authorized capacity(ie�), and that by his/hkr/th fir signature() ofj the instrument the
person( ), or the entity upon behal of which the person() acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
TA
WITN and official seal. W. #1B P. 37
t�rrxr. >11823738
WMtAwPPOW ee
IN,Cpsn Fm6a Nw. Y1. 301!
Signature (Seal)
LEGAL DESCRIPTION OF SITE
PARCEL 6 OF PARCEL MAP 29909, IN THE CITY OF LA QUINTA,
COUNTY OF RIVERSIDE, AS PER MAP RECORDED IN BOOK 200, PAGES
84 AND 85 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY
RECORDER.
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of La Quinta
P.O. Box 1504
La Quinta, CA 92247
Attn: City Clerk
DOC # 2012-0418940
09/04/2012 08:00A Fee:NC
Page r of 8
Recorded in Official Records
County of Riverside
Larry W. Ward
Assessor, County Clerk $ Recorder
I IIIIII �IIIIII IIIII IIII IIII IIIII i�l�ll III IIII IIII If�l
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465
426
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CTY!UINI
EXEMPT FROM RECORDER'S FEE PER GOV. CODE §27383 U
AMENDMENT NO.1 TO COVENANTS, CONDITIONS. AND
XM
RESTRICTIONS AFFECTING INTERESTS IN REAL PROPERTY
This AMENDMENT NO. 1 TO COVENANTS, CONDITIONS, AND RESTRICTIONS
AFFECTING INTERESTS IN REAL PROPERTY ("Amendment No. 1") is entered into as of
this I3 day of AtA&UST , 2012 ("Amendment No. 1 Effective Date"), by and between the
CITY OF LA QUINTA, a California municipal corporation and charter city ("City'), and
VILLAGE RESORT, LLC, a California limited liability company ("Owner') (individually a
"Party" and collectively the "Parties").
RECITALS
A. On or about September 26, 2006, Owner and the City executed that certain
Covenants, Conditions, and Restrictions Affecting Interests in Real Property, which was
recorded against the real property identified therein as the "Site" on October 24, 2006, as
Instrument No. 2006-0781811, in the Official Records of the County of Riverside (the
"Covenant Agreemenfl. All terms not otherwise defined herein shall have the meanings
ascribed thereto in the Covenant Agreement.
B. Prior to the execution of the Covenant Agreement, City and Owner entered into
that certain unrecorded Agreement to Share Transient Occupancy Tax Revenue (the
"Agreement") which provided for the recordation of the Covenant Agreement against the Site.
C. Pursuant to the Covenant Agreement and Agreement, City agreed to make certain
payments to Owner, the amount of which were to be measured by the Transient Occupancy Tax
generated by the operation of the Hotel on the Site during the Operating Period. The Covenant
Agreement provided that the City's obligation to make payments to Owner would terminate on
the earliest of (i) September 26, 2011, (ii) the date that the City has paid to Owner the Covenant
Payments Cap Amount, or (iii) the date the Covenant Agreement is terminated by City pursuant
to any of Sections 2, 5.2, or 5.3 thereof.
D. As of the initial termination date of September 26, 2011, the City's payments to
Owner had not reached the Covenant Payments Cap Amount. Owner has requested that the City
reinstate the Agreement and the Covenant Agreement, and extend the Covenant Agreement for
one (1) additional year, until October 31, 2012, subject to the Covenant Payments Cap Amount.
City and Owner have negotiated an amendment to the Agreement that would provide for such
reinstatement and extension, subject to the Covenant Payments Cap Amount (Amendment No. 1
143532
-1-
to Agreement'). Concurrently with the execution hereof, City and Owner are executing
Amendment No. 1 to Agreement.
E. City and Owner now wish to make conforming revisions to the Covenant
Agreement, subject to the terms and conditions of this Amendment No. 1.
F. City and Owner have agreed that the portion of Transient Occupancy Tax
required to be paid by City to Owner hereunder during each additional Quarter of the Operating
Period provided for by this Amendment No. 1 is a fair exchange for the consideration to be
furnished by Owner to City in that Quarter.
COVENANTS
Based upon the foregoing Recitals, which are incorporated herein by this reference, and
for other good and valuable consideration, the receipt and sufficiency of which is acknowledged
by both Parties, City and Owner hereby reinstate the Covenant Agreement and amend the
Covenant Agreement as follows:
1. Revised Termination Date. The definition of the term "Termination Date" in
Section 1 of the Covenant Agreement is hereby revised to replace the Phrase "(i) the date that is
five (5) years following the Commencement Date," with the date: "(i) October 31, 2012".
2. No Change to Covenant Poments Cap Amount. Owner acknowledges and
agrees that the Covenant Payments Cap Amount (i) is not changed by this Amendment No. 1, (ii)
remains at One Million Dollars ($1,000,000), (iii) applies to all payments made to Owner with
respect to Owner's operation of the Hotel during the entire Operating Period, as the Operating
Period has been extended pursuant to this Amendment No. 1.
3. Operating Covenant. During the remainder of the Operating Period, as the
Operating Period has been extended by this Amendment No. 1, Owner covenants and agrees to
continuously operate the Hotel on the Site (subject to temporary interruptions for casualty losses,
repairs, and the like, provided, however, that no such interruptions shall continue for more than
five (5) days without the City's prior written consent, which consent may be withheld in City's
sole and absolute discretion). Owner's failure to comply with the requirements of this Section 3,
after written notice by the City and expiration of a 30 day cure period, shall constitute a Default
under the Covenant Agreement. Notwithstanding Section 5.2(ii) of the Covenant Agreement to
the contrary, upon the occurrence of such a Default, City may terminate the Covenant Agreement
and this Amendment No. 1 by providing written notice thereof to Owner.
4. Extended Covenant Payments. Within fifteen (15) days of recordation of this
Amendment No. 1, City shall pay Owner the Covenant Payments for the period September 27,
2011 through December 31, 2011. For the remainder of the extended tern of the Covenant
Agreement, City shall make the Covenant Payments within thirty (30) days after the Transient
Occupancy Tax for the Hotel is reported and remitted to the City by Owner for the final month in
each quarter, consistent with the terns of Section 4 of the Covenant Agreement.
5. Effectiveness of Agreement. Except as otherwise expressly provided in this
Amendment No. 1, all of the terms and conditions of the Covenant Agreement, including,
143532
-2-
without limitation, owner's and City's obligations thereunder, shall remain in fall force and
effect.
6. Attomey's Fees. In the event of any action between City and Village Resort
seeking enforcement of any of the terms and conditions to this Amendment No. 1, the prevailing
Party in such action shall be awarded, in addition to the relief granted, its reasonable costs and
expenses, including without limitation its expert witness fees and reasonable attorney's fees.
7. hrteroretation. This Amendment No. 1 shall be construed according to its fair
meaning and as if prepared by both Parties hereto.
8. Govemine L.aw. Any legal action with respect to this Amendment No. 1 shall be
subject to the requirements and limitations set forth in Section 6.5 of the Covenant Agreement.
9. Time of Essence. Time is of the essence of this Amendment No. 1 and of each
and every term and provision hereof.
10. Counterparts. This Amendment No. 1 may be executed in counterparts, each of
which, when this Amendment No. 1 has been signed by all the Parties hereto, shall be deemed an
original, and such counterparts shall constitute one and the same instrument.
11. Authority. The person(s) executing this Amendment No. 1 on behalf of each of
the Parties hereto represent and warrant that (i) such Party is duly organized and existing, (ii)
they are duly authorized to execute and deliver this Amendment No. 1 on behalf of said Party,
(iii) by so executing this Amendment No. 1 such Party is formally bound to the provisions of this
Amendment No. 1, and (iv) the entering into this Amendment No. 1 does not violate any
provision of any other agreement to which such Parry is bound.
[End — Signature page follows]
143532
.3-
IN WITNESS WHEREOF, the Parties have executed this Amendment No. 1 to be
effective as of the Amendment No. 1 Effective Date.
Date: 3 2012
ATTEST: Kl,,y,d�
Susan Maysels,'.. City Clerk
AS
Special Counsel
►, Vaughn & Treiger LLP
S�E NE"Vk] CALIF.
--Aeis_FORK,
ATI TACAIED J. A,
v Date:`' 2012
"City"
CITY OF LA QUINTA,
a California municipal cw:
i Frank J. Sp6vac�O City Manager
"Owner"
Village Resort"
VILLAGE RESORT, LLC, a California
limited liability company
By:
Al Stinson, President
143532
-4-
State of C- Wernia /6 'Pk -
County of Riverside P44"L-;7
On 7�L(D�?iD/7✓ before me,
A „ (meat name and tide of the officer)
Notary Public, personally appeared 1t/• f-
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s&are
sub bed to the within instrument and acknowledg to me thatt�eillhe/they executed the same
iu= their authorized capacity(ies), and that by i er/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
?,.M 6gyM RENAM SAUNIcR
J ��2ojnrtry Fy NOTARY PUBLICforthe
(r/v/ to Montana
SEAL Residu ispell, Montana
Slgmature -- �y� My Commission Expires
W f September 22, 2012
State of California
County of Riverside
On before me,
(meat name ad tide of the office)
Notary Public, personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(Seal)
143532
State of California
County of Riverside
On August 23, 2012, before me, SUSAN MAYSELS, Notary Public,
personally appeared FRANK J. SPEVACEK who proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the
within instrument, and.acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the
instrument.
I certify under PENALTY OF PERJURY under the laws of the State of
California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal. �"""
NO"""�SUSAN IIAAYSELS
COAApA. #I W79 se
N0T RNERSAI�Cion �RMNSignatureCgmOnEi iresAPR132013+
(seal)
DOCUMENT:
AMENDMENT NO. 1 TO COVENANTS, CONDITIONS, AND RESTRICTIONS
AFFECTING INTERESTS IN REAL PROPERTY between City of LQ & Village
Resort, LLC dated 8/23/2012
ACKNOWLEDGMENT
State of California
County of Los Angeles )
On August 16, 2012 before me, John P. Tata - Notary Public
(insert name and title of the officer)
personally appeared James D. Vaughn ---------------------------------------------
)e proved to me on the basis of satisfactory evidence to be the person() whose name( is/ark
subscribed to the within instrument and acknowledged tom that he/sto hey executed the same in
his/he}tt�e�r authorized capacity(iet), and that by his/h�r/th jir signature() oj� the instrument the
person( ), or the entity upon behal of which the person() acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
JOHN P. TATA
Z:TD
COMM.l1823738
�iwv Peat • CkWOR"
Los ♦1N IXES CooaTT
MY Comm. Ewirat Nov. 21. 201!
(Seal)
LEGAL DESCRIPTION OF SITE
PARCEL 6 OF PARCEL MAP 29909, IN THE CITY OF LA QUINTA,
COUNTY OF RIVERSIDE, AS PER MAP RECORDED IN BOOK 200, PAGES
84 AND 85 OF PARCEL MAPS, IN 'THE OFFICE OF THE COUNTY
RECORDER.