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Home My WebLink About2007-061305� JULIE RODEWA( , San Luis Obispo Coum�pc Clerk/Recorder flecorded at the request of Public 8N � 9/11/2007 10:04 AM �oc#: 2007061305 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of Arroyo Grande P.O. Box 550 214 East Branch Street Arroyo Grande, CA 93420 Attention: City Clerk I IIII II Tdles: 1 Pages: 1 ] Fees 0.00 Taxes 0.00 Others 0.00 PAID $0.00 [Space above for Recorder.] (Exempt t'rom Recordation Fee per Gov. Code $ 2T83) J DECLARATION OF COVENANTS CONDITIONS. AND RESTRICTIONS AFFECTING INTERESTS IN REAL PROPERTY This DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS AFFECTING INTERESTS IN REAL PROPERTY ("Covenant°) is entered into as of this YZn day of NovEmBER , 200 b, by and between the CITY OF ARROYO GRANDE, a California general law city and municipal corporation ("City"), and ARROYO HOTEL, LLC, a Califomia limited liability company ("Owner") (individually a"Party" and collectively the "Parties"). RECITALS A. Owner is the owner of that certain real property located generally at 1400 West Branch Street, in the City of Arroyo Grande, County of San Luis Obispo, 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. On or about November �}, 2006, City and Owner entered into that certain unrecorded agreement captioned "Agreement to Enter Into Covenant to Operate and Pay Compensation Based on Transient Occupancy Tax Revenue [Hampton Inn & Suites)" (the "AgreemenY') authorizing the recordation of this Covenant against the Site upon the timely satisfaction of the "Covenant Conditions" identified therein. C. Subject to the terms and conditions hereof, Owner has agreed to de��elop and operate a Hampton Inn and Suites Hotel on the Site. D. In consideration for Owner's encumbrance of the Site by this Covenant and Owner's performance of its obligations hereunder, City has agreed to make certain payments to Owner, the amount of which is measured by the Transient Occupancy Tax generated by the Hampton Hotel and received by the City from other Transient Occupancy Tax payors in the City above a Threshold Amount. City and Owner have agreed that the amounts required to be paid by City to Owner hereunder during each Year of ffie Operating Period provided for herein is a fair exchange for the consideration to be furnished by Owner to City in that Year. 1072/0'_46(10-(HNII '/595tG U? al?/11/OG � � COVENANTS Based upon the foregoing Recitals, which are incorporated herein by this reference and are acknowledeed by the Parties as true and correct, 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: DEFINED TERMS. The following terms when used in this Covenant shall have t6e meanings set forth below: The term "AgreemenY' shall have the meaning ascribed in Recital B of this Co��enant. The term "Annual Reimbursement Cap Amount' shall have the meaning ascribed in Sectiai -4.1.1(b). The term "Commencement Date" shall have the meaning ascribed in Section 2 of this Covenant. The term "Corporate Successor" shall mean (i) any ent'ity H�hich is controlled by or under common control ��ith Owner, or (ii) any successor by merger, acquisition or corporate reorganization of O«�ner and that ��ill operate a facility similar in size. operation. transient occupancy ��olume and all other material aspects to the Hampton Hotel (as defined below) on the Site. The term `'Covenant Payments � shall mean the amounts to be paid by City to O��ner � ith respect to each tweh�e-month period during the Operatine Period for which a Covenant Pa� ment is due and payabie. 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. 7�he term "Effective Date" shall mean the date this Covenant is executed by the latter of the t�vo Parties to sign, which date shall be inserted in the preamble to this Covenant. The term "Force Majeure" is defined in Section 6.4 below. 7 term "Han�pton Hotel" shall refer to the specified hotel use authorized by the Land Use Approvals approved by tlte City in or about June 2006 permitting the Site to be developed, constructed and operated with the Hampton Hotel and related permitted uses. The term "Holder" shall have the meaning ascribed in Section 5.1(b) of this Covenant. The term "Land Use Approvals" shall mean those discretionary land use entitlements approved by the City in or about June 2006 permitting the Site to be developed, constructed and operated as an approximate ] 04-room hotel. imaio�aeoa000i 7595iG.0? al I/I(,/OG �2 �.. .� 7he tenn "Operate' or "Operatioii � means not less than eight�� percent (SO%) of the hotel rooms in the Hampton Hotel are available for transient occupancy to the general puMic e�cept for such reasonable interruptions as ma�� be incidental to the conduct of its business. The tenn "Operating Period" refers to the period beh�een the Commencement Date and the Termination Date. The tenn "Permitted Assignee" means a"Corporate Successor to O��ner. The temi "Permitted Closure' means periods of Force Majeure and such period or periods aegreeating up to not more than one (1) cear associated �� ith any reno��ation of the Site. The term "Site' shall ha�e the meanin� ascribed in Recital A of this Co�enant. The term "Termination Date° shall mean the date that is the earliest of (i) the date that is live (�) ��ears follo�+ing the Commencement Date: (ii) the date tl�at the Covenant Pa�ments Cap Amount is paid in full; or (iii) the date on �chich this Co��enant is tenninated pursuant to Sections �.2 or �.3, as applicable. The tenn "Transieni Occupancy Ta�° shall mean tases recei��ed by and paid to the City pursuant to Arro� o Grande 1�9unicipal Code chapter 3?4. ?. CONDITION TO O�� NER�S R)GHT TO RECEIVE COVENANT PAYMENTS. 3.1 Openin� Date: Commencement Date. As a condition precedent to O��'ner�s right to recei�-e the Co��enant Pa}•ments. O�� ner shall open or cause said Hampton Hotel to be opened for business to the public (e�cludine any "pre-opening" periods or similar special periods) not later than the Outside Date defined in Section 2?. aIl in compliance �cith the Land Use Appro��als. The date on �chich the aforesaid condition is satisfied shall constitute the °Commencement Date." at �rhich time O�tner�s oblieations pursuant to Section 3 of this Co�enant and Cit��'s obligations pursuant to Section 4 of this Covenant. to the e�tent applicable. shall commence. O�rner shall notify the Cit� in ��riting of the Commencement Date and City shall confinn its agreement to the Commencement Date in �+riting. The Parties' ��ritten confirmation of the Commencement Date shall be deemed part of this Co�enant and incorporated herein. 2.2 Outside Date. Not��ithstanding any other pro��ision set forth in this Co��enant. and subject to eztension for events of force majeure as pro��ided in Section 6.4, if the condition set forth in the first sentence of the precedin¢ paragraph is not satisfied on or before the date that is eighteen (18) months afrer the execution ofthe Aereement ("Outside Date'), this Co�-enant shall automaticall�� terminate and in such e��ent. neither Party shall have any furiher rights aeainst or obligations to the other Party arising out of this Co�enant, except for O�+ners indemnity obliaations set forth in Section 3.6 ��liich shall sun�i��e die tennination of this Co��enant. 2.3 Operatin� Condition. ]f O��•ner or a Pennitted Assignee ceases to operate the Hampton Hotel on the Site other than by reason of a Permitted Closure, U�en this Agreement shall tenninate as of the date such Operation is discontinued (other than by reason of a Pennitted Closure) and no further payments by City shall be due under Section 4.1. iu�3:nla��on_nom �cqs�r, u� :�i in7ion -�- v 3. 0��1R�lER'S OBLIGATIONS. ..� 3.1 Continuous Oaeration_ Site As Point of Sale. O��•ner covenants and a�srees to continuously operate the Hampton Hotel on the Site. or to cause said Hampton Hotel to be continuously operated on the Site, during normal business hours (except for Permitted Closures) during the entire Operating Period. O�vner co�enants and agrees to report to the arplicable �_o��ernment authority, or cause the reporting of to the applicable go�'ernmental authorih-. all transient occupancy, sales, and use taxes from occupanc�, sales. and use occurrinc on ihe Site as beine generated from the Site. 3.? Use Restriction. During the entire Operating Period. the Site shall not be put to any use other than the operation of the Hampton Hotel and incidental related uses that crnnply �� ith the Land Use Entitlements and applicable pro��isions of City"s I�4unicipal Code. 3.3 1�laintenance and Repair of Site: Landscapine. During the entire Operatin�_ Period. O�tner, at its sole cost and ezpense, shal] keep and maintain the Site and the impro� ements thereon and all facilities appurtenant thereto in first class condition (as judged b�� other de�elop�uents of similar quality located in Santa Barbara and San Luis Obispo counties) and keep free from accumulations of debris. ��eeds, eraffiti, and ��aste materials. ��ith landscaping in a healthy condition. and shall other��ise f�ll�� compl�� 'ith the Site's landscape and maintenance standards established in the Land Use Appro��als and nlunicipal Code. Din'ine such period. O�rner shall not abandon any ponion of the Site or lea�e the Site un�uarded or unprotected. and shall not other��ise act or fail to act in such a��ay as to unreasonabl�• increase the risk of am� damace to the Site or of anv other impainnent of City's interest set forth in this Co� enant. ;.4 Comvliance �cith La"s. During the entire Operatine Period. O�cner shall cunsuuct and operate the I-Iampton Hotel on the Site in conformit�' �tiith all applicable tederal. state (including without limitation the California Ci��il Code. the California Go��ernment Code. the Califomia Health & Safet�� Code. the California Labor Code, the California Public Resources Code. and the Califomia Re��enue & Taxation Code). and local la��s. ordinances. and repulations (includin�_ ��ithout limitation the City's Transient Occupanc�- Ta�). 3.5 Non-Discrimination. ln the development and operation of the Hampton Hotel, O�+ner agrees not to ��iolate applicable la��s that prohibit discrimination acainst any person or class of persons on the basis of any impennissible classification including but not limited to �,ender. marital status, race, color, creed. mental or ph}'sical disabilih�, relieion. age, ancestr��_ or national oricin. �.6 Indemnification of Citv 3.6.1 Owner shall indemnify. defend, assume all responsibility for, and hold the City, and the City's oTficers, officials, emplo}�ees. aeents, representatives, and colunteers, hannless from any and all daims. demands, damages. defense costs or liability of any ki��d (including attorneys' fees, expert �aitness fees, and litigation and court costs), that arise from the construction, de��elopment, or operation of the Site. including but not limited to the death or iqjury to any person or damage to any propertp, or arise from this Co��enant (other than those ia: ��,:ano+:�ii i�ma -4- �. ..� damages caused by the breach of the Agreement by Ciq� or by the gross negligence or ��illful misconduct of the Cit�� or by the City`s officers, officials, employees, agents. representati�es. or � olunteers acting in an official capacity). includine. but not limited to, O��ner's failure to pa��. if required. pre�ailin, ��ages on the constructio❑ and development of the Site and any portion thereof. O�+ner shall be solely responsiUle for determining and effectuatine compliance �+ith pre��ailing ��age la��s. and the City makes no representation as to the applicabilit� or non- applicability of any of such la��s to the de�elopment and construction of the Site or any part thereof. O��ner hereby expressly ackno��ledges and aerees that the City has not pre�iously aYfirmatively represented to O�+'ner or its contractor(s), in �rriting or othen��ise. in a call for bids or othen�ise. that the de�elopment or construction of a Hampton Hotel is not a"public ��ork.�� as defined in Section 1720 of the L�bor Code. The foregoing O�+�ner indemnity of Cit�� shall include any and all loss, liability, damaee. claim, cost, expense and/or "increased costs � (including attorne��s' fees. court and liti;ation costs, and fees of eapert �eitnesses) that results or arises in any ��ay from any of the follo�+ing: (i) the noncompliance by O��ner or its contractor(s) or ❑n�� subcontractor(s) of any applicable locai. state and/or federa] la��, includine. ��ithout limitation. am� applicable federal and,/or state labor la��s (including. nithout limitation. if ❑pplicable, the requirement to pa�� state pre��ailin�� +a�_es and hire apprenticesl: (ii) the implementation of Section 1781 of the Labor Code. os the same may be amended from time to time, or an�� other similar la��: and/or (iii) failure by O��ner or its contractor(s) or an�� subcontractor(s) to pro��ide any required disdosure or identification as required b� Labor Code Section ] 781, as the same may be amended from time to time. or any other similar la��. The term "increased costs," as used in this Section 8 shall ha�e the meaning ascribed to it in Labor Code Section 1781. as the same ma�� be amended (rom time to time. The foregoine indemnit}� shall sur�i�e termination of this A��reement and shall continue afier completion o( the crn�struction and de�•elopment of the Site. 3.6.2 O�+ner shall indemnif��. defend, assume all responsibilit�� for, and hold the Cit��. and the City's officers, officials. emplo�ees. agents. representati�es, and �olunteers. harmless (including attorneys' fees. expert n�itness fees, and litieation and court costs). from and a�_ainst any claim. action, suit, proceedinc, damaee. liabilit}�. deficiency, fine. penalty, or puniti�e dama�e (including, �+'ithout limitation, expert �citness fees and reasonable attorne�s' �ees) (collecti�'ely. "Lm'ironmental Claims �), resulting from, arisine out of, or based upon la) the presence. release, use. generation, discharge. storaee or disposal of an�� Hazardous Ma�erials on. under, in or about, or Uie transportation of any such Hazardous Materials to or from. the Site. or (b) the violation. or alleged �iolation. of any present or future statute, ordinance. order, rule. regulation, permit, judgment or license relating to the use. generation, release. discharge, storage. disposal or transportation of Hazardous 1�4aterials on. under, in or about. to or from. the Site. "Environmental La��' shall mean all applicable past. present or future federal. state and local statutes. regulations. directi��es, ordinances. common law. and rules. �cUich pertain to environmental matters, contamination of any t�pe �+•hatsoever, or health and safety matters. as such ha��e been amended, modified or supplemented from time to time (including am- present and future amendments thereto and re-authorizations thereo�, induding. ��ithout limitation. those relating to: (a) the manufacture, processing. use. distribution, treatment, storage. disposal, ��eneration or lransportation of Hazardous AQaterials: (b) air, soil, surface, subsurface, surface �vater and groundwater; (c) the operation and closure of w�dercround storage tanks; (d) health and safety of employees and other persons; and (e) notification and record keeping requirements relating to the foregoing. Without limiting the abo��e, Em�ironmental LaN�s also include the ioa_ �s�is�e u� , i i; rnue -5- e. .� follo�� ing: (a) the Comprehensi��e Environmental Response. Compensation, and Liability Act (42 U.S.C. §§ 9601 e� se9.), as amended ("CL-RCLA"): (b) the Solid \��aste Disposal Act, as amended by the Resource Conser��ation �nd Reco�er�• Act (42 U.S.C. §t6901 ei seq.). as amended ("RCRA"); (c) the Emer��ency Planning and Coinmmiity Right to Kno�+� Act of 1986 (42 U.S.C. �§ 1] 001 e! seg.). as amended; (iv) the Clean Air Act (42 U.S.C. §§ 7401 el ce�.), as amended: (d) the Clean Water Act (33 U.S.C. §fi1251 er seq.), as amended; (e) the Tosic SuUstances Conirol Act (15 U.S.C. §§ 2601 ei .ceq.). as amended; (� the Hazardous D9aterials Transportation Act (49 U.S.C. �§ 1SOl c�l scy.), as amended; (g) the Federal Insecticide. Pungicide and Rodenticide Act (7 U.S.C. �§ li6 e� .seg.), as amended; (h) the Federal Safe Drinkine \�1�ater Act (42 U.S.C. 1� 300f e� .cec�.), as amended; (i) the Federal Radon and Indoor Air Qualit�� Research Act (42 U.S.C. �§ 7-�Ol cr se9.); (j) the Occupational Safety and Health Act (29 U.S.C. §§ 651 e� seq.), as amended: and (k) any state. county, municipal or local statutes, la��s or ordinances similar or analogous to (including counle�parts o� an�� of the statutes listed abo� e. The foregoing indemnity shall survi��e tennination of this Co��enant and shall continue afler completion of the construction and de� elopment of the Site. 3.6.3. O��ner shall indemnify, defend. assume all responsibility for. and hold the City. and the City's officers. officials. emplo�ees. agents, representati��es. and c�ltmteers. harniless (includine attorne�s' fees. ezpert ��itness fees. and litigation and court costs). trom and aeainst any claim, action. suit. proceedine, damage. liability. defciency, fine. penalty. or puniti�e damage (includinc. �+ithout limitation, espert ��itness fees and reasonable attorne��s' }ees). arising out of an}� oblication for pa�ment of am� real estate or broker's conunission or �inder's fee in co�uiection �+ith this Co� enant. or O��'ner's acquisition or de� elopment of �he Site. The toregoin= indemnity shall suni�e termination of this Co�enant �nd shall continue afier completion o1 the construction and de� elopment o1 the Site. �. OBLIGATIONS OF C1TY. 4.1 Co� enant Pavments to ON ner 4.1.1 Amount of Co��enant Pa��ments: Co��enant Pavments Cao Amount. In consideration for O��ner's undertakings pursuant to this Covenant and the encumbrance of O�+ner�s interest in the Site pursuant to this Co��enant. City shall make the follo��ine Co�enant Pa� ments to O�cner during the Operating Period subject to the follo��ing terms and conditions: (a) At tlie conclusion of each t��-elve (12) month period follo��ine the Commencement Date (until the Termination Date). City shall determine all of the follo�j ing: (i) if the total City Transient Occupancy Tax re��enue recei�ed by and paid to City by all Transient Occupancy Ta� pa�ors during such h��eh�e (12) month period esceeds by Fifiy Thousand Dollars ($50.000) the total City Transient Occupancy Ta� re�enues recei��ed by and paid to City by all Transient Occupancy Tas payors fbr the t��eh�e (12) month period immediately prior to the Commencement Dale. (ii) if the Transient Occupancy Tax received by and paid to City fi�om the operation ofthe Hampton Hotel on the Site during such t��ehe (12) month period is at least Fifty Thousand Dollars ($50.000) ("Threshold Amount"); and i u?„ozaooaono i ; s��a o, :� i i �i ��w� -b- �.. � (iii) if the Owner complied �rith its obligations set rorth in Section 3 durim� the entire applicable t��ehe (12) montli period. as described in Section 4.2 belo��. (b) lf Cit�� determines that the conditions in clauses (i) and (ii) of the preceding subparaeraph (a) ha��e been met, City shall (in accordance �vith Section �3.1.3) reimburse O��•ner One Dollar (�1.00) for every T�+o Dollars ($2.00 ) that is in excess of the Threshold Amount (the "Annual Reimbursement Pa�ment); provided, ho��ever that in no e�ent shall any Annual Reimbursement Pa�ment be greater than Fifry Thousand Dollars ($�0.000) ("Annual Reimbursement Pa�•ment Cap Amounf'). There shali be i�o carry-o��er to a subsequent �ear of an�� reimbursement amowit earned but not paid because it exceeds the Annual Reimbursement Pa�ment Cap Amount of Fifly Thousand Dollars ($50.000). Cit�� shall ha��e no ohligation to make anv Annual Reimbursement Papment ifthe Threshold Amount is not �ttained e� en if such Threshold Amount is ne� er attained durine the Operatin� Period. (c) Not��'ithstanding any other pro��ision set forth in this Co�enant to the contran�. in no event shall the total sum of all Annual Reimbursement Pa}ments made by Cit�� to O��ner exceed T��o Hundred Fifty Thousand Dollars ($250,000.00) (the "Co�enant P:�yments Cap Arnount°). (d) Noh� ithstanding am� other pro� ision set fonh in this Co� enm�t to the contrar�. e�en in the e��ent the Threshold Amount has nrn been reached at the end of the Operatin�� Period, and/or e�'en in the event the Co�enant Pa��ments Cap Amount has not been reached at the end of the Operating Period, this Co�enant shall terminate and Cit�� shall h��e no 1ln obli��ation afrer that time to make any fu�lher or additional Co�'enant Pavments. 4.]? Source of Pa�ments. 'I�he Annual Reimbursement Payment shall be pa� able from an�� source of funds lecally a� ailable to City. indudinc City's eeneral fund. In this regard, it is understood and agreed that the Transient Occupancy Taa that is eenerated ]iom tl�e Hampton Hotel and other Transient Occupancy Tax payors is beinc used merely as a measure of the amount of the Covenant Pa��ments that ma}� be periodically o��ing by City to Onner under this Co��enant. if applicable as set forth abo�e: and that City is not pledgine any portion of the Transient Occupancy Tax generated from the Site to O�� ner or am� other general funds monies. 4.1.3 Pavment Procedure. (a) Not later than thirt}� (30) days afrer the end of the first t��'el�e month period follo��ing the attainment of the Threshold Amount, City shall pay the Annual Reimbursement Payment for said hreh•e month period to O��ner. Each such payment shall be accompanied by a statement identifying (i) the amount of 7ransient Occupanc�� Tax upon ��hich the Annual Reimbursement Pa�ment amount �+as calculated and (ii)a cumulati�e total comparing ho�� the Annual Reimbursement Pa��ment in question, tocether �aith all prior Annual Reimbursement Pa��ments. if any. relate to the Co�enant Pa}'me��t Cap Amount. (b) It is understood and agreed by the Parties that the amount of City's Annual Reimbursement Pa��ments to O�+ner shall be based upon the amount of Transient Occupancy Taa that City shall ha��e been able to reasonably confirm it actually has recei��ed from the ��ithin fifteen (15) days prior to the applicable pa�anent date. In addition, if. afier anJ� io:��o �snszno�,iim�o�� '�' �.. ..� such Annual Reimbursement Payment is made (or not made because the conditions for payment ��ere not met). either City or O��ner obtains information �hat the amount of City's pa�ment ��as in error, the Party obtaining such infonnation shail promptly notify the other Partti' and shall pro��ide such detailed infonnation as may be necessary to explain the discrepancy. The discrepancy then shall be taken into consideration by means of an adjusunent to the ne�t Annual Reimbursement payment to be made by City (either an additional payment in the event Citv has underpaid a prim Annual Reimbursement Pa� ment that is due or a credit against the subsequent Annual Reimbursemei�t Payment in the e�ent City has o�erpaid); pro�ided. ho��'e��er, that in the e� ent (i) an adjustment needs to be made in e�cess of Ten Thousand Dollars ($]0.000). or �ii) the Annual Reimbursement Payment in question is the final one to be made under this Cocenant. the Partv entitled to said sum shall be entitled to deli� er a��•ritten notice to the other Pa�1}� requesting an immediate adjusLnent and in such e�ent the other Party shall make an appmprime payment �� ithin fifteen ( I�) days from receipt of said notice. 4. ].4 Books and Records. Upon the �+ritten request of either Part}�. the other Party shall make a��ailable for inspectio�� (at Cit�� Hall in the e��ent of a re��ie�� of Cit�� records and at O��ner�s place of business in Arroto Grande in the e�ent of a re�•ie�v of O��ner's records) such of its books and records as the requesting PartJ� may reasonably determine must be re��ie��ed in order determine ��hether the correct amount of Annual Reimbursement Payments ha� e been made or are beine made herew�der. Noh� ithstanding the foregoinc. City shall not be required to produce any books or recards that it is prohibited from producing by la�� and O�+ner shall not be required to produce information that � iolates the stawtorily prescribed pri�acy ri�_hts of indi�'idual customers. 4J.5 No Acceleration: Prcna��ment Pcrmittcd. It is ackno��icdecd b�� the Parties that am� pa��ments b�� City procided for in this Co� enant are in consideration for the perfonnance b�� O��ner during the time period(s) for ��'hich pa� ments are due. Therefore. Cit� �s failure to timely make any pa�•ments or Cit��s failure to perfonn any of its uther oblications hereunder shall not cause the acceleration of an}� anticipated future Annual Reimbursement Pa� ments bv Cit�� to O�� ner. 4.2 �dditional Condition Precedent to Citv's Oblieations. In additirni to the provisions set forth in Section 2 of this Co�enant. City�s obligation to make the Cocenant Pa��ments pursuant to Section 4.1 of this Co��enant 1br any t�reh-e month period dw�in�� the Operating Period shall be contineent and conditional upon O��ner's perfonnance of its obligations set forth in Section 3 of this Co��enant during such t��el��e month period. �. DEFAULTS AND RET9EDIES. �.l Defaults (a) Subject to Force Majeure (Section 6.4), the occurrence of an�� of the follo��•ine shall constitute a Default: (i) the failure by either Party to perform an�� obligation of such Party for the payment of money under this Co��enant if such failure is not cured wiihin tifieen m„io�ai�un.uooi p 'SqSiGA'_ al I!I i;OL 'o— �.. ..i (15) calendar days afier the nonperformin�, Party's receipt of ��riuen notice from the other Part�� that such obligation ��as not performed �+hen due: or (ii) the failure by either Party to perform any of its obli��ations (other tl�an obligations described in clause (i) of this Section �.1) set fonh in this Co��enant, if such failure is not cured n ithin thirty (30) days after the nonperfonning Part��'s receipt of �� ritten notice from the other Party or, if such failure is of a nature that cannot reasonably be cured ��ithin thirt� (30) da�s. the failure b�� such Parh� to commence such cure �vithin thirty(30) da}s and thereafter dilicently and continuously prosecutes such cure to completion: or (iiij any representation or ��arranty by a Party set forth in this Co� enant pro�es to ha��e been incmrect in any material respect ��hen made; or (i�) the Hampton Hotel is materially damaged or desu�o�ed by tire or other casualty durine the Operating Period and O��ner fails to commence resloration of the impro�ements ��'ithin a six(6) months or thereafier fails to diligently and continuously pmceed to complete such restoration in accordance �cith this Covenant; or (v) O�+ner is enjoined or other��ise prohibited by any ��o�'ernmental agency from occup} ing the Site during the Operatine Period and such iiijunction or prohibition continues unsta�ed for ninet�� (90) da�s or more for any reason. (b) In the e�ent O��ner }ails to perform any of its obligations under this Co�'enant and Citv sends a notice of such failure to O��ner. concurrently there��ith Cit� shall send a copy of such notice to an� monga__ee or deed of trust holder �+ith respect to the Sitr (herein the "Holder") (the name and address of ��hich Ho]der shall be furnished b�� O�+'ner or such Holder to Cit�') and the Holder shall ha�°e the same period of time as is available to O�� ner to remed� such breach or failure under this Cocenant. Cit}' sh�ll accept an� proper cure of a breach or failure tendered bv the Holder. �? Citv's Remedies Uaon Default b�� O��ner. Upon the occurrence of any Delault by O�cner. and afier O��ner s receipt of �critten notice of default and espiration of the time for O�rner to cure such Default as pro� ided in Section �.1. Citt� may at its option: (i) suspend the pa�ment of Annual Reimbursement Pa}ments othen+ise due and payable to O��ner hereunder for the period that O�+roer remains in Default. If City has so suspended its payments in accordance �rith the terms of ihis clause (i), then upon O��ner`s cure of such Default. Cit}� shall resume its Pa�•ment obligations, but shall ha�e no obligation to make payments for any t��elve month period or portion thereof during �rhich Citp's oUligation to make payments ��as so suspended; or (ii) if the Default continues uninterrupted for a period of sis (6) months. City may tenninate this Covenant, in ��hich case Citys obligation to make payments to O��•ner for any period of time afier the occurrence of the Default shall be fully and tinally tenninated and discharged. h� no e��ent, ho�vever, shall City have the right (i)to specifically enforce O��ner`s covenants set forth in Section 3 of this Covenant. (ii) to seek damages other than by offset of io?=�o7�nua.nnui , sos:e �e :� i i n ; �oe -9' �.. ..i Puture Annual Reimbursement Payments othernise due hereunder, or (iii) to prevent O��ner s la��ful com�ersion of the Site to another law-fu1 use (e��en if sucit use ��ould be inconsistent ��ith this Co��enant). 5.3 Owner s Remedies Unon Default bv Ciri�. Upon the occurrence of any Default by City. and afier Cit��'s receipt of ��ritten notice of Default from O�cner and e�piration of the time for City to cure such Default as provided in Section �.1, O�+ner may tenninate this Co�enant by nritten notice to City and/or seek ��•hate��er legal or equitable remedies may be acailable to O�1'ner. subject to the provisions of Section 4.1.5; pro�'ided, ho�+e��er. that not�+ithstandinc anything in the foregoing to the contrary, in no e��ent shall O��ner be entitled to obtain damages of any kind from City for lost protits or any other economic or consequential dama�es of am• kind other than am� amount of Annual Reimbursement Payment to �vhich O��ner ��as entitled but ��hich ��as not paid by City to O��'ner. �.4 Cumulati��e Remedies: No \1'ai��er. Escept as expressly pro��ided herein. the nondefaulting Pariy's rights and remedies hereunder are cumulati��e and in addition to all ri=hts and remedies provided by law from time to time and the exercise by the nondefaultine Paity of any ri�_ht or remedy shall not prejudice such Pa�tJ� in the exercise of an}� other rieht or remed��. None of the provisions of this Co��enant shall be considered �cai��ed by eidier Party eacept ��hen such ��ai�er is deli�ered in ��riting. No ��aiver of any Default shall be implied from any omission b�� Cit�� to take action on account of such Default if such Default persists or is repeated. No ��ai�er of an�� Default shall afrect am� Default other than the Default expressly �cai�ed. and am� such ��ai�er shall be operati�e onh• for the time and to the estent stated. No �cai�er of am� pro� ision of this Co��enant shal] be construed as a��ai�er of any subsequent breach of the same procision. A Part��'s consent to or approval of am� oct by the other Party requiring t�w consent or appro�al shall not be deemed to ��aire or render unnecessan� the consentine Pam`s consent to or appro��al of any subsequent act. A Party's acceptance of the late perfonnance of any obli�ation shall not constitute a�+ai�er by such Party of the rieht to require prompt perfonnance of all further oblieations. A Party's acceptance of any perfom�ance follo�cing the sending or filine of any notice of Default shall not constitute a�cai��er of that Part�'s rieht to proceed �+ith the exercise of its remedies for any wifulfilled obligations. A Pariy�'s acceptance of any partial performance shal] not constitute a�aai�er by that Pany of any rights relating to the unfullilled portion of the applicable obligation. �.5 Limitations on Citv's Liabilitv. O�+'ner ackno�+•ledges and aerees that: (i) this Covenant shall not be deemed or construed as creatinc a partnership, joint ��enture, or similar association betneen O�+ner and City, the relationship beh�'een O��mer and City pursuant to this Co��enant is and shall remain solel�� that of contractine Parties, that the development and operation of the Hampton Hotel is a pri��ate undertakine. and City neither undertakes nor assumes any responsibility pursuant to this Co�enant to revie��, inspect, supenise, appro�e. or inform O��ner of any matter in connection �rith the de�elopment or operation of the Hampton 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 o��n judgment ��ith respect to such matters: (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 am� person or property resulting from any construction on. or occupancy or use of, the Site, ��hether arising from: (a) any defect in am building, gradine, landscaping, or other onsite or offsite Illi?lU'_dG00-OOUI -cvsza o� :a unma - ] 0- �.. ..r impro��ement; (b) any act or omission of O�+ner or any of O��ner's agents. emplo}ees. 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 an�7hing required to be performed or civen to City under this Covenant. includine any certiticate, sun�e��, appraisal, or insurance policy. City shal] not be deemed to ha��e ��arranted or represented the sufficiency or legal effect of the same, and no such acceptance or appro�al shall constitute a�jarranty or representation by City to an}�one. 6. GENL-RAL PROVISIONS. 6.1 inte�ration and Amendment This Covenant constitutes the entire asreement bv and Uetw•een the Parties pertainine to the subject matter hereof and supersede all prior a��reements and understandines of the Pai1ies ��ith respect thereto. This Co��enant ma� not be modified, amended. supplemented. or othen�ise changed except by a��riting executed by both Parties. 6.2 Captions. Section headines used in this Co�enant are for com�enience of reference only and shall not affect the construction of am� pro�'isions of this Co� enant. 6.3 Dindins Effect: Successors and Assiens: Assi��nments. This Co��enant shall run ��ith the land and shall be bindine upon and inure to the benefit of. the Parties and their respective successors and assigns. as limited b�• this Section 6.3. Except as such assigmne��t relates to Holder. the O�vner shall not assign. h� pothecare. encumber or other�i•ise transfer. either � oluntaril�•. incoluntarily or by operation of ]a�a. its richts or obiications as set fonh in this Co�enant ��ithout tirst obtainine the Cit��s uritten consent. ��hich may be eicen ordenied or conditioned in the City's sole and absolute discretion. O�+'ner may assign its right to recei�e the Co� enant Pa� ments to any Holder for security purposes or to any lessee or business o�cning and uperatim, the Hampton Hotel on the Site. In ihe evei�t of an assigmnent for security pw'poses to a Holder. Cih� agrees that tliis Co��enant be subordinated to the lien of said Holder's deed of trust or morteaee and City aerees to cooperate ��ith O�+�ner in e�ecuting an appropriate subnrdination a�,reement. In the e�•ent of an�- assignment that is consented to in ��•riting b�� the Cit�, the references in this Co�•en�nt to "O��ner" shall be deemed to refer to the assicnee. 6.4 Force Maieure. Not�+�ithstanding any other pro��ision set forth in this Co��enant to the contrarV, in no e��ent shall a Party be deemed to be in Default of its obligations set forth herein �rhere delays or failures to perfonn are caused by circumstances ��ilhout the fault and beyond the reasonable control of such Party, ��hich circumstances shall include. ��ithout limitation, fire/casualty losses; strikes; litieation; unusually se�ere ��,eather; inabilit� to secure necessary laboc materials. or tools: dela��s of any contractor, subcontractor, or supplier, uqjustilied acts or failure to act by City or other govemmental aeency in the processing of plans or pennits or inspection or appro�al of the construction of the Hampton Hotel project: liti��ation by third Parties challenging the validity or enforceability of the Agreement or this Co��enant or the Land Use Approvals and acts of god (collectively. °force majeure"). Ad�•erse market conditions or Owner's inability to obtain financing or appro��al to operate the Hampton Hotel shall not constitute e��ents of force majeure. In the ev en[ of an event of force majeure. the Party so delayed shall notify the other Party of the circumstances and cause of the dela�� ithin a reasonable time period afier commencement of the delay, it shall keep the other Part�� informed iag„a rsosar� o� a i vi �nK� - � �- �.. ..i at reasonable inter��als upon request regardino tl�e status of its efforts to o��ercome said delay. and it shall exercise commercially reasonable dilieence to perform as soon as practicable thereafier. 6.5 Notices. Notices to be �_iven by Cit�� or O��ner hereunder may be deli��ered personally or may be deli��ered by prepaid, certified mail, return receipt requested. or by reputable pre-paid same-day or o��ernight deli��ery ser��ice pro��iding a delivery conformation receipt. �vith notices to be addressed to the appropriate address(es) hereinafter set forth or to such other address(es) that a Party may hereafter desiei�ate b� �vritlei� notice. Notices gi�en by personal delivery shall be effective upon receipt. Notices deli��ered by same-day or overnight deli��ery ser��ice or by certified mail shall be effecti� e on deli� ery or attempted deli��ery as sho�rn on the deli�•ery conSrmation receipt or postal return receipt. If notice is to City: City: City of .Arroyo Grande P.O. Box 550 214 East Branch Street Arrovo Grande. CA 93421 Attention: Ste�-en Adams, City n4anacer �vith a copy to: City of Arro}o Grande P. O. IIo� 550 214 East Branch Street Arro�•o Grande. CA 93421 Attention: Timothy J. Carmel. City Attomey If notice is to O��ner: Arro}o Hotel. LLC 8910 Universit�� Center Lane. Suite 100 San Dieeo. CA 92122 Attention: T9ichael S. Gallegos ��ith a copy to: American Property 1�9anagement Corp. 5910 Uni�ersit�� Center Lane. Suite ]00 San Dieco. GA 92122 Attention: \4'illiam C. Littiefield 6.6 Further Acts. Each Pam� aerees 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, ho�vever, its la�+ful discretionary and police po�cer authority. Without limiting the generality of the foreeoing. upon the erpiration or terminatiai of the Operating Period, City �aill execute and deliver such instruments as may be prepared by 0��'ner at O��ner's expense to release the doud upon title to the Site created b�� this Covenant: pro��ided. ho�vever. that any such document shall be in a fonn and ��ith content reasonably acceptable to the City Attorney of City. 6J Third Partv Beneficiaries. With the exception of the specific pro��isions set forih 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 ha�e any rights or obligations hereunder. in�„ov��on.non i -12- 7iq5i(�11? al I/17/OG �.. .s 6.S Leeal Ad��ice. Each.Party represents and ��arrants to the other the follo��ine: they lia�e carefully read this Agreement, and in signing this Agreement, they do so ��ith full kno��ledge of any right ��hich they may have; they l�a��e recei��ed independent leeal ad�•ice from their respecti��e lecal counsel as to the matters set forth in this Agreement, or ha�•e 4�io�cin��ly chosen not to consult legal counsel as to the matters set forth in this Agreement; and, they ha��e freely signed this Agreement �r'ithout any reliance upon any agreement, promise, statement or representatio�i by or on behalf of the other Party, or their respective agents, emplo�ees or attorneys. except as specitically set forth in this Aereement. and ��ithout duress or coercion. �� hether economic or othen+ise. 6.9 Goveming La�a: Liti¢ation Matters. This Agreement shall be co��erned b�� and construed in accordance �e�ith the internal la��s of the State of California ��ithout re��ard to conflict of la��, principles. ]f either Party conunences an action against the other Party in connection ��ith this Agreement, the pre�ailing party shall be entitled to reco��er from the losing pany its e�pert witness fees (if any), its reasonable litication costs and expenses includine. �vithout limitation. litigation costs, and its reasonable attorne� s' fees. The Superior Court of the County of San Luis Obispo shall ha�e the exdusice jurisdiction of any litigation bet�+'een the Parties. 6.10 Nonliabilitv of Citv Officials. No officer. official. emplo��ee. a�sent. representati�e. or �olunteer of Cit�� shall be personally liable to O��ner or any successor in interest. in the e� ent of any default or breach by City or for any amount ��hich may become due to O�� ner or its successors. or on any obli��ations under the terms of this Aereement. 6.1 1 Counter�arts. This Covenant may be ezecuted in t��o or more counterparts. each of ��hid� ��hen so executed and deli��ered shall be deemed an original and all of ��hich. ��hen taken toeether. shall constimte one and the same instrument. [Si<_natures contained on ne�t pace.] i u�zm�a�uo-uoo i -13 - ?59<il�.fl� nl I/I'//OG � ..� IN WITNESS WHEREOF, the Parties have executed this Covenant to be effective as of the Effective Date. "CITY" CITY OF ARROYO GRANDE, a Califomia municipal corporation By: ��<1�� Ste e Adams, City Manager ATTEST: O ARpGy`' \ ,� C� 9 Kelly Wehn •e, y Clerk V + �fp � APPROVED A TO FORM: � �Y l0.1i11 � �� 1,� � � ��ORM�' By: �` , TimotJ y J. Carme , City Attorney "Owner" ARROYO HOTEL, LLC, By: Arroyo Grande Inn-Vestment, LLC Its: Sole Member and Manager By: Armada Hotel Investment, LLC Its: Manager By: _ � Michael S. Gall� s, Managing Member 1032/024G00-0001 n "/59536.02 a06/12/07 -1 `f- � � nne Ho. oe-aaoos2s�-a-Ts io��e No. cacnnao-naa�ao-oosaooizsi LEGAL DESCRIPTION EKHIBIT°A° THE LAND REFERRED TL� HERQN BELOW IS SITUATED IN THE CITY OF ARROYO GRANDE, COUfJ7Y OF SAN LUIS OBISPO, ST'A7E OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS: PARCEL 1: Parcel B of Par�el Map No. AG79-266, in the Cfty of Arroyo 6ronde, County of San Luis Obispo, State of Ca{rfomia, according to map recarded ]anuary 14, 1981 in Book 30, Page 11 of Parcel Maps and as per Certlficate of CoRect�n reoorded April 5,1983 in Book 2476, Page 114 of Offictal R�ords, in the offite of the County Recortier of said County, PARCEI 2: A portion ot Wes[ Branch Street atljacent to Par�el H of ParceJ Map AG79-268, � the City of Arroyo Grande, County of San Luls Obispo, Siate oF CaUfornW, aaording m map r�orded in Book 30, Page 11 of Parcel Maps, in the office of the County Recorder of safd County, more parttcutarly described as fotlows: Commencing at the rtrosc Westeriy comer of said Parcel B, said comer being also a point on a curve, concave ta the Nortlieask, with a radius of 957.00 feet, radfal to said polnt bears NoRh 22° 28' S3" East; thence SouNieasterly along said Curve, being also the Southerly Iine of said Pa�el B and the Northeriy right- of-way Ifne of West Branch Street, through a oentral angle of Ol° 01' 22" and an arc length of 17.08 feet to a polnt of tangenc.y, said point of tangenty bei� aiso the true point of beginning; thence mntlnuing abng said Southerly iine and said Northerty ri9ht-of-way line, South 75° 22' S2" East, a distance of 299.18 feet to the Westeriy telminus af.a curve, rnncave bo the Northwest with a radius of 25 feet; thence wntinuing along saki Soucheriy line and said Northerry right-of-way (ine, EasGerly and Northeasterly abng said curve, through a central angie of 92° ST 00" and an are length of 40.56 feet to a point of asp; thence South il° 40' 08" West, abng satd Southerly projection of the Easterly line of said Parcel B, running parellel to and 30 feet distant Westerly from the centerline of Camino Mercado, a distance of 1.62 Feet to the Nwtheasterly terminus oF a curve, concave to the Northwest, wlth a radius of 25 feet; thence Southwes0erly abng sa(d curve, through a centrel angle of 9J:° 57' 40" and an arc length of 40.13 feet to a point of tangency; thence North 76° 22' 12" Wes4 abng a line parellel oo and 31 fee[ distant from the centerline of West Bnnch Street, a dis[ance of 185.83 feet to the Easterly tertnfnus of a cvrve, co�xave fi the Northeast, with a radlus cf 957 feet; thence conUnuing abng sald parallel line, Northwesterly along said curve, through a central angle of 06° 49' 43", and an arc iength of 114.06 feet m Me dve point of begfnning, as abandoned by Resolution remrded September 15, 1982 in Book 2432, Page 493 of Off'Kial Records, which would pass under Section 831 of the Cnil Code of the Sqte of Califomfa, by a mnveyance of Parcet 8 of Parcel Map AG79-Z68. APN: 007-771-063 tt7a rrthnx�w waart ram put�ro+l � CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT `:• State of California S�h1 �.�t.ls '� BISPa } SS. County of �� On IW��IIISE�?� KE�1U�� - ITNOQE ,No - r�Kyr�ac.<<, Date ame and Title o� ORCer (e.g., Jane Doe. Notary ublic') personally appeared f�rsonally known to me ❑ proved to me on the basis of satisfactory evidence , r—r•,•. �� " :. �� Place No�ary Seal Above 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. WITNE S y hand and offic� I se I. Sign l re o No[ary Public OPT/ONAL Though the informa[ion below is not required by law, i[ may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachmen[ of fhis form to another document. � Description of Attached Document Title or Type of Document: Document Date: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer Signer's Name: ❑ Individual ='� CorporateOfficer—Title(s): J Partner—C Limited Ll Ge al C Attomey in Fact L' Trustee — Guardian or Ca ❑ Other: Pages: Representing: RIGHT THUMBPRINT OF SIGNER � t999 Nanmal Notary Fssoclatlon • 9350 De So�o Nve.. PO. Box 2002 • C�a4aworlM1, CA 913132CO2 • www.na0onelnotary org Prod No. 590] Reortler. Call ToILFrre YB00-8]8�682] ... CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT STATE of CALIFORNIA COiJNTY of SAN DIEGO .. On July 1�, 20%7, before me, Christina L. Cahall, personally appeared Michael S. Gallegos personally known to me to be the person(s) whose name(s) is/a�e subscribed to the within instrument and acknowledged to me that he/s�e/t�Hey executed the same in his/he�/t� authorized capacity(ies), and that by his/�/t�iei� signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted�xecuted the instrument. Notary L. My Commission Expires: October 2, 2009 � Notory p�'� �bova7e coino, MY Com n ��O Counry �"�re_Ocf 2. 2IX E(lt� OF DOCUMENT