HomeMy WebLinkAbout1L OCRCITY COUNCIL STAFF REPORT
DATE: FEBRUARY 11, 2021 CONSENT CALENDAR
SUBJECT: RECEIVE AND FILE SETTLEMENT AGREEMENT BElWEEN CITY OF
PALM SPRINGS AND O&M HR, LLC, NEXUS DEVELOPMENT
CORPORATION/CENTRAL DIVISION, NOC EQUITIES DOWNTOWN
PS, LLC
FROM: David H. Ready, City Manager
BY: Jeffrey S. Ballinger, City Attorney
SUMMARY:
This is a receive and file of a settlement agreement that has been reached in the
following two cases, both involving what is commonly known as the "Prairie Schooner"
property, which is located near the Palm Springs Convention Center, south of Andreas
Road and east of Calle El Segundo:
• City of Palm Springs, a public entity v. 0 & M HR, LLC, Nexus Development
Corporation/Central Division, NOC Equities Downtown PS, LLC, Richard
Meaney, and Does 1 through 50, inclusive, as Riverside Superior Court Case No.
PSC1701804
• NOC Equities Downtown PS, LLC, a California Limited Liability Company v. City
of Palm Springs, a public entity, as United States District Court Case No. 5: 19-
cv-00100-JGB-SHK
RECOMMENDATION:
1. Receive and file.
BACKGROUND:
This settlement agreement has been the subject of litigation-based closed session
discussions, as authorized by the Brown Act, for the past several months, as the parties
have attempted to settle the two subject lawsuits. Those negotiations resulted in the
Settlement Agreement, which is included as Attachment 1.
r nat NO. CDNSt.NT .1. L
2City Council Staff Report February 11, 2021 --Page 2 Prairie Schooner/ NDC Settlement Agreement STAFF ANALYSIS: The following are the primary deal points contained in the Settlement Agreement: 1. NDC will, in good faith, use commercially reasonable efforts to pursue the development of a hotel project on the Prairie Schooner property during the 5-year period following the execution of the settlement agreement. Despite such efforts, if NDC is unsuccessful in financing and constructing the Hotel Project within such 5-year period, then NDC will have the right to pursue such other project permitted under applicable law and applicable City zoning requirements. 2. City will in good faith take all steps reasonably necessary to expedite NDC's application for the Hotel Project entitlements, consistent with applicable land use and environmental processing requirements, such as public hearing, notice and participation requirements. 3. In connection with items 1 and 2 above, NDC's and the City's respective representatives will meet at least once every 180 days to discuss the progress of the development, financing and construction of the Hotel Project. 4. In the event NDC sells the Prairie Schooner property at any time during the 5-year period following the execution of the settlement agreement, NDC must cause the buyer to assume in writing the hotel development obligations for the remaining balance of the 5-year period. 5. City will have the right to include the following conditions of approval in connection with its issuance of a building permit for the Hotel Project: a. NDC will, at no cost to NDC, cause to be constructed during the period of construction of the Hotel Project a shaded walkway generally commencing adjacent to the Hotel Project and ending in or near downtown Palm Springs (the specific path of travel to be agreed upon by NDC and City). b. Following opening of the Hotel, the then-current owner of the Hotel Project (i.e., NDC or any successor owner) will be obligated to pay to the City during its period of ownership of the Hotel Project the transient occupancy taxes then-applicable to hotels in the City of Palm Springs. 6. A new Parking Lot License Agreement is to be entered into on substantially the same form as existing parking lot agreement, except as follows: a. Upon NDC's submittal of a completed planning application to City (in accordance with the City planning application process requirements then-applicable to similar projects), City will begin paying to NDC a license fee equal to $2,000 per month,
3City Council Staff Report February 11, 2021 --Page 3 Prairie Schooner/ NDC Settlement Agreement b. Upon NDC's submittal of a completed building permit application, City will begin paying to NOC a license fee equal to $4,000 per month, c. Following NDC's submittal of a completed building permit application, either party will have the right to terminate the License upon thirty (30) days' notice to the other, and d. Section 6 (i.e., City's first right of negotiation in the event of NDC's sale of the property) to be deleted. ENVIRONMENTAL ASSESSMENT: This action will have no potential to cause any environmental impact. Any environmental impacts arising from the development of the property will be analyzed as part of the land use entitlement process for the property. FISCAL IMPACT: Approval of this settlement agreement avoids the cost of litigation, which could be significant, as well as the potential for liability, which in inherent in most all litigation. In addition, the agreement enables the development of a hotel at the Prairie Schooner property, which would generate transient occupancy tax, sales tax as well as other indirect tax revenues to the City's general fund. SUBMITTED BY: ~~ Marcus L. Fuller, MPA, P.E., P.L.S. City Attorney Assistant City Manager/City Engineer ~~ o!°vid H.Ready, ~ City Manager Attachments: A. Settlement Agreement.
4SETTLEMENT AGREEMENT AND MUTUAL RELEASE PRAIRIESCHOONERPROPERTY This Settlement Agreement and Mutual Release ("Agreement"), is entered into by and between Plaintiff City of Palm Springs (the "City") on the one hand, and Defendants O & M HR, LLC, Nexus Development Corporation/Central Division, NDC Equities Downtown PS, LLC (''NDC") ( collectively, "Corporate Defendants"), on the other hand. The City and Corporate Defendants are hereinafter sometimes individually called a Party or collectively referred to as the "Parties." The "Effective Date" of this Agreement is the date last executed. RECITALS A. The City filed a lawsuit entitled City of Palm Springs, a public entity v. 0 & M HR, LLC, Nexus Development Corporation/Central Division, NDC Equities Downtown PS, UC, Richard Meaney, and Does 1 through 50, inclusive, as Riverside Superior Court Case No. PSCl 701804 (the "State Court Lawsuit"). B. The Corporate Defendants deny all of the allegations in the State Court lawsuit, and assert certain affirmative defenses. C. NOC Equities Downtown PS, LLC filed a lawsuit entitled NDC Equities Downtown PS, LLC, a California Limited Liability Company v. City of Palm Springs, a public entity, as United States District Court Case No. 5:19-cv-00100-JGB-SHK (''the Federal Court Lawsuit"). The City denies any liability in the Federal Court Lawsuit. After the District Court granted the City's motion to dismiss the Federal Court Lawsuit, NDC Equities Downtown PS, LLC appealed to the United States Court of Appeals for the Ninth Circuit, Case No. 20-56080. The term "Federal Court Lawsuit" includes the Ninth Circuit appeal, as well as any claims in State Court associated with the Federal Court Lawsuit. The State Court Lawsuit and the Federal Court Lawsuit are referred to collectively in this Agreement as the "Lawsuits." D. The Lawsuits concern certain real property located at the southeast comer of E. Andreas Road and N. Calle El Segundo, Palm Springs, California (APNs 508-055-007, 508-055-008 and 508-055-009) commonly known as the "Prairie Schooner'' ·site (''the Prairie Schooner Property''). NDC is the current legal owner of the Prairie Schooner Property. E. On or about January 7, 2015, the City and NDC Equities Downtown PS, LLC entered into that certain Parking Lot License Agreement (the "Parking Lot License Agreement"), providing for the use of the Prairie Schooner Property for public parking purposes. F. It is the intention and desire of the Parties to compromise and settle, fully and completely, the Lawsuits, subject and pursuant to the terms of this Agreement, and without admitting any liability or wrongdoing in connection therewith. AGREEMENT NOW, THEREFORE, in consideration of the matters recited above, which are incorporated herein as if recited in full, and in consideration also of the mutual covenants and representations - 1 -55575.10020\33584689.3
5set forth herein, without an admission of liability by any of them, the Parties hereto agree as follows: 1. Consideration. The Parties agree to the following in settlement of the Lawsuits: (a) Within fifteen (15) days following the Effective Date, the City shall cause to be filed a request for dismissal (with prejudice) of the State Court Lawsuit in its entirety (i.e., as to the Corporate Defendants and Richard Meaney) (and City's counsel shall deliver a copy of the Court-filed dismissal of the State Court Lawsuit to the Corporate Defendants' Counsel by email promptly following the same being entered by the Court). (b) Within fifteen ( 15) days following the Effective Date, NDC shall cause to be filed a request for dismissal (with prejudice) of the Federal Court Lawsuit (and NDC's counsel shall deliver a copy of the Court-filed dismissal of the Federal Court Lawsuit to the City's Counsel by email promptly following the same being entered by the Court). ( c) NDC shall, in good faith, use commercially reasonable efforts to pursue the development, financing and construction of a hotel project on the Prairie Schooner Property, which hotel project may include one or more hotel buildings and complementary amenities (the "Hotel Project") during the 5-year period following the Effective Date of this Agreement (the "Development Period"). NDC's obligation set forth in the preceding sentence, together with NDC's obligations pursuant to subparagraph (e)(i) below, shall be referred to as the "Hotel Development Obligations". Subject to further market and feasibility research and analysis by NDC, as of the Effective Date, the Parties contemplate that the Hotel Project may be a select service, premium select service, luxury, or other mid-to high-range hotel. If, despite such good faith, commercially reasonable efforts, NDC is unsuccessful in financing and constructing the Hotel Project within the Development Period, then NDC shall have the right to pursue such other development as permitted under applicable law and applicable City planning and zoning requirements. ( d) City shall, in good faith, take all steps reasonably necessary to expedite NDC's application for the Hotel Project entitlements, consistent with applicable land use and environmental processing requirements, such as public hearing, notice and participation requirements. ( e) In connection with items ( c) and ( d) above, from and after the Effective Date, NDC's and the City's respective representatives shall meet in person ( or video platform if such in person meeting is not feasible due to health mandates or concerns) at least once every one hundred eighty (180) days to discuss the progress of the development, fmancing and construction of the Hotel Project, with the first such meeting occurring within one hundred 2 55515.10020\33584689.3
6eighty (180) days following the Effective Date. In advance of each such meeting: i. NOC shall prepare and submit to the City (A) a written summary of the status of the Hotel Project and (B) a then-current, written projected development schedule, setting forth the projected milestones as set forth in Exhibit "A", attached hereto and incorporated by reference herein (it being acknowledged and agreed by the City that any such schedule would constitutes estimates and projections, which may be subject to change); and, ii. City shall prepare and submit to NOC a written summary of the status of any pending applications to the City (including to any Committee, Commission or other subdivision thereof) by NOC for the Hotel Project entitlements. (f) In the event NOC voluntarily transfers the Prairie Schooner Property at any time during the Development Period, (i) NOC shall provide City with at least thirty (30) days' prior written notice thereof, and (ii) NDC shall cause the applicable transferee to assume, by way of a covenant enforceable by either the City or any of the Corporate Defendants, the Hotel Development Obligations for the remaining balance of the Development Period. (g) City will have the right to include the following conditions of approval in connection with its issuance of any building permit for the Hotel Project: 55575.10020\33584689.3 i. NOC will, at no cost to NDC, cause to be constructed during the period of construction of the Hotel Project a walkway generally commencing adjacent to the Hotel Project and ending in or near downtown Palm Springs (the specific path of travel to be agreed upon by NDC and City) (''the Walkway Project"), provided that (A) City shall pay NDC for all out-of-pockets costs incurred by NOC in connection therewith (excluding (for the avoidance of doubt) any profit to NDC, unless and to the extent the construction of the Walkway Project extends beyond the period of construction of the Hotel Project for reasons outside ofNOC's control), (B) NDC's and City's obligations with respect to the Walkway Project shall be structured in a way so that the Walkway Project qualifies as a work of public improvement under Labor Code section 1720( c )(2) and the Hotel Project does not constitute/qualify as a work of public improvement, and (C) NOC shall be relieved of its obligations to construct the Walkway Project in the event City has not procured, as of the date ofNDC's commencement of construction (defined as the commencement of the construction of the hotel building foundation) of the Hotel Project, all rights of way and other access permits necessary to commence and complete the Walkway Project during the period of construction of the Hotel Project. The Parties 3
7envision the Walkway Project to consist of a covered/shaded connection between the Hotel Project and downtown Palm Springs, though the ultimate, specific design shall be reasonably determined by City in consultation with NDC. ii. Following opening of the Hotel Project to the general public, the then current owner (i.e., NDC or any successor owner) of the Hotel Project shall be obligated to pay to the City during its period of ownership of the Hotel Project the transient occupancy taxes then applicable to hotels in the City. If NDC or its successor voluntarily transfers the Hotel Project, they shall cause the applicable transferee to assume, by way of a covenant enforceable by either the City or any of the Corporate Defendants, the contractual obligation to pay to the City such transient occupancy taxes. (h) Within sixty (60) days following the Effective Date of this Agreement, a revised and restated parking lot license agreement, in substantially the form attached hereto as Exhibit "B" and incorporated by reference herein, shall be entered into between the City and NDC, on substantially the same terms as the existing Parking Lot License Agreement, except as follows: (i) upon NDC's submittal of a completed planning application to City (in accordance with the City planning application process requirements then-applicable to similar projects), City will begin paying to NDC a license fee equal to $2,000 per month, (ii) upon NDC's submittal of a completed building permit application, City will begin paying to NDC a license fee equal to $4,000 per month, (iii) following NDC's submittal of a completed building permit application, either party shall have the right to terminate the License upon thirty (30) days' notice to the other, (iv) Section 6 of the Parking Lot License Agreement (i.e., City's first right of negotiation in the event of NDC's proposed sale of the Prairie Schooner Property) shall be deleted; and (v) references to the Aberdeen Project shall be deleted. (i) NDC and City shall collaborate in good faith in preparing and issuing a joint public statement, announcing the mutual resolution of the Lawsuits. 2. Attorneys' Fees. The Parties will bear their own attorneys' fees and costs related to the Lawsuits, and the facts alleged in the Lawsuits, including the negotiation and preparation of this Agreement 3. Default/Breach. In the event of a breach of this Agreement, the non-defaulting Party may seek any legal or equitable relief available by law or in equity that may be available to that Party. For purposes of this Agreement, (a) a default by NDC in meeting the Hotel Development Obligations, following written notice by City and a reasonable opportunity to cure such default, shall be deemed a material breach of this Agreement by NDC, and (b) a default by City in meeting its obligation to expedite NDC's application for the Hotel Project entitlements pursuant to Section 1 ( d) above, following written notice by NDC and a reasonable opportunity to cure such default, shall be deemed a material breach of this Agreement by City. Notwithstanding 4 55575.10020\33584689.3
8any provision of this Agreement or any law to the contrary, and in addition to any legal or equitable relief available by law or in equity to City, in the event NOC submits during the Development Period a land development application with respect to the Prairie Schooner Property for a non-Hotel Project, the City shall be entitled to withhold or deny the processing or approval of such land development application. 4. Mutual Release. Except for the rights and obligations arising out of this Agreement, the Parties on behalf of themselves in all capacities and their respective attorneys, insurers, accountants, agents, representatives, beneficiaries, executors, predecessors, successors, and assigns ( collectively "Related Parties"), agree to and do fully release and discharge each other and their respective partners, members, shareholders, affiliates, parent entities, subsidiaries, related companies, directors, officers, employees, attorneys, insurers, accountants, agents, representatives, beneficiaries, executors, predecessors, successors, and assigns ( collectively "Released Parties''), from any and all claims, obligations, demands, expenses, costs or causes of action of any type, known or unknown, suspected or unsuspected, which any of them now owns or holds or at any time owned or held against each other with respect to (i) the Prairie Schooner Property, and/or (ii) the matters covered by the Lawsuits (whether raised in the Lawsuits or not) (items (i) and (ii) collectively referred to as the "Released Matters"). For the avoidance of any doubt, "Released Parties" specifically includes Curtis R. Olson, but specifically excludes Richard H. Meaney, Steven Pougnet and John Wessman. 5. Waiver of Civil Code section 1542. Except for the rights and obligations arising out of this Agreement, it is the intention of the Parties that the release entered into as part of this Agreement shall be effective as a bar to all actions, causes of action, obligations, costs, expenses, attorneys' fees, damages, losses, claims, liabilities and demands of any character, nature, and kind, known or unknown, suspected or unsuspected, to be so barred with respect to the Released Matters; in furtherance of which intention the Parties expressly waive any and all right and benefit conferred upon them with respect to the Released Matters by the provisions of Section 1542 of the California Civil Code, which reads as follows: A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party. The Parties hereby acknowledge that the foregoing waiver of the provisions of Civil Code section 1542 was bargained for separately. The Parties expressly agree that the release provisions contained herein shall be given full force and effect in accordance with each and all of their express terms and provisions, including but not limited to those terms and provisions relating to unknown or unsuspected claims, demands, and causes of action with respect to the Released Matters. The Parties specifically agree to assume the risk of the subsequent discovery or understanding of any matter, fact, or law which if now known or understood would in any respect have affected this Ill 5 55575. 10020\33584689.3
9Agreement. Initials: 6. No Assignment of Claims. The Parties represent and warrant that they have not sold, assigned, or transferred, or purported to sell, assign, or transfer, and shall not hereafter sell, assign, or transfer, any obligations, liabilities, demands, claims, costs, expenses, debts, controversies, damages, rights, actions, or causes of action released pursuant to this Agreement. 7. Further Assurances. The Parties agree to take any action or execute any document as may be reasonably necessary to effectuate this Agreement. 8. Severability. Should any term of this Agreement be deemed unlawful, that provision shall be severed and the remaining terms shall continue to be valid and fully enforceable. 9. Authority. The signatories to this Agreement represent and warrant that they have the authority to enter into this Agreement and bind the applicable Party. I 0. Amendment. No modification of this Agreement shall be valid unless in writing and signed by all of the Parties and their attorneys. The Parties shall not be bound by any representation, warranty, promise, statement, or information, unless it is specifically set forth in this Agreement. 11. Waiver. The failure of any Party to insist upon strict observance of, or compliance with, all of the terms of this Agreement in one or more instances, shall not be deemed to be a waiver of that Party's right to insist upon such observance or compliance with the other terms of this Agreement. 12. Binding Effect. This Agreement shall bind and inure to the benefit of the successors and assigns of the Parties to this Agreement. 13. Not a Statutory Development Agreement. This Agreement is not a statutory development agreement as described by California Government Code Section 65864, et seq. This Agreement confers no vested entitlements with respect to the development of the Prairie Schooner Property. This Agreement does not limit, in any way whatsoever, any authority the City may have to lawfully increase development impact fee, change any planning or zoning law or land use regulations, or otherwise lawfully exercise all powers available to the City pursuant to its police power, statutes, and judicial decision (specifically excepting, however, any powers available to the City pursuant to its police power, statutes, and judicial decision with respect to the Released Matters). 14. Governing Law. This Agreement shall in all respects be interpreted, enforced, and governed by and under the laws of the State of California. The Parties hereto agree that any subsequent action relating to this Agreement shall be instituted and prosecuted in the County of Riverside, California. Each Party consents to personal jurisdiction. 6 55575.10020\33584689.3
10Agreement. Initials: -~ 6. No Assignment of Claims. The Parties represent and warrant that they have not sold, assigned, or transferred, or purported to sell, assign, or transfer, and shall not hereafter sell, assign, or transfer, any obligations, liabilities, demands, claims, costs, expenses, debts, controversies, damages, rights, actions, or causes of action released pursuant to this Agreement. 7. Further Assurances. The Parties agree to take any action or execute any document as may be reasonably necessary to effectuate this Agreement. 8. Severability. Should any term of this Agreement be deemed unlawful, that provision shall be severed and the remaining terms shall continue to be valid and fully enforceable. 9. Authority. The signatories to this Agreement represent and warrant that they have the authority to enter into this Agreement and bind the applicable Party. 10. Amendment. No modification of this Agreement shall be valid unless in writing and signed by all of the Parties and their attorneys. The Parties shall not be bound by any representation, warranty, promise, statement, or information, unless it is specifically set forth in this Agreement. 11. Waiver. The failure of any Party to insist upon strict observance of, or compliance with, all of the terms of this Agreement in one or more instances, shall not be deemed to be a waiver of that Party's right to insist upon such observance or compliance with the other terms of this Agreement. 12. Binding Effect. This Agreement shall bind and inure to the benefit of the successors and assigns of the Parties to this Agreement. 13. Not a Statutory Development Agreement. This Agreement is not a statutory development agreement as described by California Government Code Section 65864, et seq. This Agreement confers no vested entitlements with respect to the development of the Prairie Schooner Property. This Agreement does not limit, in any way whatsoever, any authority the City may have to lawfully increase development impact fee, change any planning or zoning law or land use regulations, or otherwise lawfully exercise all powers available to the City pursuant to its police power, statutes, and judicial decision (specifically excepting, however, any powers available to the City pursuant to its police power, statutes, and judicial decision with respect to the Released Matters). 14. Governing Law. This Agreement shall in all respects be interpreted, enforced, and governed by and under the laws of the State of California. The Parties hereto agree that any subsequent action relating to this Agreement shall be instituted and prosecuted in the County of Riverside, California. Each Party consents to personal jurisdiction. 6 55575.10020\33584689.3
1115. Court to Retain Jurisdiction to Enforce Settlement. The Parties agree to, and do mutually request that the Court in the State Court Lawsuit retain jurisdiction to enforce this Agreement under Code of Civil Procedure section 664.6. The Parties instruct their attorneys to obtain an order from the Court in the State Court Lawsuit to retain jurisdiction under Section 664.6 for such purposes before entering dismissal of the State Court Lawsuit. If necessary, the Parties agree to sign a separate written request that the Court retain jurisdiction under Section 664.6. 16. Attorneys' Fees to Enforce Agreement. Each Party consents to the personal jurisdiction of the court and stipulates and agrees that in the event any Party to this Agreement commences any legal proceeding concerning any aspect of this Agreement, including but not limited to the interpretation or enforcement of any of its provisions or based on an alleged dispute, breach, default or misrepresentation in connection with any aspect or provision of this Agreement, the prevailing party shall be entitled to recover reasonable attorneys' fees and all costs and expenses incurred in connection with the action or proceeding, including court costs and collection expenses, whether or not such action or proceeding ultimately results in judgment. The "prevailing party" means the Party determined by the court to have most nearly prevailed, even if such Party did not prevail in all matters, not necessarily the one in whose favor judgment is rendered. If the court fails or refuses to make a determination of the prevailing party, the Party who is awarded costs of suit shall be deemed to be the prevailing party for purposes of awarding attorneys' fees. 17. No Admission of Liability. This Agreement is the result of a compromise and shall never at any time nor for any purpose be considered an admission of liability or responsibility on the part of any Party herein released, nor shall the payment of any sum of money in consideration for the execution of this Agreement constitute or be construed as an admission of any liability whatsoever, by any Party herein released, all of which continue to deny such liability and to disclaim such responsibility. 18. Countemarts. This Agreement may be executed in one or more counterparts, any one of which shall be binding on any Party signing thereon. Photocopies, facsimile copies, and scanned original documents shall be deemed originals and shall be valid, binding, and enforceable in accordance with their terms. 19. Complete Agreement. This Agreement constitutes the entire agreement and understanding between the Parties concerning the subject matter hereof, and supersedes and replaces all prior negotiations and proposed agreements, written and/or oral. Each Party acknowledges to the other Parties that no Party or agent or any attorney of any Party has made any promise, representation, or warranty whatsoever, express or implied, written or oral, not contained herein concerning the subject matter hereof to induce it to execute this Agreement, and each Party acknowledges that it has not executed this Agreement in reliance upon any promise, representation, or warranty not contained herein. 20. Meet and Confer. If any provision of this Agreement shall be found to be invalid in any respect and cannot be construed to effectuate its intended purpose, the Parties agree to meet and confer for the purpose of modifying in writing the provision in a mutually acceptable manner so as to effectuate the intent of this Agreement. 7 55575.10020\33584689.3
1221. Neutral Interpretation. The language of this Agreement shall be construed as a whole according to its fair meaning and not strictly for or against any Party. 22. Consultation with Counsel. The Parties, and each of them, represent and declare that they have carefully read this Agreement and know and understand its contents, and have had the advice of counsel regarding the same ( or ample opportunity to consult with counsel of their choosing), and that they sign the same freely and voluntarily. 23. The headings contained in this Agreement are for reference purposes only and shall in no way affect the meaning or interpretation of it. WHEREFORE, EACH OF THE UNDERSIGNED HEREBY DECLARES THAT THE TERMS OF THIS SETTLEMENT AGREEMENT AND GENERAL RELEASE HA VE BEEN COMPLETELY READ AND ARE FULLY UNDERSTOOD, AND BY EXECUTION HEREOF VOLUNTARILY ACCEPTS THE TERMS WITH THE INTENT TO BE LEGALLY BOUND THEREBY. IN WITNESS WHEREOF, the Parties have executed this SETTLEMENT AGREEMENT AND MUTUAL RELEASE effective as of the date last signed below. [SIGNATURES CONTINUED ON FOLLOWING PAGE] 8 55575.10020\33584689.3
13SIGNATURE PAGE TO SETTLEMENT AGREEMENT AND MUTUAL RELEASE PRAIRIES SCHOONER PROPERTY Dated: January ZS, 2021 Dated: January_, 2021 Dated: January_, 2021 APPROVED AS TO LEGAL FORM: BEST BEST & KRIEGER, LLP ~~~~ City Attorney O&MHR,LLC By: ___________ _ Its: ___________ _ NEXUS DEVELOPMENT CORPORATION/ CENTRAL DIVISION By: ___________ _ Its: ___________ _ [SIGNATURES CONTINUED ON FOLLOWING PAGE] Dated: January_, 2021 NDC EQUITIES DOWNTOWN PS, LLC By: ___________ _ Its: ___________ _ 9 5557S.10020\33584689.3
14SIGNATURE PAGE TO SETTLEMENT AGREEMENT AND MUTUAL RELEASE PRAIRIES SCHOONER PROPERTY Dated: January_, 2021 Dated: January 19 , 2021 Dated: Januaryl.'i , 2021 CITY OF PALM SPRINGS, a charter City and California municipal corporation By: ____________ _ Its: ____________ _ APPROVED AS TO LEGAL FORM: BEST BEST & KRIEGER~ LLP By: ___________ _ Jeffrey S. Ballinger City Attorney NEXUS DEVELOPMENT CORPORATION/ CENTRAL DIV~ sf Uiw 15 -J<'l uffltt 11 [SIGNATURES CONTINUED ON FOLLOWING PAGE] Dated: January V1 , 2021 NOC EQUITIES DOWNTOWN PS, LLC ,#11,,14/& 9 55575.10020\33584689.3
15EXHIBIT"A" PRAIRIE SCHOONER HOTEL PROJECT PRELIMINARY PROJECT SCHEDULE <PREPARED 12/31/2020} Estimated Date 2/1/2021 10/1/2021 2/1/2022 1/31/2023 7/31/2023 1/31/2024 4/30/2024 Commence Construction 5/1/2024 Hotel 1/31/2026 Cautionary Note: The tasks and estimated dates set forth herein are only projections, are not guarantees and do not constitute any contractual obligations or promises. These projections are based on expectations, estimates, assumptions and beliefs that involve numerous risks and uncertainties. Although we believe these projections are based on reasonable assumptions, these assumptions may prove to be incomplete or incorrect due to the effects of, among other things, future economic, competitive and market conditions and unanticipated events, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Consequently, actual results, performance and timing will most likely vary from that set forth herein since the future is inherently uncertain and unpredictable. 10 55575.10020\33584689.3
16EXHIBIT"B" PARKING LOT LICENSE AGREEMENT (RESTATED) [ATTACHED ON FOLLOWING PAGES) 11 55575.10020\33584689.3
17[Prairie Schooner Site] AMENDED AND RESTATED PARKING LOT LICENSE AGREEMENT This AMENDED AND RESTATED PARKING LOT LICENSE AGREEMENT (this "Agreement'') is entered into as of January 29, 2021 (the "Effective Date"), by and between NOC EQUITIES DOWNTOWN PS, LLC, a California limited liability company ("NOC''), and THE CITY OF PALM SPRINGS, a california charter city ("Qtt'). RECITALS A. NOC is the owner of certain real property located at the south-east corner of E. Andreas Road and N. ca lie El Segundo, Palm Springs, California (APNs 508-055-007, 508-055-008 and 508-055-009) (the "Property''), which NOC acquired from City pursuant to that certain Purchase Agreement and Escrow Instructions, dated October 25, 2011, as amended by that certain First Amendment to Purchase Agreement and Escrow Instructions, dated December 1, 2014 (the "Purchase Agreement''). B. City is currently using the Property as a public parking lot pursuant to that certain Parking Lot License Agreement entered into by NOC and City on or about January 7, 2015 (the "Prior Agreement''), subject to the terms and conditions set forth in the Prior Agreement. C. Concurrently herewith, NOC and City are entering into a Settlement Agreement and Mutual Release (the "Settlement Agreement'') pursuant to which NOC and City have agreed to settle certain existing lawsuits with respect to the Property as more particularly described in and subject to the terms and conditions of the Settlement Agreement. D. Pursuant to the Settlement Agreement, NOC has agreed to, in good faith, use commercially reasonable efforts to pursue the development, financing and construction of a hotel project on the Property, which hotel project may include one or more hotel buildings and complementary amenities (the "Hotel Project'') during the 5-year period following the Effective Date of the Settlement Agreement (the "Development Period"). E. Pursuant to Section l{h) of the Settlement Agreement, NOC and City desire to enter into this Agreement whereby the Prior Agreement is amended and restated in its entirety and NOC grants to City the non-exclusive right to continue to use the Property as a public parking lot, subject to the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the terms, covenants and conditions hereof, and for other good consideration, the receipt and sufficiency of which are hereby acknowledged, NOC and City hereby agree as follows: 1. License. Subject to the terms and conditions set forth herein, NOC hereby grants to City a non-exclusive license (the "License") for City and its employees, representatives, agents, contractors, guests and invitees (collectively, "Permittees") to use the Property for public parking purposes only (the "Permitted Use") during the License Term (defined below). No license fee shall be payable to NOC by City or its Permittees in connection with the use of the Property for such Permitted Use except as follows: (a) upon NDC's submittal of a completed planning application to City (in accordance with the City planning application process requirements then applicable to similar projects) prior to the expiration of the Development Period, City shall begin paying to NOC a license fee equal to $2,000 per month, and (b) upon the earlier of (i) NDC's submittal of a completed building permit application to City prior to the expiration of the Development Period, or (ii) the expiration of the Development Period, City shall begin paying to NOC a license fee equal to $4,000 per month. Each monthly installment of the applicable license fee shall 1S88628v3
18be payable by City in advance by no later than the fifth (5th) day of the applicable calendar month; provided, however, the initial installment of each of the license fees payable pursuant to clauses (a) and (b) above shall be due and payable by City within ten (10) days following the date of NDC's submittal of such completed planning application to City, the date of NDC's submittal of such completed building permit application to City, or the expiration of the Development Period, as applicable (and shall be prorated as to any partial month). 2. License Term. As provided in the Prior Agreement, the term of the License (the "License Term") commenced on January 7, 2015 (i.e., the closing date of NDC's acquisition of the Property under the Purchase Agreement). The License Term shall continue under this Agreement until the License and this Agreement are terminated pursuant to any of the following: (a) City shall have the right to terminate the License and this Agreement at any time, for any reason, upon ninety (90) days' prior written notice to NOC, (b) following NDC's submittal of a completed building permit application for the Hotel Project (or, following the expiration of the Development Period, such other development as permitted under applicable law and applicable City planning and zoning requirements), each of NOC and City shall have the unilateral right to terminate the License and this Agreement upon thirty (30) days' prior written notice to the other, (c) NOC shall have the right to terminate the License and this Agreement immediately in the event of a breach of this Agreement by City which is not cured by City within thirty (30) days following written notice thereof by NOC (such termination right of NOC to be in addition to any other rights and remedies available to NOC under this Agreement, at law or in equity), and (d) after the seventh (7th) anniversary of the Effective Date of the Settlement Agreement, each of NOC and City shall have the unilateral right to terminate the License and this Agreement at any time, for any reason, upon thirty (30) days' prior written notice to the other. 3. Use and Maintenance. At all times during the License Term, City shall, at City's sole cost and expense, (a) repair, maintain, and operate the Property, in such manner as reasonably determined by City, and (b) maintain the Property in a secure and safe condition. City agrees that it will keep the Property clean and free from litter. City shall observe and obey all laws, rules, and regulations that apply to City's and/or its Permittees' use of the Property. City shall not make any alterations or modifications to the Property without first obtaining NDC's prior written consent, which may be given or withheld by NOC in its sole and absolute discretion. 4. Indemnification by City. Notwithstanding the existence of any insurance carried by or for the benefit of NOC or City, and without regard to the policy limits of any such insurance, City shall protect, indemnify, save harmless and defend NOC and its affiliates, partners, members, shareholders, directors, officers, employees, agents, representatives, successors, and assigns (collectively, the "Indemnified Parties") from and against any and all claims, causes of action, liabilities, obligations, liens, demands, suits, losses, damages, injuries, judgments, penalties, costs, or expenses (including, without limitation, attorneys' fees and costs and consultants' and experts' fees and expenses) of any kind or character whatsoever, imposed upon or incurred by or asserted against any Indemnified Party which arises out of or relates to City's and/or its Permittees' entry into or use of the Property, except to the extent caused by NDC's or the Indemnified Parties' gross negligence or willful misconduct. The obligations of City pursuant to this Paragraph 4 shall survive the expiration or earlier termination of the License and/or this Agreement. 5. Insurance. City shall, at City's sole cost and expense, carry and keep in force at all times during the License Term (and provide NOC with reasonable documentation evidencing the existence of) the following insurance: IS88628v3 2
19(a) Commercial general liability insurance covering the Property and City's use thereof, with limits of not less than Two Million Dollars ($2,000,000.00) each occurrence and Four Million Dollars ($4,000,000.00) general aggregate. Coverage shall be on an occurrence (as opposed to a claims made) basis. Such insurance shall also provide that it is primary insurance, and that any insurance carried by NOC shall be excess and noncontributory. (b) Automobile liability insurance covering owned, non-owned or rented automotive equipment having a combined single limit of at least One Million Dollars ($1,000,000) with respect to injuries or damages in any single occurrence. Such insurance shall also provide that it is primary insurance, and that any insurance carried by NOC shall be excess and noncontributory. (c) Workers' compensation insurance, covering all persons employed by City in connection with the performance of work of any nature in or about the Property, in a form prescribed by the laws of the State of California, and employers' liability insurance. All insurance policies required hereunder will be issued by fiscally responsible insurance companies authorized to do business in the State of California having an A.M. Best's (or its successor) rating of no less than A-VIII and must name (by endorsement) NOC and such other parties requested by NOC as additional insureds, and contain an express waiver of subrogation in their favor (except that the additional insured requirement will not apply to the workers compensation coverage required hereunder, although the waiver of subrogation requirement does apply). All such policies will require 30 days' written notice to NOC prior to any cancellation thereof. Any insurance coverage required by this Paragraph 5 may be effected by means of a policy or policies of blanket liability (primary and excess) and property insurance covering other premises. 6. [Intentionally Omitted]. 7. Notices. Any notice, writing or communication required or desired to be given or delivered pursuant to this Agreement will be personally delivered, delivered by Federal Express or comparable overnight courier, providing written evidence of delivery, or delivered by U.S. registered or certified mail, return receipt requested, postage prepaid and sent to NOC and City at the following addresses: lfto NOC: With a copy to: lfto City: 1S88628v3 c/o Nexus Companies 1 MacArthur Place, Suite 300 Santa Ana, California 92707 Attn: Matthew B. Kaufman Elkins Kalt Weintraub Reuben Gartside LLP 10345 W. Olympic Boulevard Los Angeles, CA 90064 Attn: Ryan A. Vogt-Lowell Best Best & Krieger LLP 655 West Broadway, 15th Floor San Diego, CA 92101 Attn: Jeffrey S. Ballinger 3
20With a copy to: Best Best & Krieger LLP 2855 E. Guasti Rd., Suite 400 Ontario, CA 91761 Attn: Richard T. Egger or such other address(es) as either party may from time to time designate as its notice address by notifying the other party thereof. Notice so sent will be deemed given (a) when personally delivered, or (b) on the first business day following deposit with Federal Express or a comparable overnight courier service providing written evidence of delivery. 8. Successors and Assigns. This Agreement shall be binding upon, and inure to the benefit of, NOC's and City's successors and assigns; provided, however, the rights, duties and obligations of City hereunder may not be assigned by City without the prior written consent of NOC, which may be given or withheld in NOC's sole and absolute discretion. Any attempted assignment by City of its rights, duties and/or obligations under this Agreement without the prior written consent of NOC shall result in a termination of this license. 9. Attorneys' Fees. In the event of any controversy, claim or dispute between NOC or City arising out of or relating to this Agreement or any breach thereof, the prevailing party shall be entitled to recover all reasonable costs, including, without limitation, reasonable attorneys' fees and costs, relating thereto. 10. Entire Agreement. This Agreement (and to the extent the subject matter of this Agreement is contained in the Settlement Agreement) contains the entire agreement between the parties, and no modification of this Agreement will be binding upon the parties unless evidenced by an agreement in writing signed by NOC and City after the date hereof. 11. Counterparts; Faxed/Emailed Signature Pages. This Agreement may be executed in one or more separate counterparts, each of which, when so executed, will be deemed to be an original. Such counterparts will together constitute and be one and the same instrument. Telecopied or e-mailed signatures may be used in place of original signatures on this Agreement, and the parties intend to be bound by the signatures on the telecopied or e-mailed document. 12. Governing Law. This Agreement will be construed in accordance with the laws of the State of California. 13. Restatement and Replacement of Prior Agreement. This Agreement amends, restates and supersedes the Prior Agreement in its entirety from and after the Effective Date. [Signature Page Follows] 1588628v3 4
21IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first written above. NOC: NOC EQUITIES DOWNTOWN PS, LLC, a California limited liability company By: _________ _ Name: _________ _ Title: _________ _ 1S88628v3 5 City: THE CITY OF PALM SPRINGS, a California charter city By: _________ _ Name: _________ _ Title: __________ _
22[Prairie Schooner Site] AMENDED AND RESTATED PARKING LOT LICENSE AGREEMENT This AMENDED AND RESTATED PARKING LOT LICENSE AGREEMENT (this "Agreement'') is entered into as of January 29, 2021 {the "Effective Date"), by and between NDC EQUITIES DOWNTOWN PS, LLC, a California limited liability company ("NDC''), and THE CITY OF PALM SPRINGS, a california charter city (".Q!y'). RECITALS A. NDC is the owner of certain real property located at the south-east corner of E. Andreas Road and N. Calle El Segundo, Palm Springs, California (APNs 508-055-007, 508-055-008 and 508-055-009) (the "Property''), which NDC acquired from City pursuant to that certain Purchase Agreement and Escrow Instructions, dated October 25, 2011, as amended by that certain First Amendment to Purchase Agreement and Escrow Instructions, dated December 1, 2014 {the "Purchase Agreement''). B. City is currently using the Property as a public parking lot pursuant to that certain Parking Lot License Agreement entered into by NDC and City on or about January 7, 2015 (the "Prior Agreement''), subject to the terms and conditions set forth in the Prior Agreement. C. Concurrently herewith, NDC and City are entering into a Settlement Agreement and Mutual Release (the "Settlement Agreement'') pursuant to which NDC and City have agreed to settle certain existing lawsuits with respect to the Property as more particularly described in and subject to the terms and conditions of the Settlement Agreement. D. Pursuant to the Settlement Agreement, NDC has agreed to, in good faith, use commercially reasonable efforts to pursue the development, financing and construction of a hotel project on the Property, which hotel project may include one or more hotel buildings and complementary amenities {the "Hotel Project'') during the 5-year period following the Effective Date of the Settlement Agreement (the "Development Period"). E. Pursuant to Section l{h) of the Settlement Agreement, NDC and City desire to enter into this Agreement whereby the Prior Agreement is amended and restated in its entirety and NDC grants to City the non-exclusive right to continue to use the Property as a public parking lot, subject to the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the terms, covenants and conditions hereof, and for other good consideration, the receipt and sufficiency of which are hereby acknowledged, NOC and City hereby agree as follows: 1. License. Subject to the terms and conditions set forth herein, NOC hereby grants to City a non-exclusive license {the "License") for City and its employees, representatives, agents, contractors, guests and invitees {collectively, "Permittees") to use the Property for public parking purposes only {the "Permitted Use") during the License Term (defined below). No license fee shall be payable to NOC by City or its Permittees in connection with the use of the Property for such Permitted Use except as follows: (a) upon NDC's submittal of a completed planning application to City {in accordance with the City planning application process requirements then applicable to similar projects) prior to the expiration of the Development Period, City shall begin paying to NOC a license fee equal to $2,000 per month, and (b) upon the earlier of (i) NDC's submittal of a completed building permit application to City prior to the expiration of the Development Period, or (ii) the expiration of the Development Period, City shall begin paying to NOC a license fee equal to $4,000 per month. Each monthly installment of the applicable license fee shall 1S88628v3
23be payable by City in advance by no later than the fifth (5th) day of the applicable calendar month; provided, however, the initial installment of each of the license fees payable pursuant to clauses (a) and (b) above shaJI be due and payable by City within ten (10) days following the date of NDC's submittal of such completed planning application to City, the date of NDC's submittal of such completed building permit application to City, or the expiration of the Development Period, as applicable (and shall be prorated as to any partial month). 2. License Term. As provided in the Prior Agreement, the term of the License (the "License Term") commenced on January 7, 2015 (i.e., the closing date of NDC's acquisition of the Property under the Purchase Agreement). The License Term shall continue under this Agreement until the License and this Agreement are terminated pursuant to any of the following: (a) City shall have the right to terminate the License and this Agreement at any time, for any reason, upon ninety (90) days' prior written notice to NOC, (b) following NDC's submittal of a completed building permit application for the Hotel Project (or, following the expiration of the Development Period, such other development as permitted under applicable law and applicable City planning and zoning requirements), each of NOC and City shall have the unilateral right to terminate the License and this Agreement upon thirty (30) days' prior written notice to the other, (c) NOC shall have the right to terminate the License and this Agreement immediately in the event of a breach of this Agreement by City which is not cured by City within thirty (30) days following written notice thereof by NOC (such termination right of NOC to be in addition to any other rights and remedies available to NOC under this Agreement, at law or in equity), and (d) after the seventh (7th) anniversary of the Effective Date of the Settlement Agreement, each of NOC and City shall have the unilateral right to terminate the License and this Agreement at any time, for any reason, upon thirty (30) days' prior written notice to the other. 3. Use and Maintenance. At all times during the License Term, City shall, at City's sole cost and expense, (a) repair, maintain, and operate the Property, in such manner as reasonably determined by City, and (b) maintain the Property in a secure and safe condition. City agrees that it will keep the Property clean and free from litter. City shall observe and obey all laws, rules, and regulations that apply to City's and/or its Permittees' use of the Property. City shall not make any alterations or modifications to the Property without first obtaining NOC's prior written consent, which may be given or withheld by NOC in its sole and absolute discretion. 4. Indemnification by City. Notwithstanding the existence of any insurance carried by or for the benefit of NOC or City, and without regard to the policy limits of any such insurance, City shall protect, indemnify, save harmless and defend NOC and its affiliates, partners, members, shareholders, directors, officers, employees, agents, representatives, successors, and assigns (collectively, the "Indemnified Parties") from and against any and all claims, causes of action, liabilities, obligations, liens, demands, suits, losses, damages, injuries, judgments, penalties, costs, or expenses (including, without limitation, attorneys' fees and costs and consultants' and experts' fees and expenses) of any kind or character whatsoever, imposed upon or incurred by or asserted against any Indemnified Party which arises out of or relates to City's and/or its Permittees' entry into or use of the Property, except to the extent caused by NDC's or the Indemnified Parties' gross negligence or willful misconduct. The obligations of City pursuant to this Paragraph 4 shall survive the expiration or earlier termination of the License and/or this Agreement. 5. Insurance. City shall, at City's sole cost and expense, carry and keep in force at all times during the License Term (and provide NOC with reasonable documentation evidencing the existence of) the following insurance: 1S88628v3 2
24(a) Commercial general liability insurance covering the Property and City's use thereof, with limits of not less than Two Million Dollars ($2,000,000.00) each occurrence and Four Million Dollars ($4,000,000.00) general aggregate. Coverage shall be on an occurrence (as opposed to a claims made) basis. Such insurance shall also provide that it is primary insurance, and that any insurance carried by NOC shall be excess and noncontributory. (b) Automobile liability insurance covering owned, non-owned or rented automotive equipment having a combined single limit of at least One Million Dollars ($1,000,000) with respect to injuries or damages in any single occurrence. Such insurance shall also provide that it is primary insurance, and that any insurance carried by NOC shall be excess and noncontributory. (c) Workers' compensation insurance, covering all persons employed by City in connection with the performance of work of any nature in or about the Property, in a form prescribed by the laws of the State of California, and employers' liability insurance. All insurance policies required hereunder will be issued by fiscally responsible insurance companies authorized to do business in the State of California having an A.M. Best's (or its successor) rating of no less than A-VIII and must name (by endorsement) NOC and such other parties requested by NOC as additional insureds, and contain an express waiver of subrogation in their favor (except that the additional insured requirement will not apply to the workers compensation coverage required hereunder, although the waiver of subrogation requirement does apply). All such policies will require 30 days' written notice to NOC prior to any cancellation thereof. Any insurance coverage required by this Paragraph 5 may be effected by means of a policy or policies of blanket liability (primary and excess) and property insurance covering other premises. 6. [Intentionally Omitted]. 7. Notices. Any notice, writing or communication required or desired to be given or delivered pursuant to this Agreement will be personally delivered, delivered by Federal Express or comparable overnight courier, providing written evidence of delivery, or delivered by U.S. registered or certified mail, return receipt requested, postage prepaid and sent to NOC and City at the following addresses: lfto NOC: With a copy to: lfto City: 1S88628v3 c/o Nexus Companies 1 MacArthur Place, Suite 300 Santa Ana, California 92707 Attn: Matthew B. Kaufman Elkins Kalt Weintraub Reuben Gartside LLP 10345 W. Olympic Boulevard Los Angeles, CA 90064 Attn: Ryan A. Vogt-Lowell Best Best & Krieger LLP 655 West Broadway, 15th Floor San Diego, CA 92101 Attn: Jeffrey S. Ballinger 3
25With a copy to: Best Best & Krieger LLP 2855 E. Guasti Rd., Suite 400 Ontario, CA 91761 Attn: Richard T. Egger or such other address(es) as either party may from time to time designate as its notice address by notifying the other party thereof. Notice so sent will be deemed given (a) when personally delivered, or (b) on the first business day following deposit with Federal Express or a comparable overnight courier service providing written evidence of delivery. 8. Successors and Assigns. This Agreement shall be binding upon, and inure to the benefit of, NDC's and City's successors and assigns; provided, however, the rights, duties and obligations of City hereunder may not be assigned by City without the prior written consent of NOC, which may be given or withheld in NDC's sole and absolute discretion. Any attempted assignment by City of its rights, duties and/or obligations under this Agreement without the prior written consent of NOC shall result in a termination of this License. 9. Attorneys' Fees. In the event of any controversy, claim or dispute between NOC or City arising out of or relating to this Agreement or any breach thereof, the prevailing party shall be entitled to recover all reasonable costs, including, without limitation, reasonable attorneys' fees and costs, relating thereto. 10. Entire Agreement. This Agreement (and to the extent the subject matter of this Agreement is contained in the Settlement Agreement) contains the entire agreement between the parties, and no modification of this Agreement will be binding upon the parties unless evidenced by an agreement in writing signed by NOC and City after the date hereof. 11. Counterparts; Faxed/Emailed Signature Pages. This Agreement may be executed in one or more separate counterparts, each of which, when so executed, will be deemed to be an original. Such counterparts will together constitute and be one and the same instrument. Telecopied or e-mailed signatures may be used in place of original signatures on this Agreement, and the parties intend to be bound by the signatures on the telecopied or e-mailed document. 12. Governing Law. This Agreement will be construed in accordance with the laws of the State of California. 13. Restatement and Replacement of Prior Agreement. This Agreement amends, restates and supersedes the Prior Agreement in its entirety from and after the Effective Date. [Signature Page Follows] 1S88628v3 4
26IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first written above. NOC: NOC EQUITIES DOWNTOWN PS, LLC, a California limited liability company 1588628v3 5 City: THE CITY OF PALM SPRINGS, a California charter city By: _________ _ Name: _________ _ Title: _________ _
27IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first written above. NOC: NOC EQUITIES DOWNTOWN PS, LLC, a California limited liability company By: _________ _ Name: _________ _ Title: _________ _ 1588628v3 5 City: THE CITY OF PALM SPRINGS, a california charter city
28[Prairie Schooner Site] AMENDED AND RESTATED PARKING LOT LICENSE AGREEMENT This AMENDED AND RESTATED PARKING LOT LICENSE AGREEMENT (this "Agreement'') is entered into as of January 29, 2021 (the "Effective Date"), by and between NDC EQUITIES DOWNTOWN PS, LLC, a California limited liability company ("NDC"), and THE CITY OF PALM SPRINGS, a California charter city ("Q~"). RECITALS A. NOC is the owner of certain real property located at the south-east corner of E. Andreas Road and N. Calle El Segundo, Palm Springs, California (APNs 508-055-007, 508-055-008 and 508-055-009) (the "Property''), which NOC acquired from City pursuant to that certain Purchase Agreement and Escrow Instructions, dated October 25, 2011, as amended by that certain First Amendment to Purchase Agreement and Escrow Instructions, dated December 1, 2014 (the "Purchase Agreement''). B. City is currently using the Property as a public parking lot pursuant to that certain Parking Lot License Agreement entered into by NDC and City on or about January 7, 2015 (the "Prior Agreement"), subject to the terms and conditions set forth in the Prior Agreement. C. Concurrently herewith, NDC and City are entering into a Settlement Agreement and Mutual Release (the "Settlement Agreement'') pursuant to which NDC and City have agreed to settle certain existing lawsuits with respect to the Property as more particularly described in and subject to the terms and conditions of the Settlement Agreement. D. Pursuant to the Settlement Agreement, NDC has agreed to, in good faith, use commercially reasonable efforts to pursue the development, financing and construction of a hotel project on the Property, which hotel project may include one or more hotel buildings and complementary amenities (the "Hotel Project'') during the 5-year period following the Effective Date of the Settlement Agreement (the "Development Period"). E. Pursuant to Section l{h) of the Settlement Agreement, NDC and City desire to enter into this Agreement whereby the Prior Agreement is amended and restated in its entirety and NDC grants to City the non-exclusive right to continue to use the Property as a public parking lot, subject to the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the terms, covenants and conditions hereof, and for other good consideration, the receipt and sufficiency of which are hereby acknowledged, NOC and City hereby agree as follows: 1. License. Subject to the terms and conditions set forth herein, NOC hereby grants to City a non-exclusive license (the "License") for City and its employees, representatives, agents, contractors, guests and invitees (collectively, "Permittees") to use the Property for public parking purposes only (the "Permitted Use") during the License Term (defined below). No license fee shall be payable to NDC by City or its Permittees in connection with the use of the Property for such Permitted Use except as follows: (a) upon NDC's submittal of a completed planning application to City (in accordance with the City planning application process requirements then applicable to similar projects) prior to the expiration of the Development Period, City shall begin paying to NOC a license fee equal to $2,000 per month, and (b) upon the earlier of (i) NDC's submittal of a completed building permit application to City prior to the expiration of the Development Period, or (ii) the expiration of the Development Period, City shall begin paying to NOC a license fee equal to $4,000 per month. Each monthly installment of the applicable license fee shall 1S88628v3
29be payable by City in advance by no later than the fifth (5th) day of the applicable calendar month; provided, however, the initial installment of each of the license fees payable pursuant to clauses (a) and (b) above shall be due and payable by City within ten (10) days following the date of NOC's submittal of such completed planning application to City, the date of NDC's submittal of such completed building permit application to City, or the expiration of the Development Period, as applicable (and shall be prorated as to any partial month). 2. License Term. As provided in the Prior Agreement, the term of the License (the "License Term") commenced on January 7, 2015 (i.e., the closing date of NDC's acquisition of the Property under the Purchase Agreement). The License Term shall continue under this Agreement until the License and this Agreement are terminated pursuant to any of the following: (a) City shall have the right to terminate the License and this Agreement at any time, for any reason, upon ninety (90) days' prior written notice to NOC, (b) following NDC's submittal of a completed building permit application for the Hotel Project (or, following the expiration of the Development Period, such other development as permitted under applicable law and applicable City planning and zoning requirements), each of NOC and City shall have the unilateral right to terminate the License and this Agreement upon thirty (30) days' prior written notice to the other, (c) NOC shall have the right to terminate the License and this Agreement immediately in the event of a breach of this Agreement by City which is not cured by City within thirty (30) days following written notice thereof by NOC (such termination right of NOC to be in addition to any other rights and remedies available to NOC under this Agreement, at law or in equity), and (d) after the seventh (7th) anniversary of the Effective Date of the Settlement Agreement, each of NOC and City shall have the unilateral right to terminate the License and this Agreement at any time, for any reason, upon thirty (30) days' prior written notice to the other. 3. Use and Maintenance. At all times during the License Term, City shall, at City's sole cost and expense, (a) repair, maintain, and operate the Property, in such manner as reasonably determined by City, and (b) maintain the Property in a secure and safe condition. City agrees that it will keep the Property clean and free from litter. City shall observe and obey all laws, rules, and regulations that apply to City's and/or its Permittees' use of the Property. City shall not make any alterations or modifications to the Property without first obtaining NDC's prior written consent, which may be given or withheld by NOC in its sole and absolute discretion. 4. Indemnification by City. Notwithstanding the existence of any insurance carried by or for the benefit of NOC or City, and without regard to the policy limits of any such insurance, City shall protect, indemnify, save harmless and defend NOC and its affiliates, partners, members, shareholders, directors, officers, employees, agents, representatives, successors, and assigns (collectively, the "Indemnified Parties") from and against any and all claims, causes of action, liabilities, obligations, liens, demands, suits, losses, damages, injuries, judgments, penalties, costs, or expenses (including, without limitation, attorneys' fees and costs and consultants' and experts' fees and expenses) of any kind or character whatsoever, imposed upon or incurred by or asserted against any Indemnified Party which arises out of or relates to City's and/or its Permittees' entry into or use of the Property, except to the extent caused by NDC's or the Indemnified Parties' gross negligence or willful misconduct. The obligations of City pursuant to this Paragraph 4 shall survive the expiration or earlier termination of the License and/or this Agreement. 5. Insurance. City shall, at City's sole cost and expense, carry and keep in force at all times during the License Term (and provide NOC with reasonable documentation evidencing the existence of) the following insurance: 1S88628v3 2
30(a) Commercial general liability insurance covering the Property and City's use thereof, with limits of not less than Two Million Dollars ($2,000,000.00) each occurrence and Four Million Dollars ($4,000,000.00) general aggregate. Coverage shall be on an occurrence (as opposed to a claims made) basis. Such insurance shall also provide that it is primary insurance, and that any insurance carried by NOC shall be excess and noncontributory. (b) Automobile liability insurance covering owned, non-owned or rented automotive equipment having a combined single limit of at least One Million Dollars ($1,000,000) with respect to injuries or damages in any single occurrence. Such insurance shall also provide that it is primary insurance, and that any insurance carried by NOC shall be excess and noncontributory. (c) Workers' compensation insurance, covering all persons employed by City in connection with the performance of work of any nature in or about the Property, in a form prescribed by the laws of the State of California, and employers' liability insurance. All insurance policies required hereunder will be issued by fiscally responsible insurance companies authorized to do business in the State of California having an A.M. Best's (or its successor) rating of no less than A-VIII and must name (by endorsement) NOC and such other parties requested by NOC as additional insureds, and contain an express waiver of subrogation in their favor (except that the additional insured requirement will not apply to the workers compensation coverage required hereunder, although the waiver of subrogation requirement does apply). All such policies will require 30 days' written notice to NOC prior to any cancellation thereof. Any insurance coverage required by this Paragraph 5 may be effected by means of a policy or policies of blanket liability (primary and excess) and property insurance covering other premises. 6. [Intentionally Omitted]. 7. Notices. Any notice, writing or communication required or desired to be given or delivered pursuant to this Agreement will be personally delivered, delivered by Federal Express or comparable overnight courier, providing written evidence of delivery, or delivered by U.S. registered or certified mail, return receipt requested, postage prepaid and sent to NOC and City at the following addresses: lfto NOC: With a copy to: lfto City: 1S88628v3 c/o Nexus Companies 1 MacArthur Place, Suite 300 Santa Ana, California 92707 Attn: Matthew B. Kaufman Elkins Kalt Weintraub Reuben Gartside LLP 10345 W. Olympic Boulevard Los Angeles, CA 90064 Attn: Ryan A. Vogt-Lowell Best Best & Krieger LLP 655 West Broadway, 15th Floor San Diego, CA 92101 Attn: Jeffrey S. Ballinger 3
31With a copy to: Best Best & Krieger LLP 2855 E. Guasti Rd., Suite 400 Ontario, CA 91761 Attn: Richard T. Egger or such other address(es) as either party may from time to time designate as its notice address by notifying the other party thereof. Notice so sent will be deemed given (a) when personally delivered, or (b) on the first business day following deposit with Federal Express or a comparable overnight courier service providing written evidence of delivery. 8. Successors and Assigns. This Agreement shall be binding upon, and inure to the benefit of, NOC's and City's successors and assigns; provided, however, the rights, duties and obligations of City hereunder may not be assigned by City without the prior written consent of NOC, which may be given or withheld in NDC's sole and absolute discretion. Any attempted assignment by City of its rights, duties and/or obligations under this Agreement without the prior written consent of NOC shall result in a termination of this License. 9. Attorneys' Fees. In the event of any controversy, claim or dispute between NOC or City arising out of or relating to this Agreement or any breach thereof, the prevailing party shall be entitled to recover all reasonable costs, including, without limitation, reasonable attorneys' fees and costs, relating thereto. 10. Entire Agreement. This Agreement (and to the extent the subject matter of this Agreement is contained in the Settlement Agreement) contains the entire agreement between the parties, and no modification of this Agreement will be binding upon the parties unless evidenced by an agreement in writing signed by NOC and City after the date hereof. 11. Counterparts; Faxed/Emailed Signature Pages. This Agreement may be executed in one or more separate counterparts, each of which, when so executed, will be deemed to be an original. Such counterparts will together constitute and be one and the same instrument. Telecopied or e-mailed signatures may be used in place of original signatures on this Agreement, and the parties intend to be bound by the signatures on the telecopied or e-mailed document. 12. Governing Law. This Agreement will be construed in accordance with the laws of the State of California. 13. Restatement and Replacement of Prior Agreement. This Agreement amends, restates and supersedes the Prior Agreement in its entirety from and after the Effective Date. [Signature Page Follows] 1S88628v3 4
32IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first written above. NOC: NOC EQUITIES DOWNTOWN PS, LLC, a California limited liability company 1588628v3 5 City: THE CITY OF PALM SPRINGS, a California charter city By: _________ _ Name: _________ _ Title: -----------
33IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first written above. NOC: NOC EQUITIES DOWNTOWN PS, LLC, a California limited liability company By: _________ _ Name:. _________ _ Title: _________ _ 1S88628v3 5 City: THE CITY OF PALM SPRINGS, a california charter city ... aza, zoz,1