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HomeMy WebLinkAbout00500C - NEXUS DEVELOPMENT CORP EXCLUSIVE AGR TO NEGOTIATE HARD ROCK HOTEL MERGED PROJ AREA 2 k AMENDMENT NO. 1 TO EXCLUSIVE AGREEMENT TO NEGOTIATE Nexus Development Corporation THIS AMENDMENT NO. 1 TO EXCLUSIVE AGREEMENT TO NEGOTIATE ("Amendment') is made and entered into this 6th day of September, 2006 by and between the Community Redevelopment Agency of the City of Palm Springs, a public agency ("Agency"), and Nexus Development Corporation — Central Division, a California corporation ("Developer"). RECITALS A. On December 8, 2005, The Agency and the Developer entered into an Exclusive Agreement to Negotiate ("ENA"), for the purposes of negotiating a disposition and development agreement for the sale of Agency property generally described as the Prairie Schooner parcel and the development of a Resort and condominium development on the Prairie Schooner parcel. B. Developer has proceeded in good faith in the planning of the project and the acquisition of adjoining properties for inclusion in the project. C. Developer has requested additional time to complete the required milestones identified in the Schedule of Performance and an extension of the period of negotiation in which to complete all tasks identified in the ENA and the Schedule of Performance. D. The ENA provides for extensions by the mutual agreement of the parties (Section 2.A.3). D. Agency agrees that an extension of time is warranted and in the best interests of the Agency for the orderly completion of the required milestones and the negotiation of a disposition and development agreement. NOW, THEREFORE, in consideration of the foregoing Recitals, Agency and Developer agree as follows: AGREEMENT 1. The foregoing Recitals are true and correct. 2_ Exhibit B to the ENA is amended to read as provided in the document labeled "Exhibit B" to this First Amendment and milestones provided therein shall be deemed the milestones for the ENA. Page 1 of 2 514099.1 3. The first sentence of Section 2.A of the ENA is amended to read: "The term of this Agreement shall be for the period of time from December 8, 2005 to December 31, 2007 (the `Period of Negotiation') and it is the intent of the Parties to negotiate and prepare definitive documentation reflecting the transaction for execution and delivery within such Period of Negotiation." 4. All other terms and conditions of the original ENA shall remain unchanged and in full force and effect- s. The persons executing this Amendment on behalf of the parties warrant that they are duly authorized to execute this Agreement on behalf of said parties and that by so executing this Amendment the parties hereto are formally bound to the provisions of this Amendment. Agency Community Redevelopment Agency of the City of Palm springs, a public agency B L:y David Ready, ExeZ�Ut Q.. or I "NP','T olf pn �D(b Attest. Approved p"to Form: , rsisiur: Secretary Agency ounsel %J Contractor Nexus D velopment Central Division a Califo Cor ra By: By: Print Name:f� o,rQ �� Print Name: Print Title: 7 1�P Se d I Print Title: (Please Attach Corporate Acknowledgements) Page 2 of 2 514099 1 s EXHIBIT"B" ENA Milestones/Schedule ENA"terms Negotiated and Executed 11/30/05 Commence appraisal of property 12/15/05 Appraisal completed and value accepted by Parties 03/15/06 Enter into contract with consulting firm to undertake 12/15/06 Environmental assessment and perform planning services Submittal of Site Plan, Project Description, Feasibility 12/31/06 Analysis, Letter of Commitment, and Evidence of Acquired Property Commence CEQA review process 01/15/07 Submittal of Entitlement Applications with City 08/01/07 Commence Negotiation of Term Sheet 09/01/07 Complete Negotiation of Term Sheet 10/01/07 Complete Negotiation of DDA 11/01/07 Complete CEQA Process I I/01/07 Complete City Entitlement Process and Agency 12/15/07 approves DDA IJ.;xuo LJ-v�lupr ern l.orp. Excl. Agr. Hard Rock Hotel AGREEMENT #0500C Res 1291, 10-5-05 EXCLUSIVE AGREEMENT TO NEGOTIATE -- Nexus Development Corporation THIS EXCLUSIVE AGREEMENT TO NEGOTIATE ("Agreement") is made this 8 44 day of 2005, by and between the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS ("Agency"), and NEXUS DEVELOPMENT CORPORATION—CENTRAL DIVISION, a California corporation ("Developer"). The Agency and the Developer may sometimes be referred to individually as "Party" and collectively as the "Parties." RECITALS The Parties entered into this Agreement on the basis of the following facts, understandings, and intentions: A. The Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under the Community Redevelopment Law of the State of California (Health and Safety Code Sections 33000, et seq.). B. The Agency desires to implement the Amended and Restated Redevelopment Plan for Merged Project Area # 2, formerly the Tahquitz Andreas (Redevelopment Project Area (the "Redevelopment Plan"), by providing for the development of a "four star'T'four diamond" quality hotel resort property (the "Resort") at the southeast corner of Calle El Segundo and Andreas Road, consisting of approximately six (6) acres currently owned by the Agency, commonly known as the Prairie Schooner Parcel (the "Site"). The Legal Description of the Site is contained on Exhibit "A1" to this ,Agreement and the Site is depicted on Exhibit "A2" to this Agreement. C. In June, 2005,the Agency issued that certain Request For Qualifications(the "RFQ") seeking a developer for the Site. The Developer responded to the RFQ with a submittal dated June 8, 2005, and supplemental material for presentation to the Agency, dated June 30, 2005, together with the presentation and answers to questions of the ,Agency at a public meeting on October 5, 2005 (collectively, the"Developer's Proposal"). The Agency Board selected Developer as the Developer for the Site in reliance on the representations of the Developer in the Developer's Proposal. D. The Developer desires to construct a Resort and condominium development (the "Project") at the Site or on a larger property consisting of the Site and additional property adjacent to the Site (the"Adjacent Property")the Developer may acquire prior to the milestone date specified in the Schedule to this Agreement(the Site and the Adjacent Property shall be collectively referred to as the "Extended Site"). The land that can be included in the Adjacent Property is depicted on Exhibit A2 to this Agreement. E. The Agency and Developer desire,for the period set forth herein, to negotiate diligently and in good faith the design, schedule, scope of development, and other agreements described in this Agreement, in the RFQ, and the Developer's Proposal, including, without limitation, the terms and conditions of a term sheet and a disposition and 756378.03/0C N6003-040/12-1-05/""j/pal development agreement ("DDA")with respect to the Site or, if the Developer is successful in acquiring any portion of the Adjacent Property, the Extended Site. The DDA, if agreed upon and executed, will specify the rights, obligations, and method of participation of the Parties with respect to the sale by the Agency to the Developer of the Site and development of the Site or the Extended Site by the Developer. NOW, THEREFORE, and in consideration of the mutual covenants hereinafter contained, it is mutually agreed upon by the parties as follows: SECTION 1 NATURE OF NEGOTIATIONS. A. Good Faith. The Agency and the Developer agree that for the period set forth in Section 2 herein they will negotiate diligently and in good faith to prepare and enter into a DDA consistent with the provisions of this Agreement for the development of a "four star"/"four diamond" quality hotel on the Site specified herein. In the event the Developer acquires additional property adjacent to the Site, as described in Subsection B below, the Agency and the Developer agree that the subject of the negotiation shall be a "four star"/"four diamond" quality hotel on the Extended Site, consisting of the Site and any adjacent property the Developer acquires. A"Hard Rock Hotel" is hereby agreed to meet the requirements of this Agreement for the Resort. The development will be subject to all rules, regulations, standards, and criteria set forth in the Redevelopment Plan, the City's General Plan, and Section 14 Master Plan, applicable specific plans and zoning regulations, as may be amended from time to time, and with this Agreement. This Agreement is solely an exclusive right to negotiate and is not a final agreement. The Parties do not intend this Agreement to be a purchase agreement, option, or similar contract or to be bound in any way by this Agreement, other than to establish a period of exclusive negotiations during which time each Party shall negotiate with the other in good faith and the Agency shall not market the Site to other interested parties. The Parties agree to negotiate diligently and in good faith and exclusively with each other and to work togetherto negotiate the details of a term sheet upon which the terms and conditions of the DDA will be based (the "Term Sheet"). B. Site. The Project shall be located upon the Site. The Site may be expanded to include the Adjacent Property shown on Exhibit "A2" to this Agreement. During the Period of Negotiation, the Developer and Agency shall discuss an expanded Project to include residential, hotel, retail, or entertainment uses on the Extended Site, but only if the Developer acquires all or a portion of the Adjacent Property. The Developer shall be responsible for conducting the negotiations with the property owners of the Adjacent Property, subject to the terms of Subsection D below. To the extent one (1) or more legal parcels consisting of the Adjacent Property have been acquired or are under contract to be purchased by Developer on or before June 1, 2006, the Developer and the Agency have mutually agreed to expand the Project to include the Adjacent Property, and such legal parcel(s) shall be deemed to constitute a portion of the Extended Site, as well as part of the Project. C. Initial Submittals for the Project. On or before June 1, 2006, the Developer shall generate the necessary analysis, plans, and studies to be able to fully describe the 756378 03/OC N6003-040/12-1-05/mj/pal -2- i material aspects of the proposed Development on the Site or the Extended Site. This information will include a "Site Plan," a "Project Description," "Feasibility Analysis," a "Letter of Commitment," and, if the Developer proposes an Extended Site development, "Evidence"that the Developer has acquired or is under contract to acquire one or more of the parcels that make up the Adjacent Property. The submittal shall be in sufficient detail to reasonably enable the Parties to be able to evaluate and determine the feasibility of the Project and to assure the Parties that the Development Planning Process can be completed and that the Term Sheet can be negotiated. D. Financial Provisions. The Developer is responsible for the acquisition of the Site, including any of the Adjacent Property, and the financing and construction of all improvements upon the Site. The identification and scope of public improvements for the Development shall be based upon the results of the CEQA analysis for the Project. Without assistance from the Agency, Developer shall pay for all such public improvements and shall also pay all fees of the City of Palm Springs and any other government entity with review authority over the Project as may be agreed to in the DDA. Upon the successful negotiation of the DDA, that portion of the Site owned by the Agency shall be conveyed to the Developer at fair market value based on an MAI appraisal in accordance with the requirements California Health and Safety Code Section 33433. The Agency shall commission such appraisal, the cost of which shall be paid from Cost Recovery Deposit described in Section 3.A.4. E. Schedule. A schedule for the completion of the Developer's and Agency's respective obligations pursuant to this Agreement (the "Schedule") is attached to this Agreement as Exhibit B. The DDA shall contain a separate Schedule of Performance apart from the Schedule. During the Period of Negotiation, the Agency and Developer shall agree on an itemized schedule for the DDA process. Agency and Developer shall meet semi-monthly in order to review Developer's and Agency's progress and to allow the parties to comment upon the parties' respective efforts. Agency and Developer agree to reasonably consider adjustments to the Schedule and the Period of Negotiation for delays caused by factors beyond the control of Agency and the Developer. In this regard, it is agreed and acknowledged that as of the date of this Agreement the precise scope of the Project is subject to numerous factors beyond the control of the parties, including, without limitation, the ability of Developer to acquire one or more legal parcels consisting of the Adjacent Property and the ability to provide a precise description of the Project for purposes of the required CEQA analysis; however, the deadlines for the submittal as described in Section 1.0 above will ensure that a Project Description will be completed and full processing of the required CEQA analysis will be able to be commenced no later than ,June 1, 2006, or as soon thereafter as is reasonably practicable. F. Use and Transfer Restrictions. The DDA will generally be subject to restrictions on use and transfer during construction and for a specified period thereafter through recorded restrictions (i) to assure that the use will be consistent with and promote the Project, (ii)to prevent speculation, (iii)to assure that any transferee has the resources, capability and experience to successfully develop the Project, and (iv)to assure long-term maintenance of the Project in an attractive first class condition. 756378 03/OC N6003-040/12-1-05/"n1/pal -3- i j G. Exclusivity. The Agency agrees for the period set forth in Section 2 that it will not negotiate with or enter into any agreement with any other entity for development or sale of the Site, and the Developer agrees not to negotiate with any other person or entity regarding the development of a Hard Rock hotel within the Coachella Valley. j H. CEQA. The intent of this Agreement is for the parties to proceed with the drafting of the DDA, which shall require a CEQA action by the Agency. An Initial Study for CEQA purposes shall be undertaken forthe purpose of determining the appropriate CEQA action. Once the appropriate CEQA action is determined, a more precise environmental timeline shall be developed. I. Payment of the Purchase Price for the Site. It is hereby agreed and acknowledged that the Agency and the Developer may agree to a Schedule of Performance in the DDA which may call for the conveyance of the Site to the Developer, within a brief period of time following the approval of the DDA, and any and all necessary "Entitlements" for the development of the Project. J. Agreement to Negotiate. The Parties acknowledge that the Developer's Proposal and this Agreement do not establish the essential terms of the transfer of property or the development of the Project and that although they have set forth in this ,Agreement a framework for negotiation of the essential terms: (a) they have not set forth herein nor agreed upon all essential terms, including, e.g., price, terms, and timing of the transfer of property; (b) they do not intend the Developer's Proposal or this Agreement to be a statement of all of the essential terms; and (c)the essential terms of any transaction, if agreed to by the Parties, shall be set forth, if at all, in the DDA approved and executed by authorized representatives of each of the Parties. The DDA shall not exist and shall not be binding unless and until it is fully executed by both Parties, approved by counsel to each Party as to form and approved by the City Council of the City and by the authorized members or managing member of the Developer. Each Party assumes the risk that, notwithstanding this Agreement and good faith negotiations, the Parties may not enter into a DDA due to the Parties' failure to agree upon essential terms of a transaction. K. Developer's Representations, Warranties, and Covenants. 1. The Developer represents that it has the necessary expertise, experience, and financial capability to undertake the Project contemplated herein, including expertise and experience in developing and financing mixed uses and multiple land uses including, but not limited to, office, retail, hotel, and residential uses of a similar size, quality, and design of the Development contemplated in the RFQ and the Developer's Proposal. 2. The Developer represents and agrees that its intended acquisition of the Site and, if applicable, the Extended Site, and its other intended undertakings pursuant to this Agreement shall be used only for the timely development of the Site and, if applicable, the Extended Site, and not for speculation in any manner. 756378 03/OC N6003-040/12-1-05/mj/pal -4- i 3. The Developer shall only negotiate with the Agency's negotiating team as defined in writing by the Executive Director of the Agency (the "Executive Director") and with no other persons unless expressly authorized to do so by the Executive Director. Nothing in this Agreement shall restrict the Developer from responding to inquiries from the Agency Board or communicating with the Agency Board as requested by the Agency. During the period of negotiations, neither the Developer nor the Agency's negotiating team shall make any statements to the media about the proposed Development without the approval of the other Party, which approval shall not be unreasonably denied. 4. The Developer acknowledges and agrees that prior to issuance of any certificate of occupancy for the Project, the DDA shall include (a)certain restrictions upon assignment, sale, encumbrance, and use of the Site or the Extended Site and/or any improvements thereon without approval of the Agency and (b) restrictions on transfer of control of the Developer. 5. The Developer agrees to make oral and/or written reports at least monthly (or at such other times as information is requested by the Executive Director) advising the Executive Director of all matters and studies being made. 6. The Developer shall, within fifteen (15) days following the Effective Date, to the extent not submitted with the Developer's Proposal, make full disclosure in writing to the Agency of the names of the Developer's agents, authorized negotiators, employees or other associates of the Developer who may be participants in planning, negotiation, and development of the Project and other relevant information concerning the above, such as addresses,telephone numbers, employers. L. As-Is. The Developer acknowledges and agrees that all property conveyed, if at all, by the Agency pursuant to the DDA shall be conveyed, on an "AS-IS, WHERE-IS AND WITH ALL FAULTS" basis, and the Developer shall be obligated to release, as applicable, with respect to its acquisition and development of the Site and the condition of the Site, including any and all land use and environmental conditions of the Site. 1. Effective as of the date of execution of this Agreement by the Agency, the Agency hereby grants to the Developer and its representatives and agents a revocable license during the Period of Negotiations to enter upon the Site for purposes of conducting the Developer's due diligence inspections and necessary inspections for the purposes of developing the Development Plan Package, provided that prior to such access the Developer shall: (a) deliver to the Executive Director written evidence that the Developer has procured the insurance required under Section 11.2; (b) give the Executive Director twenty-four (24) hours telephonic or written notice of any intended access which involves work on the Site or which may result in any impairment of the use of any portion of the Site; (c) access the Site in a safe manner; (d) conduct no invasive testing or boring without the written consent of the Executive Director; (e) allow no dangerous or hazardous condition created by the Developer or the Developer's agents; (f) comply with all 756378.03/OC N6003-040/12-1-05/nnj/pal -5- laws and obtain all permits required in connection with such access; and (g)conduct inspections and testing, subject to the rights of existing occupants and contractors, if any, and only after obtaining the Executive Director's consent, which shall not be unreasonably withheld. The limited license granted herein is revocable by the Agency and may be revoked during the continuation of any breach of this Agreement by the Developer and shall be automatically revoked and terminated, without further action of the Agency, upon the termination of this Agreement or any period of exclusive negotiation hereunder. 2. The Developer shall obtain at Developer's sole cost and expense prior to commencement of any investigative activities on the Site, a policy of commercial general liability insurance covering any and all liability of the Developer and its contractors and consultants arising out of any investigative activities and listing the Agency and the officers, officials, employees and contractors of each as additional insureds thereunder, in an amount approved by the Executive Director. Such insurance shall be provided by insurer(s) licensed to do business in, and in good standing in, the State of California, with a Best's Key Rating of at least A VII and satisfactory to the Executive Director and Agency Counsel. Such policy of insurance shall be kept and maintained in force at all times during the term of this Agreement and so long thereafter as necessary to cover any claims of damages suffered by persons or property resulting from any acts or omissions of the Developer, the Developer's employees, agents, contractors, suppliers, consultants or other related parties. The Agency's Insurance Endorsement Form must be executed by the applicable insurance underwriters and delivered to the Agency. 3. The Developer hereby agrees to protect, indemnify, defend and hold the Agency and the officials, employees, agents, representatives, consultants and contractors of the Agency free and harmless from and against any and all claims, costs, expenses, losses, damages, liabilities, fees,fines and penalties resulting from the Developer's access to the Site or its exercise of its rights under this license, including any inspections, surveys, tests or studies performed by the Developer or its employees, consultants or contractors, save and except where such claims result solely from the gross negligence or willful misconduct of the Agency or its agents, employees or representatives. The Developer shall keep the Site free and clear of mechanics' liens and materialmen's liens related to the Developer's inspection of the Site. The indemnification by the Developer set forth in this Section 11.3 shall survive the termination of this Agreement, the execution of the DDA, and the closing and transfer of the Site to the Developer and shall not merge into any deed granted pursuant to the DDA. SECTION 2. PERIOD OF NEGOTIATIONS. A. The term of this Agreement shall be a period of one (1) year (the"Period of Negotiation")from the date this Agreement is signed by the Agency(the"Effective Date") and it is the intent of the Parties to negotiate and prepare definitive documentation reflecting the transaction for execution and delivery within such Period of Negotiation. This Agreement shall automatically terminate at the end of the Period of Negotiation unless the 756378 03/0C N6003-040/124-05/nnj/pal -6- Developer and Executive Director have agreed upon a form of DDA acceptable to each as of said date, unless terminated earlier as provided in this Section 2, or unless extended as follows: 1. For sixty (60) days if a DDA has been prepared by the Agency and executed by the Developer, and has been submitted to the Agency but has not yet '• been approved by the Agency Board; or 2. For thirty (30) days if the major business terms have been agreed to ' and the Executive Director determines that further negotiations are likely to result in a written agreement; or 3. By mutual agreement of the parties. B. Developer understands and acknowledges that if negotiations culminate in a DDA, such agreement shall be effective only after and if the Agreement has been considered and approved by the Agency Board after public hearing thereon as required by law. C. Notwithstanding the Period of Negotiation established by this Agreement and in addition to the termination rights set forth in this Section 2 if the Agency determines in its reasonable discretion and notifies the Developer in writing (1) at any time that the Developer is not negotiating diligently or in good faith; or(2) that the Parties have failed to make substantial progress toward the negotiation of the DDA in accordance with the Schedule; or (3) the Developer does not comply with the provisions of Section 1.C, then subject to the provisions of Section 6.D the Agency may terminate this Agreement at any time thereafter upon five (5) days written notice to the Developer and such termination shall be binding upon each of the Parties. D. Notwithstanding the Period of Negotiation established by this Agreement, the Developer may terminate this Agreement in the event that during the course of its investigations and evaluation of the Project, the Developer determines in good faith that the Project is not feasible for any reason, including, without limitation, the geotechnical and/or environmental condition of the Site or is not able to be reasonably financed. E. Upon the Agency's negotiating team being prepared to recommend a DDA acceptable to the Developer to the Agency Board for approval, the Developer shall execute said DDA and the Agency's staff shall submit the form DDA to the Agency for approval. The Developer acknowledges that any DDA shall require approval of the Agency and hereby agrees that, upon submittal by the Developer to the Agency of its fully executed DDA, the Developer shall not withdraw such offer for a period of sixty (60) days following such submittal (provided there shall have been no material adverse changes to the Project, including applicable land use regulations, title, the geotechnical condition of the Site and the status of the Letter of Commitment). During said sixty (60) day period the Agency shall (a) determine whether it desires to enter into such DDA, and (b) if it does so desire, take all actions necessary to authorize the execution of and execute the DDA. If the Agency has 756378.03/OC NMOM40/12-1-05/mj/pal -7- not approved the DDA by the end of such sixty (60) day period, this Agreement shall automatically terminate. F. In the event this Agreement is terminated as provided in this Section 2, no Party shall have any liability hereunder following such termination except as otherwise expressly set forth in this Agreement. In the event of such termination of this Agreement, unused portions of the Cost Recovery Deposit shall be allocated as provided in Section 3.A.4. In the event of such termination of this Agreement the provisions of this Section and Section 11.3 shall not terminate, and such Sections shall survive and be binding upon the Parties notwithstanding such termination. H. The Executive Director shall review and preliminarily approve the plans and all other appropriate documents at each milestone as identified in the Schedule, prior to, and as a condition precedent to, proceeding to each following milestone. SECTION 3. DEVELOPER'S RESPONSIBILITIES. A. During the Period of Negotiation, Developer will prepare such studies, reports, and analysis as shall be reasonably necessary to determine the feasibility of the Project. The Developer shall fully cooperate with the Agency in the development of the Project design and financing plan, subject to the terms of Section 1.C. above. During the Period of Negotiation and as requested by the Agency, the Developer shall submit to the Agency the following: 1. Full disclosure of Developer's principals, partners, joint venturers, negotiators, or other associates of the Developer who are participants or principals of the Project. 2. Statement of financial condition in sufficient detail to demonstrate Developer's financial capabilities, and where applicable, those of its principals, partners, orjoint venturers, to satisfy the commitments necessitated by the Project. 3. The Developer shall negotiate exclusively with the Agency's negotiating team and with no other persons, including the members of the Agency Board, unless expressly authorized to do so by the Executive Director in writing. During the Period of Negotiation, Developer and Agency shall coordinate community and neighborhood outreach efforts. No statements will be made by the Developer or the Agency's negotiating team to the media without the approval of the other party. No prepared statements shall be released to the media without the mutual consent of the respective negotiating teams. The Developer shall also cooperate with Agency, which will manage the environmental review of the Project, as well as the Project planning contract through the City's Focused Entitlement Process. 4. Prior to and as a condition precedent to the execution of this Agreement by the Agency, Developer shall submit to the Agency a minimum initial deposit in the amount of Fifty Thousand Dollars ($50,000.00) (the"Cost Recovery 756378.03/OC N6003-040/12-1-05/.j/pal -8- Deposit") in the form of cash or check, deposited into a trust account selected by the City Treasurer, in his sole discretion, to pay for all commercially reasonable costs incurred by the Agency for third party costs and expenses incurred to carry out the Agency's obligations under this Agreement, including any legal, environmental, planning, engineering, financial analysis, negotiations, appraisals, public ourtreach, and all other reasonable out of pocket expenses directly related to the Project incurred by the Agency. If the Agency's costs associated with its obligations under this Agreement exceed the deposit amount, the Agency at its sole discretion reserves the right to require the Developer to increase the Deposit to an amount not to exceed the actual or anticipated costs. Within ten (10) calendar days of written notice of such increase, Developer shall submit to the Agency in cash or check an amount equal to the difference between the initial deposit and the increased deposit amount. Unused portions of the Cost Recovery Deposit remaining at the time of the termination of this Agreement or at the time the Site is transferred to Developer will be returned to the Developer. 5. The Developer understands and agrees that the Agency's negotiating team reserves the right at any time to reasonably request from the Developer additional information, including information, data, and commitments to ascertain the depth of the Developer's capability to develop the Project expeditiously. The Agency's negotiating team shall provide a reasonable time in which the Developer may obtain and submit to the Agency such additional information. The Developer agrees to submit such additional information in a timely manner. B. The Developer acknowledges and agrees that, as the Developer: 1. It shall design and construct the Project and all required Project infrastructure at its own cost and expense. 2. It shall collaborate with the Agency to design and develop a mutually satisfactory Development Plan for the Project. 3. It shall make all oral and/or written reports as provided in this Agreement or at such other times as information is requested by the Executive Director. 4. It shall have a continuing obligation to demonstrate, to the Agency, after written request, the financial capacity of Developer and its capital partners and members, the willingness of each to make adequate funding available and the capability of Developer to perform its obligations under this Agreement and the proposed DDA until the completion of the Project. C. The Developer acknowledges that the selection of the Developer as the developer is based in large part on the experience, qualifications, and financial capacity of the Developer and the constituent members of the Developer's development team. Accordingly, the principals of the Developer and the members of the development team, all as described in the Developer's Proposal, shall remain substantially as set forth therein 756378.03/OC N6003-040/12-1-05/mi/pal _9_ throughout the Period of Negotiation. The Developer shall notify the Agency in writing of any proposed change in the Developer's ownership, directors, or officers, and any change in the development team, including consultants, as described in the Developer's Proposal. D. The Developer will be required to make and maintain full disclosure to the • ,Agency of the methods of financing and the material terms of any Project financing I obtained by Developer for the acquisition and/or development of the Project. SECTION 4. AGENCY'S RESPONSIBILITIES. A. Negotiate Exclusively. The Agency agrees that, during the Period of Negotiation and provided that the Developer is not in default of its obligations under this ,Agreement, the Agency shall negotiate exclusively and in good faith with Developer with respect to the DDA. During the Period of Negotiation, the Agency shall not solicit or entertain offers or proposals from other parties concerning the Site. Developer acknowledges, however, that the Agency may, from time to time, be contacted by other developers respecting the Site and that such contact is expressly permitted so long as the Agency does not initiate such contacts and the Agency indicates to such other developers that the Agency has executed this Agreement with Developer and that the Agency is unable to discuss anything concerning these negotiations with Developer, disclose any unformation other than any Project related information that is a disclosable public record, entertain any offer or proposal, or negotiate with any other developer regarding the Site until the Period of Negotiation expires or this Agreement is terminated, as provided in this ,Agreement. B. Preparation of Agreement. If agreement is reached on the business terms for unclusion in the DDA, the Agency shall prepare such DDA for consideration by the Developer. Agency's outside legal, appraisal, and financial consultant expenses shall be chargeable against the Cost Recovery Deposit as provided in Section 3.A.4 of this ,Agreement. Agency shall notify Developer of the amount of the appraiser and financial consultant contracts and provide monthly notification of the legal costs of preparing the DDA. C. Planning Approvals, The Agency will undertake all acts necessary to assist Developer in securing necessary permits as may be necessary to permit the commercial/residential development at the Site, including hiring the environmental review firm and planning firm and assisting with the presentations and staff reports made to the City's review boards. D. Contract Authority. The Executive Director is authorized to enter into contracts on behalf of the Agency for the purposes of planning, environmental review, appraisals, and such other services identified in Section &A of this Agreement in any amount, provided such contracts have been funded by Developer and the contract amount has been deposited with Agency by Developer under the same terms and conditions described in Section 3.A above. 756376 03/OC N6003-040/12-I-05Aq/pal -10- E. Termination of Valet Parking License. Agency shall be solely responsible for terminating the Valet Parking License, if any, at the Agency's sole cost and expense (without any right of reimbursement from the Cost Recovery Deposit) on or before the date of the conveyance of the Site to the Developer. The Agency shall cooperate with Developer to permit the Developer and its consultants to enter the Site prior to the termination of the overflow valet parking license in order to conduct inspections and/or :studies. The Agency shall be entitled to accompany Developer and its consultants during any such inspections. F. Confidentiality. The Developer acknowledges that all documents submitted to the Agency are public records; however, Developer and Agency agree that certain documents may not be required to be disclosed. Prior to delivering any information to the ,Agency which the Developer deems to be confidential or proprietary, and non-disclosable i under law, the Developer shall identify such information. The Executive Director shall review the Developer's position and if the Executive Director concurs with such position, the Developer shall deliver the information to the Agency and the Agency shall maintain the non-disclosable status of the information. If the Agency determines that the information is a disclosable public record, the Executive Director shall so advise the Developer and the (Developer can decide to submit the information as initially described orthe Developer shall meet with the Executive Director and review or formulate alternative forms or content of submissions. In the event the Developer fails or refuses to deliver the information, either (Party shall have the right to terminate this Agreement. The Parties shall mutually cooperate in the defense of any legal challenge of a determination of the Executive (Director pursuant to this section that any such record is non-disclosable. SECTION 5. GOOD FAITH DEPOSIT. Concurrently with the execution of this Agreement, Developer shall submit to the Agency a initial good faith deposit in the sum of Fifty Thousand Dollars ($50,000.00) (the "Good Faith Deposit") in the form of a cash deposit, cashiers' check, irrevocable letter of credit, or other form of security acceptable to the Agency to ensure that the Developer will proceed diligently and in good faith to negotiate and perform all of the Developer's obligations under this Agreement. If the Good Faith Deposit is in cash or a certified cashiers' check, it shall be deposited with the Agency consistent with Agency practices. Interest, if any, shall be added to the Good Faith Deposit and held as additional security for the Developer's obligations hereunder. Upon completion of the appraisal of the Site as provided in this Agreement and the mailing of notice of completion of such Appraisal to the Developer, and the execution of the DDA, the Developer shall supplement the Good Faith Deposit by submitting to the Agency additional funds towards the Good Faith Deposit so that the total of the Good Faith Deposit will equal three percent (3.0%) of the appraisal amount. The Parties agree that a Good Faith Deposit in an amount equal to three percent (3.0%) of the appraised value of the Site is reasonable for all purposes provided in this Agreement. In the event the Period of Negotiation expires without execution of the DDA for any reason other than (i) the default of the Agency; (ii) the geotechnical or environmental condition of the Site makes the development of the Site unfeasible; or (iii) the circumstances described in Section 2.A, i.e., the Developer and the Agency staff has agreed upon a form of DDA acceptable to each and Agency fails to approve such form 756378 03/OC N6003-040/14-I-05/nn3/pal '� I within the Period of Negotiation, as extended by the terms of Section 2.A, Agency shall retain the Good Faith Deposit as liquidated and agreed damages, representing the cost to the Agency of providing the exclusive negotiating arrangement and assurances provided in E this Agreement. In the event the DDA is executed, the Good Faith Deposit shall be applied or credited against the Developer's financial obligations to the Agency under the DDA. SECTION 6. MISCELLANEOUS. A Brokerage Commission. Agency and Developer hereby represent and i acknowledge that neither party has engaged a broker or finder to represent such parties in connection with this Agreement. The Agency and Developer hereby indemnify and hold the other free and harmless from and against any and all costs and liabilities including, i without limitation attorneys' fees, for causes of action or proceedings which may be instituted by any broker, agent or finder, licensed or otherwise, claiming through, under or by reason of the conduct of the indemnifying party in connection with this Agreement. The foregoing representation and indemnity shall survive the termination of this Agreement. B. Successors and Assigns. This Agreement shall be binding upon and enforceable by the respective successors and assigns of the Agency and the Developer. Without the prior written consent of the Agency, Developer may not assign its rights or delegate its obligations hereunder; provided, however, Developer shall have the right to assign its rights in and to this Agreement and the DDA to any entity in which Developer, or any "Affiliate" of Developer holds a direct or indirect interest and maintains an active role in the management of the affairs of such entity. C. Notices. Any notice, consent, approval or disapproval to be given or other document to be delivered by any party to the other or others hereunder, and any payments from Builder to Company, may be delivered in person to an officer of any party, or may be delivered by Federal Express, other private commercial delivery or courier service for next business day delivery, or may be deposited in the United States mail, duly certified or registered, return receipt requested, with postage prepaid, and addressed to the party for whom intended, as follows: If to Developer: Nexus Development Corporation 1 MacArthur Place, Suite 300 Santa Ana, CA 92707 Attn: Cindy Nelson and Matt Kaufman Phone No.: (714) 546-5600 Fax No.: (714) 546-5660 If to Agency: Community Redevelopment Agency of the City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA, 92263 Attn: Executive Director Phone No.: (760) 323-8350 Fax No.: (760) 323-8207 756373.03/OC N6003-040/12-1-05/mj/pal -1 2- Notice may also be given by facsimile transmission ("Fax") to any party at the respective Fax number given above and marked "RUSH - PLEASE DELIVER IMMEDIATELY," provided receipt of such transmission shall be confirmed by follow-up notice within seventy-two (72) hours by another method authorized above. Any party hereto may from time to time, by written notice to the other, designate a different address which shall be substituted for the one above specified. Any notice shall be deemed served or delivered upon actual receipt or first attempted delivery (as shown by the records of the U.S. Postal Service or private delivery service) at the address listed above. D. Default. Neither Agency nor Developer shall be deemed to be in default of its respective obligations under this Agreement unless the non-defaulting party shall deliver written notice of any alleged default which the defaulting party fails to cure within thirty(30) days after delivery of such notice, and if such breach is capable of cure, but cannot reasonably be cured within such thirty (30) day period, then within such longer period (not to exceed ninety (90) days from the delivery of the original notice), provided that the defaulting party promptly undertakes to cure within the initial thirty (30) day period and thereafter diligently prosecutes such cure to completion. E. Ownership of Documents. In the event the Period of Negotiation expires without execution of the DDA, Developer shall, at the request of the Agency and in consideration for the actual, out-of-pocket cost incurred by Developer therefor, transfer to Agency copies of any non-privileged and/or proprietary reports, studies, analysis, site plan layouts, development cost estimates, engineering studies, regarding the proposed development and prepared during the Period of Negotiation, which copies shall become the property of Agency. Such transfer shall be made without any representation or warranty by the Developer as to the accuracy or sufficiency of the contents of such documents and shall be made subject to the rights of the preparers of such documents including, without limitation, the copyright (if any) associated with such documents. F. Purpose of Contract. It is expressly understood and agreed by the parties hereto that this is an Agreement regarding the conduct of contract negotiations only and does not convey any interest in the property whatsoever. It is further agreed and understood that this Agreement does not imply any obligation on the part of the Agency or Developer to enter into any agreement that may result in negotiations contemplated herein. Nevertheless, the Agency would not have entered the Agreement if the Developer's proposal did not fulfill Agency's objectives under the Redevelopment Plan and have merit, as represented. G. Amendment. This Agreement may only be amended by a document in writing signed by the parties hereto. H. Acceptance. This Agreement, when executed by the Developer and delivered to the Agency, shall constitute a binding Agreement and the Parties acknowledge the Agency has authorized the Executive Director to execute an Exclusive Negotiating Agreement at its meeting of October_", 2005. 756378.03/0C N6003-040/12-1-05/un3/pal -1 3- I. Corporate Authority. The persons executing this Agreement on behalf of the parties hereto warrant that (i) such party is duly organized and existing, (ii) they are duly authorized to execute and deliver this Agreement on behalf of said party, (iii) by so executing this Agreement, such party is formally bound to the provisions of this Agreement, and (iv) the entering into this Agreement does not violate any provision of any other ,Agreement to which said party is bound. i J. Governing Law; Dispute Resolution. The Agreement shall be interpreted in accordance with California law, without giving effect to choice of law provisions. The Parties agree that in the event of litigation, exclusive venue shall be in Riverside County, California. In the event of any dispute, controversy, or claim arising between the Agency i and the Developer in connection with or relating to this Agreement, the Parties shall make i good faith efforts to resolve such dispute through negotiation and, if the Parties so elect, j non-binding mediation, prior to initiating any judicial proceeding to enforce the terms of this Agreement. The Parties shall bear their costs, including attorneys' fees, in the dispute resolution process, including any judicial proceedings. K. Superseded by DDA. Following mutual execution by the Parties of a DDA, this Agreement shall be of no further force or effect, except that the indemnity set forth in Section 11.3 and the representations and warranties set forth in Sections 1.K shall remain in effect with respect to claims arising during the term of this Agreement. In the event of any conflict between the provisions of this Agreement and any DDA approved and executed by the Parties, the provisions of the DDA shall for all purposes prevail. L. No Duty. Notwithstanding any other provision of this Agreement, the Agency shall not have any obligation or duty under this Agreement or any liability whatsoever in the event the Parties fail to execute a DDA. M. Non-liability of City Officials and Employees. No member, official, representative, director, staff member, attorney or employee of either of the Agency shall be personally liable to the Developer or any successor in interest in the event of any default or breach by the Agency or for any amount which may become due to the Developer or to its successor with respect to this Agreement, the Project or the Site. N. DDA Approval. If the negotiations hereunder culminate in a DDA, such DDA will be considered for approval by the Agency Board only after all required public hearings have been held and after compliance with all applicable laws and ordinances. The concurrence of the Agency with the terms and provisions of a proposed DDA under any provisions of this Agreement shall not be construed or interpreted as the Agency approving or accepting such terns. Such concurrence shall be viewed as nothing more than the willingness of the Agency negotiators to recommend to the Agency Board that the Agency negotiators recommend approval of such terms. A DDA shall only become effective after it has been considered and approved by the Agency Board after notice and, if required by law or requested by members of the Agency Board, the conduct of a public hearing. 756373.03/OC N6O03-040/12-1-05/nnj/pa1 -14- I O. Definitions. In construing the provisions of this Agreement, the following definitions shall apply: "Adjacent Property" means such additional property adjacent to the Site the Developer may acquire prior to the milestone date specified in the Schedule. The land that can be included within the Adjacent Property is specifically described in Exhibit"A2"to this Agreement. "Affiliate" means any person or entity in control of, under the control of, or in common control with the Developer. "Agency" means the Community Redevelopment Agency of the City of Palm i Springs, a governmental agency organized under the laws of the State of California. "Agreement" means this Exclusive Agreement to Negotiate between the Agency and the Developer. "DDA" means a disposition and development agreement entered into pursuant to the provisions of the California Redevelopment Law. j "Developer" means the Nexus Development Corporation — Central Division, a California corporation. "Developer's Proposal" means the Developer's submittal dated June 8, 2005, the supplemental material dated June 30, 2005 submitted by the Developerfor presentation to the Agency, and the Developer's presentation and answers to questions of the Agency Board at the public hearing on October 5, 2005. "Evidence" means documentation in the form of recorded deeds of trust, contracts of sale, or other instruments of conveyance demonstrating to the reasonable satisfaction of the Executive Director and Agency Counsel that Developer has acquired or is under contract to acquire one or more of the parcels that make up the Adjacent Property(subject to any commercially reasonable conditions, including the Agency's sale of the Site to Developer). "Executive Director" means the Executive Director of the Community Redevelopment Agency of the City of Palm Springs or the Executive Director's designee. "Extended Site" means the Site and the Adjacent Property. "Feasibility Analysis" means the identification of a hotel development program that analyzes the mix (i.e. number) of transient hotel rooms and condominiums, project amenities, meeting rooms, restaurant and retail space, based on the Project Description; and a preliminary project budget based on those assumptions. "Letter of Commitment" means a document from the Hard Rock Hotel, or another four star hotel acceptable to the Agency Board, in a form reasonably acceptable to the 756378.03/0C N6003-040/12-1-05/u"3/pal -15- Agency evidencing the hotel's commitment to participate in the Project and operate an appropriate brand hotel or resort as a part of the Project, and that the Project meets the requisite brand standards for minimum number of hotel rooms and amenities "Project" means the Resort, condominiums, amenities, and public improvements to be developed by Developer on the Site or the Extended Site and any additional public improvements . "Project Description" means an accurate written description of the development of the site or the Extended site, including the number, type, and size of hotel rooms; the number and size of condominium units; the size, extent, description, and intensity of the amenities (including, but not limited to swimming pools and other recreational facilities, :spa, health club, commercial retail space, meeting rooms, and restaurants, and any other uses or facilities that the developer desires to include in the Project; and the number of barking spaces and related facilities. "Redevelopment Plan" means the Amended and Restated Redevelopment Plan for Merged Project Area #2, formerly the Tahquitz Andreas Redevelopment Project, of the Agency. "Resort" means a four star or four diamond quality hotel resort property. "RFQ" means the Agency's Request for Qualifications seeking a developer for the Site. "Schedule" means the schedule attached to this Agreement as Exhibit "B" for the completion of the Developer's and Agency's respective obligations pursuant to this Agreement. "Site" means the approximately six (6) acre parcel of land generally located at the southeast corner of Calle El Segundo and Andreas Road, commonly referred to as the Prairie Schooner Parcel, and more specifically described and depicted on Exhibits "Al" and "A2" to this Agreement. "Site Plan" means a plan, prepared to scale, showing accurately and with complete dimensioning, all of the buildings, structures, uses and the manner of development proposed for the Site or the Extended Site, including mass, height, and conceptual elevations , location of amenities and related facilities consistent with the Project Description, and the location of parking and related facilities. "Term Sheet" means a non-exhaustive narrative description of the essential terms and conditions that will be incorporated into the DDA. 756378.03/OC N6003-040/12-1-05/nnj/pal -16- IN WITNESS WHEREOF, the parties have executed this Agreement as of the day first above written. I "AGENCY" i COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body, corporate and politic --------------- Executive Director -� — ATTEST:.. '/, % ency Secretary( —0t) � -�i��� /a:SS 1� f; 3`a9.e DU C G rn l ,G 1 � � 10 o5 "®05 .. � A 0 5c�oe. APP O rED AS TO FO M: Agency Counsel [SIGNATURES CONTINUED ON NEXT PAGE] "DEVELOPER" NEXUS DEVELOPMENT CORPORATION — CENTRAL DIVISION, a California corporation (Check One: _individual, _partnership, �v�corporration) [NOTARIZED] ` �-,8ignature Print Name: " ocr-Ni U �s �� Print Title: ��e �'{;te�e-7"61-�^ [NOTARIZED] l ��a 4� Signature Print Name: Print Title: i S ,, Q s o Mailing Address: `' 49 O (Corporations require two signatures; one from each of the following: (A) Chairman of Board, President, any Vice President; AND(B) Secretary, Assistant Secretary, Treasurer, Assistant Treasurer, or Chief Financial Officer.) [END OF SIGNATURES / NOTARY JURAT(S) FOLLOW] -18- I STATE OF CALIFORNIA ) ) ss. j COUNTY OF ) ON ��.a���'t�U°��,� d? �c before me, 01c4,!�Ilew f�5- Notary j Public, personally appeared C)q" ,l rd?,cW r' personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s)whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. [SEAL] Signature =V�C:C��EXV;7�(YC UFMAN 970 ALIFORNIAj NTY STATE OF CALIFORNIA ) 22,2006 ) ss. COUNTY OF ) / PP� ON Uecern6off 2 , �ooS_ , before me, Vl�y{6eGl • `lCt !'��i✓1 Notary Public, personally appeared Cu �� eS 2. Gk so , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s)whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. [SEAL] Signature '� MATTHEW B. KAUFMAN COMM.•7365970 NOTARY PUBLIC•CAL FORNIA ORANGE COUNTY Comm.EV.JULY 22,2006 -19- EXHIBIT "Al TO EXCLUSIVE AGREEMENT TO NEGOTIATE LEGAL DESCRIPTION OF THE SITE The parcel is located in the City of Palm Springs, County of Riverside, bearing APN Numbers 508-055-008, 508-055-009, and 508-055-007 as shown below: i ON 1 I i I !c'^+for B Pl i o 1 pf ;l• q �: 1.1 • j I I /� +i •�'*,moo� I — fef� 1 Rii. EX m AOM 'n i• 4'r L4 Iql � k I w• 3 J' 0� + ...kl ii•L-.i•�� • irr.0 u •a �I i _rstrsiixUl EXHIBIT "A2" TO EXCLUSIVE AGREEMENT TO NEGOTIATE MAP OF THE PROPERTY • (Including the Site and the Adjacent Property) v (95 I I T fI @CAI P/ I ,.t � 1 I ♦y'10 A DD AC c., M I �•� s � RU I 7 . O�X SITE 8 ;) I 1! AJA r 3 6 ADJACENT PROPERTY1JW s I 'ssis�s ,s a TgHQILITZ EXHIBIT "B" ENA Milestones/Schedule ENA Terms Negotiated and Executed 11/30/05 Enter into contract with consulting firm to undertake Environmental assessment and perform planning services 12/15/05 Commence appraisal of property 12/15/05 Appraisal completed and value accepted by Parties 03/15/06 Submittal of Site Plan, Project Description, Feasibility ,Analysis, Letter of Commitment, and Evidence of Acquired Property 06/01/06 Commence CEQA review process 06/01/06 Submittal of Entitlement Applications with City 08/01/06 Commence Negotiation of Term Sheet 09/01/06 Complete Negotiation of Term Sheet 10/01/06 Complete Negotiation of DDA 11/01/06 Complete CEQA Process 11/01/06 Complete City Entitlement Process and Agency Approves DDA 12/15/06 756378.03/OC N6003-040/12-I-05/nil/pal