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HomeMy WebLinkAboutPCH Beach Resort, LLC - 2006-04-20 t RECEIVED M6 APR 25 AM 10: 44 CITY OF HUNTINGTON BEACH C`'9 Inter-Department Communication'. s 14GTO :aAcii TO: JOAN FLYNN, City Clerk FROM: JENNIFER MCGRATH, City Attorney DATE: April 20, 2006 SUBJECT: Documents executed by both the City and Redevelopment Agency relating to the Hyatt 2006 refinance Attached to this memo is one set of the original documents executed by both the City and the Redevelopment Agency on April 12, 2006,relating to the Hyatt 2006 refinance, These documents were executed pursuant to the Amended and Restated Development Agreement between the City of Huntington Beach and Mayer Financial,Ltd. and the Waterfront Hotel, LLC, and the Amended and Restated Disposition and Development Agreement between the Redevelopment Agency and Mayer Financial, Ltd. The documents should be retained in your files. If you have any questions,please contact Leonie Mulvihill. � 1 JENNIFER MCGRATH, City Attorney /k Attachments as above c: Stanley Smkalewitz, Director Economic Development(with copy) i I g/mulvihill/06memos/hyatt to clerk Recorded In Official Records, Orange County Tom Daly,Clerk-Recorder IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIilllllllllllllllllllll 54.00 ET ID NATIONAL TITLE COMPANY 2006000231644 03:28pm 04/06/06 119 48 Al2 17 RECORDING REQUESTED BY 0.00 0.00 0.00 0.00 48.00 0.00 0.00 0.00 AND WHEN RECORDED MAIL TO: Katten Muchin Rosenman, LLP 1025 Thomas Jefferson Street,N.W. East Lobby, Suite 700 Washington, D.C. 20007-5201 Attention: Christopher J. Hart, Esq. qS (Space Above For Recorder's Use) ESTOPPEL AGREEMENT REGARDING DEVELOPMENT AGREEMENT AND PROPERTY AGREEMENTS THIS ESTOPPEL AGREEMENT REGARDING DEVELOPMENT AGREEMENT AND PROPERTY AGREEMENTS ("Agreement") is made and entered into as of the (0-� day of AP-i I ,, 2006, by and among CITY OF HUNTINGTON BEACH, a public body, corporate and politic (herein the "City"); PCH BEACH RESORT, LLC, a California limited liability company ("Developer"); and GMAC COMMERCIAL MORTGAGE BANK, a Utah industrial bank("Lender"). PRELIMINARY RECITALS: A. The City and Mayer Financial, L.P., as developer ("Mayer") have entered into an Amended and Restated Development Agreement dated as of September 21, 1998, recorded in the Recorder's Office of Orange County, California as Document No. 19980838602 ("Development Agreement") pursuant to which the City and Mayer have entered certain agreements thereunder with respect to the development of the Project(as defined in the Development Agreement) on the Property (as defined in the Development Agreement) and as more particularly described in Exhibit"A"attached hereto. B. The Property consists of three defined tracts of real estate all as more particularly described in the Development Agreement as the "Ocean Grand Resort Portion", the "Third Hotel Portion", and the"Residential Parcel". C. Pursuant to an Assignment and Assumption and Consent to Assignment dated April 3, 2001 between Mayer and the Developer, Mayer has assigned and the Developer has assumed all of the rights and obligations of Mayer under the Development Agreement insofar as it relates to but only as it relates to the Ocean Grand Resort Portion. Mayer remains as the developer of the remainder of the Property. The Ocean Grand Resort Portion is more particularly described in Exhibit`B" to this Agreement and is hereinafter referred to as the "Development Property". D. Pursuant to Amended and Restated Disposition and Development Agreement by and between Mayer and the Redevelopment Agency of the City of Huntington Beach ("Agency") dated as of September 14, 1989 ("Original Agreement"), as amended by that certain First Implementation Agreement to Amended and Restated Disposition and Development 162/019740-0016 684427.04 a03/22/06 Agreement dated as of May 15, 2000 ("First Implementation Agreement") and as further amended by Second Implementation Agreement to Amended and Restated Disposition and Development Agreement dated as of February 5, 2001 ("Second Implementation Agreement") (the Original Agreement as amended by the First Implementation Agreement and Second Implementation Agreement being herein referred to as the "DDA"), the Agency has leased the Development Property to Developer pursuant to that certain unrecorded Ground Lease dated April 4, 2001 ("Ground Lease"). A Memorandum of the Ground Lease was filed and recorded on April 18, 2001 as Document No. 20010232769 herewith in the Office of the County Recorder, Orange County,California("Memorandum"). E. Pursuant to the DDA and Ground Lease the Developer constructed a resort hotel of approximately 519 keyed guest rooms, a conference center and other amenities on the. Development Property("Resort Hotel Project"). F. The Developer obtained a bridge loan from Lender on or about August 19, 2005, in the original principal amount of One Hundred Fifteen Million and No/100 Dollars ($115,000,000.00) (the "Bridge Loan") to refinance a prior bridge loan made in connection with the Development Property. In furtherance thereof, Developer and Lender entered into certain loan documents wherein Lender disbursed the Bridge Loan, or portions thereof, to Developer under the conditions contained therein. G. Developer has obtained from Lender a commitment for a loan (the "Loan")in the maximum principal amount of One Hundred Fifteen Million and No/100 Dollars ($115,000,000.00) and in connection therewith the Developer will execute and deliver to Lender its deed of trust encumbering and conveying the Developer's interest in the Resort Hotel Project as security for the Loan. In furtherance thereof, Developer and Lender have entered into or will enter into certain loan documents ("Loan Documents") wherein Lender shall disburse the Loan, or portions thereof,to Developer under the conditions contained therein. H. To evidence the Loan, the Developer will be executing and delivering to Lender its Second Amended and Restated Deed of Trust Note in the amount of the Loan (herein the "Note"). I. As security for the repayment of the Note, among other collateral documents, the Developer has or will be executing and delivering to Fidelity National Title Company, as trustee, for the benefit of Lender its Second Amended and Restated Leasehold Deed of Trust, Assignment of Rents and Profits, Security Agreement, and Fixture Filing of even date herewith (herein the "Deed of Trust") conveying the Development Property in trust to Fidelity National Title Company, as trustee, for the benefit of Lender. J. The proceeds of the Loan will be used to refinance the Bridge Loan. K. As further security for the Loan and as a condition to its disbursement of the proceeds of the Loan, Lender has required that the City provide certain assurances to Lender. NOW THEREFORE, the parties agree as follows: 162/019740-0016 684427.04 a03/22/06 '2' 1. A true and correct copy of the Development Agreement was recorded in the Recorder's Office of Orange County, California as Document No. 19980838602 on December 7, 1998. 2. The Development Agreement remains in full force and effect and has not been modified, supplemented or amended in any respect, whether in writing or orally, and no uncured default currently exists thereunder. 3. The City previously consented to the acquisition of the ground lease interest of the Development Property by the Developer and acknowledges and agrees that for purposes of the development of the Development Property the Developer shall be the "Developer" of the same as set forth in the Development Agreement and is entitled to all of the benefits of the "Developer" under the Development Agreement insofar as it affects or relates to the Development Property and the Developer is responsible for only those obligations imposed under the Development Agreement insofar as they relate to development of the Development Property. In addition, the City hereby expressly approves and consents to (a) any subsequent transfer, whether voluntary or involuntary, of membership interests in Developer between Grand Resort, LLC ("GR") and Coast Beach, LLC ("CB"), two of the three original members of Developer, so long as such transfer is pursuant to either CB or GR exercising its rights under Section 4.5, 7.1 or 9.6 of the Developer's Limited Liability Company Agreement or pursuant to any corresponding provisions in Developer's Limited Liability Company Agreement, together with (i) any subsequent change in the share of capital or profits held by GR or CB in the Developer from time to time, so long as such transfer is pursuant to either CB or GR exercising its rights under Section 4.5, 7.1 or 9.6 of the Developer's Limited Liability Company Agreement, (ii) any subsequent change in interests, capital or profits that results in CB becoming the managing member of the Developer, so long as such transfer is pursuant to either CB or GR exercising its rights under Section 4.5, 7.1 or 9.6 of the Developer's Limited Liability Company Agreement, and (iii) any subsequent change in the ownership of shares in SPE PCH Beach Resort, Inc. ("SPE"), which results from any of the foregoing permitted transfers so long as SPE's membership interest in the Developer does not increase as a result thereof, (b) any transfers that result in the transfer of membership interests to a third party so long as the existing members, in the aggregate, retain a Controlling Interest in the Developer (the term "Controlling Interest" as used herein shall mean with respect to any entity, other than an individual, (i) an ownership interest in Developer totaling in excess of fifty percent [50%) of the voting and ownership interests of such entity, or(ii) control of the management and day to day operations of such entity), and (e) a voluntary or involuntary sale, exchange, conveyance or direct or indirect transfer of membership interests or"units" in either CB or GR's limited liability company, or the creation or issuance of new membership interests or "units" therein in one or a series of transactions, so long as the result is that an aggregate of at least 51% of each such company's membership interests or "units" shall be vested legally or beneficially in a party or parties who are now members of each of such companies. No such transfers shall require any notice to the Agency or the taking of any act by the Developer or its members as a condition to the effectiveness thereof. Notwithstanding anything contained herein to the contrary and the execution of this Agreement by Lender, the foregoing transfers of interests in Developer shall remain subject to the terms and provisions of the Loan Documents. 162/019740-0016 6W27.04 a03/22/06 -3- 4. The City recognizes Lender as a "Mortgagee" (as defined in the Development Agreement). As a recognized Mortgagee, Lender is entitled to all of the rights and benefits contained in Section 3.4 Mortgagee Protection of the Development Agreement. 5. The City has approved the discretionary land uses required to effect the Resort Hotel Project and has issued a Certificate of Occupancy for the Resort Hotel Project. 6. No default by Mayer or any other developer under the Development Agreement with respect to the Residential Parcel, Third Hotel Portion or Hilton Parcel (as defined therein) shall constitute a default by the Developer with respect to the Development Property and no termination of the Development Agreement or exercise of remedies by the City by reason of a default by Mayer or any other developer under the Development Agreement with respect to the Residential Parcel, Third Hotel Portion or Hilton Parcel shall constitute a default by the Developer with respect to the Development Property nor entitle the City to terminate the Development Agreement or exercise any of its remedies thereunder as they relate to the Development Property. 7. No termination of the Development Agreement by Mayer or any other developer under the Development Agreement as to the Residential Parcel, Third Hotel Portion or Hilton Parcel shall terminate the Development Agreement insofar as it relates to the Development Property. 8. Subject to City's rights and obligations under the Development Agreement during a default thereunder, so long as there is no default under the Development Agreement, City shall not consent to a mutual termination, modification or amendment of the Development Agreement insofar as it affects the Development Property without the prior written consent of Lender. 9. The City acknowledges that Lender is not a party to the Development Agreement and by executing this Agreement does not become a party to the Development Agreement. 10. The collateral assignment of the interest of Developer under (i) that certain License Agreement to Provide Landscaping and Other Improvements in the Public Right-of-Way dated February 20, 2001, by and between City, Mayer and the Waterfront Hotel, LLC ("License Agreement") to Lender in connection with the Loan and the assignment of Developer's ground leasehold interest to Lender for collateral security purposes is a permitted assignment under the terms of the License Agreement and (ii) that certain Agreement Involving the Installation of Pedestrian Overcrossing dated February 20, 2001, by and among City, Mayer and the Orange County Sanitation District ("Pedestrian Overcrossing Agreement") to Lender in connection with the Loan and the assignment of Developer's ground leasehold interest to Lender for collateral security purposes is a permitted assignment under the terms of the Pedestrian Overcrossing Agreement. 11. City acknowledges that Developer's obligations to install, construct and develop certain improvements, including without limitation, the pedestrian overcrossing spanning the Pacific Coast Highway, as such improvements relate to the Development Property and more particularly described in the (i) the License Agreement (as defined in Section 10 above), (ii) Cooperative Agreement (District 12-373), (iii) Cooperative Agreement (District 12-375), (iii) 162/019740-0016 684427.04 a03/22/06 -4- Subdivision Agreement, and (iv) Pedestrian Overcrossing Agreement (as defined in Section 10 above) (collectively, the "Property Agreements") are satisfactorily completed and, to City's best knowledge, no defaults exist under the Property Agreements. 12. City acknowledges and agrees that on May 29, 2003, a Release of Construction Covenants was recorded as Document No. 2003000624371 in the Official Records of Orange County, California, and that such document constitutes the issuance of a "Certificate of Completion" for purposes of Section 4.2.2.2 of the Development Agreement, evidencing satisfactory completion of all construction and development related to the Development Property required under the Development Agreement. 13. City acknowledges that the Development Agreement was terminated with respect to the Development Property as of the recordation of the Release of Construction Covenants/Certificate(s) of Completion, except as set forth in Section 4.2.2.2 of the Development Agreement. 14. City acknowledges that as to the Development Property, the certain Subdivision Agreement by and between City and Mayer for Tract No. 15535 dated August 2, 1999 (the "Subdivision Agreement") has been assigned by Mayer to Developer pursuant to that certain Assignment and Assumption Agreement for Subdivision Agreement dated December 16, 2001 (the "Subdivision Assignment") which Subdivision Assignment has been approved by the City Council of City on December 16,2001. The Residential Parcel is no longer owned by Mayer. 15. The City agrees to give to Lender any notices the City is required to give to the Developer under the Development Agreement and shall notify Lender of any default by the Developer under the Development Agreement and Lender shall have the same rights as the Developer to cure such default as provided in the Development Agreement. Any notices required hereunder shall be provided in the manner and form required under the Development Agreement and shall be addressed as follows: To Lender: GMAC Commercial Mortgage Bank 6955 Union Park Center, Suite 330 Midvale,UT 84047 Attn: Loan Notices (GMACCM Loan No. 01-1052372) with a copy to: Katten Muchin Rosenman, LLP 1025 Thomas Jefferson Street,N.W. East Lobby, Suite 700 Washington,D.C. 20007-5201 Attn: Christopher J. Hart,Esq. 162/019740-0016 684427.04 a03122/06 -5- To the City: City of Huntington Beach City Hall 2000 Main Street Huntington Beach, California 92648 Attn: Stanley Smalewitz, Director of Economic Development To the Developer: PCH Beach Resort,LLC c/o The Robert Mayer Corporation Suite 1050 660 Newport Center Drive Newport Beach, California 92660 Attn: Robert L. Mayer, Jr. and Stephen Bone with a copy to: Coast Beach, LLC c/o Hyatt Development Corporation 200 West Madison Avenue Chicago, Illinois 6060 Attn: Dale Moulton 16. Notwithstanding the place of execution of this instrument, the parties to this instrument have contracted for California law to govern this instrument and it is controllingly agreed that this instrument is made pursuant to and shall be construed and governed by the laws of the State of California without regard to the principles of conflicts of law. 17. This Agreement and each and every covenant, agreement and other provision hereof shall be binding upon and shall inure to the benefit of Lender, the Developer, the City and their respective successors and assigns. 18. The unenforceability or invalidity of any provisions hereof shall not render any other provision or provisions herein contained unenforceable or invalid. 19. This Agreement may be executed in any number of counterparts which together shall constitute one and the same instrument. 162/019740-0016 684427.04 a03/22/06 -6- IN FURTHERANCE, this Agreement is executed as of the date first above-written. PCH BEACH RESORT,LLC, a California limited liability company By: GRAND RESORT, LLC, a California limited liability company, Its: Managing Member By: RLM MANAGEMENT, INC., a California corporation, Its: Manager By: Robert L er Jr. Its: Presiden �j 162/019740-0016 684427.04 a03/22/06 —7— CITY OF HUNTINGTON BEACH, a public body, corporate and politic By: � Dr. Pe/ lope Culbreth-Graft Its: City Administrator Approved as to Form: e C t Attorney Approved as o Form --,P" Kane Ball & e , City Speci ounse 1621019740-0016 684427.04 a03/22/06 -8- GMAC COMMERCIAL MORTGAGE BANK, a Utah industrial bank By: Its: Lewis L. Delafi^ld AuMorwed 162/019740-0016 684427.04 a03/22/06 -9- STATE OF VIRGINIA) )ss COUNTY OF ARLINGTON) On M&PMA1300befoare ya rh , personally appeared � f 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. PtaryPublic [SEAL] OEM S. KOVACH Notary Public COMMon"Ofth of Virginia �V C:OM �, . JOn. 31, 2009 STATE OF CALIFORNIA ) ) ss COUNTY OF _) On ,before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s)whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 162/019740-0016 6M27.04 a03122/06 '10' STATE OF CA G t FFO R-kA I �t ) ) ss COUNTY OF f7"t L(a a ) On 1ko Y1 ( �, �UG� , before me, V-CX "'o✓% s�l I" , personally appe ear d "fir. personally known to me ( to be the person(�s)whose name(e)-is/are-subscribed to the within instrument and acknowledged to me that he/slteftlrcp executed the same in his/+terftheir authorized capacity(ies), and that by his/heir signature(s) on the instrument the person(s� or the entity upon behalf of which the person(&) acted, executed the instrument. Witness my hand and official seal. REX MORISHITA Commission#1414842 @my Notary Public-California f Orange County Notary Public Comm.Expires May 1.2001 [SEAL] STATE OF CALIFORNIA ) )ss COUNTY OF 1 On ,before me, , personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s)whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted,executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 162/019740-0016 684427.04 a03/22/06 -10- State of California ) )Ss County of Orange ) On Apr15, 2006 before me, K. Copeland personally appeared Penelope Culbreth-Graft known to me to be the person whose name is subscribed to the within instrument and acknowledged to me that she executed the same in her authorized capacity, and that by her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. K.COPELAND 1111 WITNESS my hand and official seal. (� COMM.#1409904 U NOTARY PUBLIC•CALIFORNIA 0 ORANGE COUNTY n h1v COMM.EXPIRES APRIL 8 2 07� EXHIBIT"A" DESCRIPTION OF PROPERTY SUBJECT TO DEVELOPMENT AGREEMENT ALL THAT CERTAIN LAND IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA,DESCRIBED AS FOLLOWS: THAT PORTION OF SECTION 14, TOWNSHIP 6 SOUTH,RANGE 11 WEST, SAN BERNARDINO BASE AND MERIDIAN, IN THE RANCHO LOS BOLSAS,AS PER MAP FILED IN BOOK 51,PAGE 14 OF MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY,DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF A LINE THAT IS PARALLEL WITH AND 50.00 FEET WEST OF THE EAST LINE OF SAID SECTION 14, WITH THE NORTH LINE OF THE SOUTH HALF OF THE NORTHEAST QUARTER OF SAID SECTION;THENCE SOUTH 0004422"EAST 1820.36 FEET ALONG SAID PARALLEL LINE TO A POINT IN THE NORTH LINE OF THE LAND DESCRIBED IN BOOK 2351, PAGE 5 OF OFFICIAL RECORDS OF SAID COUNTY;THENCE SOUTH 74°34'12" WEST 45.01 FEET ALONG SAID NORTH LINE TO A POINT IN THE NORTHEAST LINE OF THE LAND DESCRIBED AS PARCEL 2 IN BOOK 826,PAGE 379, OF SAID OFFICIAL RECORDS; THENCE NORTH 53005'49" WEST 172.33 FEET ALONG SAID NORTHEAST LINE TO A POINT IN THE WEST LINE OF THE LAND DESCRIBED IN BOOK 261,PAGE 41 OF DEEDS, RECORDS OF SAID COUNTY;THENCE NORTH 00°44'22" WEST 12.63 FEET ALONG SAID WEST LINE TO A POINT IN THE NORTHEASTERLY RIGHT OF WAY LINE OF PACIFIC COAST HIGHWAY AS DESCRIBED IN BOOK 455, PAGE 400 OF SAID OFFICIAL RECORDS; THENCE NORTH 53°05'49" WEST 1966.76 FEET ALONG SAID NORTHEAST LINE TO THE MOST SOUTHERLY CORNER OF LOT 1,TRACT NO. 13045,RECORDED IN BOOK 628, PAGES 46 AND 47 OF MISCELLANEOUS MAPS, RECORDS OF SAID COUNTY; THENCE NORTH 36°54'20" EAST 360.46 FEET ALONG THE SOUTHEASTERLY OF SAID LOT 1 TO THE MOST EASTERLY CORNER OF SAID LOT 1; THENCE SOUTH 48°43'21" EAST 25.00 FEET; THENCE NORTH 41°16'39"EAST 97.00 FEET; THENCE NORTH 48°43'21" WEST 38.85 FEET TO THE BEGINNING OF A CURVE CONCAVE SOUTHWESTERLY,HAVING A RADIUS OF 2452.00 FEET; THENCE NORTHWESTERLY 252.68 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 05054'16" TO A POINT ON THE NORTH LINE OF THE SOUTH HALF OF THE NORTHEAST QUARTER OF SAID SECTION 14,A LINE RADIAL TO SAID POINT BEARS NORTH 35022'25" EAST; THENCE NORTH 89°42'58" EAST 1658.70 FEET ALONG SAID NORTH LINE TO THE POINT OF BEGINNING. EXHIBIT"A" TO ESTOPPEL AGREEMENT REGARDING DEVELOPMENT 684427 04a030/22/06 AGREEMENT AND PROPERTY AGREEMENTS EXHIBIT`B" DESCRIPTION OF DEVELOPMENT PROPERTY All that certain land situated in the State of California, County of Orange, City of Huntington Beach, and is described as follows: Parcel A: Lot 1 of Tract No. 15535, as shown on a map filed in Book 790, pages 44 to 50 inclusive of Miscellaneous Maps,Records of Orange County, California Parcel B: A non-exclusive revocable license to utilize that certain area defined as "Grand Coast Resort Improvement Area" in that certain "License Agreement to Provide Landscaping and Other Improvements in the Public Right-Of-Way" ("Agreement") recorded April 18, 2001 as Instrument No. 20010232765 of Official Records of Orange County, California, and delineated on Exhibit "F" attached thereto, for the installation, maintenance, repair and replacement of landscaping and other improvements, as said license is set forth in paragraph 2 of the Agreement. Parcel C: A non-exclusive revocable license to utilize that certain area defined as "Overcrossing Improvement Area" in that certain "License Agreement to Provide Landscaping and Other Improvements in the Public Right-Of-Way" ("Agreement") recorded April .18, 2001 as Instrument No. 20010232765 of Official Records of Orange County, California, and delineated on Exhibit "G" attached thereto, for the installation, maintenance, repair and replacement of overcrossing and other improvements, as said license is set forth in paragraph 2 of the Agreement. Parcel D: A non-exclusive appurtenant easement upon, in, over, under and along those portions of the land as described in that certain "Wall and Landscaping Easement and Maintenance Agreement", dated May 30, 2003, executed by and between PCH Beach Resorts, LLC, a California limited liability company and PLC/Lyon Waterfront LLC, a Delaware limited liability company recorded June 12, 2003 as instrument no. 2003000690325, of Official Records of Orange County, State of California. EXHIBIT"B" TO ESTOPPEL AGREEMENT REGARDING DEVELOPMENT 162/019740-0016 684427.04 a03/22/06 AGREEMENT AND PROPERTY AGREEMENTS Government Code 27361.7 1 certify under the penalty of perjury that the notary seal on this document read as follows: Name of Notary: KIMBERLY S. KOVACH Date Commission Expires: JAN 31, 2009 County where bond is Filed: ARLINGTON, VIRGINIA Place of execution - Newport Beach Date - April 5, 2006 FIDELITY NATION TITLE COMPANY Government Code 27361 .7 1 certify under the penalty of perjury that the notary seal on this document read as follows: Name of Notary: K. COPELAND Date Commission Expires: APRIL 8, 2007 County where bond is Filed: ORANGE Commission No.: 1409904 Manufacturer/Vendor No.: TCC1 Place of execution - Newport Beach Date - April 5, 2006 FIDELITY NATIONAL TITLE COMPANY Government Code 27361.7 1 certify under the penalty of perjury that the notary seal on this document read as follows: Name of Notary: REX MORISHITA Date Commission Expires: MAY 1, 2007 County where bond is Filed: ORANGE Commission No.: 1414842 Manufacturer/Vendor No.: NNA1 Place of execution - Newport Beach Date - April 5, 2006 FIDELITY NATION TITLE COMPANY RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Katten Muchin Rosenman, LLP 1025 Thomas Jefferson Street,N.W. East Lobby, Suite 700 Washington, D.C. 20007-5201 77,41S �d Attention: Christopher J. Hart, Esq. 06//tJ (Space Above For Recorder's Use) ESTOPPEL AGREEMENT REGARDING DEVELOPMENT AGREEMENT AND PROPERTY AGREEMENTS THIS ESTOPPEL AGREEMENT REGARDING DEVELOPMENT AGREEMENT AND PROPERTY AGREEMENTS ("Agreement") is made and entered into as of the 6 day of , 2006, by and among CITY OF HUNTINGTON BEACH, a public body, corporate and olitic (herein the "City"); PCH BEACH RESORT, LLC, a California limited liability company ("Developer"); and GMAC COMMERCIAL MORTGAGE BANK, a Utah industrial bank("Lender"). PRELIMINARY RECITALS: A. The City and Mayer Financial, L.P., as developer ("Mayer") have entered into an Amended and Restated Development Agreement dated as of September 21, 1998, recorded in the Recorder's Office of Orange County, California as Document No. 19980838602 ("Development Agreement") pursuant to which the City and Mayer have entered certain agreements thereunder with respect to the development of the Project(as defined in the Development Agreement) on the Property (as defined in the Development Agreement) and as more particularly described in Exhibit "A" attached hereto. B. The Property consists of three defined tracts of real estate all as more particularly described in the Development Agreement as the "Ocean Grand Resort Portion", the "Third Hotel Portion", and the "Residential Parcel". C. Pursuant to an Assignment and Assumption and Consent to Assignment dated April 3, 2001 between Mayer and the Developer, Mayer has assigned and the Developer has assumed all of the rights and obligations of Mayer under the Development Agreement insofar as it relates to but only as it relates to the Ocean Grand Resort Portion. Mayer remains as the developer of the remainder of the Property. The Ocean Grand Resort Portion is more particularly described in Exhibit `B" to this Agreement and is hereinafter referred to as the "Development Property" D. Pursuant to Amended and Restated Disposition and Development Agreement by and between Mayer and the Redevelopment Agency of the City of Huntington Beach ("Agency") dated as of September 14, 1989 ("Original Agreement"), as amended by that certain First Implementation Agreement to Amended and Restated Disposition and Development 162/019740-0016 684427.04 a03/22/06 Agreement dated as of May 15, 2000 ("First Implementation Agreement") and as further amended by Second Implementation Agreement to Amended and Restated Disposition and Development Agreement dated as of February 5, 2001 ("Second Implementation Agreement") (the Original Agreement as amended by the First Implementation Agreement and Second Implementation Agreement being herein referred to as the "DDA"), the Agency has leased the Development Property to Developer pursuant to that certain unrecorded Ground Lease dated April 4, 2001 ("Ground Lease"). A Memorandum of the Ground Lease was filed and recorded on April 18, 2001 as Document No. 20010232769 herewith in the Office of the County Recorder, Orange County, California("Memorandum"). E. Pursuant to the DDA and Ground Lease the Developer constructed a resort hotel of approximately 519 keyed guest rooms, a conference center and other amenities on the Development Property("Resort Hotel Project"). F. The Developer obtained a bridge loan from Lender on or about August 19, 2005, in the original principal amount of One Hundred Fifteen Million and No/100 Dollars ($115,000,000.00) (the "Bridge Loan") to refinance a prior bridge loan made in connection with the Development Property. In furtherance thereof, Developer and Lender entered into certain loan documents wherein Lender disbursed the Bridge Loan, or portions thereof, to Developer under the conditions contained therein. G. Developer has obtained from Lender a commitment for a loan (the "Loan") in the maximum principal amount of One Hundred Fifteen Million and No/100 Dollars ($115,000,000.00) and in connection therewith the Developer will execute and deliver to Lender its deed of trust encumbering and conveying the Developer's interest in the Resort Hotel Project as security for the Loan. In furtherance thereof, Developer and Lender have entered into or will enter into certain loan documents ("Loan Documents") wherein Lender shall disburse the Loan, or portions thereof, to Developer under the conditions contained therein. H. To evidence the Loan, the Developer will be executing and delivering to Lender its Second Amended and Restated Deed of Trust Note in the amount of the Loan (herein the "Note"). I. As security for the repayment of the Note, among other collateral documents, the Developer has or will be executing and delivering to Fidelity National Title Company, as trustee, for the benefit of Lender its Second Amended and Restated Leasehold Deed of Trust, Assignment of Rents and Profits, Security Agreement, and Fixture Filing of even date herewith (herein the "Deed of Trust") conveying the Development Property in trust to Fidelity National Title Company, as trustee, for the benefit of Lender. J. The proceeds of the Loan will be used to refinance the Bridge Loan. K. As further security for the Loan and as a condition to its disbursement of the proceeds of the Loan,Lender has required that the City provide certain assurances to Lender. NOW THEREFORE, the parties agree as follows: 162/019740-0016 684427.04 a03/22/06 -2- 1. A true and correct copy of the Development Agreement was recorded in the Recorder's Office of Orange County, California as Document No. 19980838602 on December 7, 1998. 2. The Development Agreement remains in full force and effect and has not been modified, supplemented or amended in any respect, whether in writing or orally, and no uncured default currently exists thereunder. 3. The City previously consented to the acquisition of the ground lease interest of the Development Property by the Developer and acknowledges and agrees that for purposes of the development of the Development Property the Developer shall be the "Developer" of the same as set forth in the Development Agreement and is entitled to all of the benefits of the "Developer" under the Development Agreement insofar as it affects or relates to the Development Property and the Developer is responsible for only those obligations imposed under the Development Agreement insofar as they relate to development of the Development Property. In addition, the City hereby expressly approves and consents to (a) any subsequent transfer, whether voluntary or involuntary, of membership interests in Developer between Grand Resort, LLC ("GR") and Coast Beach, LLC ("CB"), two of the three original members of Developer, so long as such transfer is pursuant to either CB or GR exercising its rights under Section 4.5, 7.1 or 9.6 of the Developer's Limited Liability Company Agreement or pursuant to any corresponding provisions in Developer's Limited Liability Company Agreement, together with (i) any subsequent change in the share of capital or profits held by GR or CB in the Developer from time to time, so long as such transfer is pursuant to either CB or GR exercising its rights under Section 4.5, 7.1 or 9.6 of the Developer's Limited Liability Company Agreement, (ii) any subsequent change in interests, capital or profits that results in CB becoming the managing member of the Developer, so long as such transfer is pursuant to either CB or GR exercising its rights under Section 4.5, 7.1 or 9.6 of the Developer's Limited Liability Company Agreement, and (iii) any subsequent change in the ownership of shares in SPE PCH Beach Resort, Inc. ("SPE"), which results from any of the foregoing permitted transfers so long as SPE's membership interest in the Developer does not increase as a result thereof, (b) any transfers that result in the transfer of membership interests to a third party so long as the existing members, in the aggregate, retain a Controlling Interest in the Developer (the term "Controlling Interest" as used herein shall mean with respect to any entity, other than an individual, (i) an ownership interest in Developer totaling in excess of fifty percent [50%] of the voting and ownership interests of such entity, or(ii) control of the management and day to day operations of such entity), and (e) a voluntary or involuntary sale, exchange, conveyance or direct or indirect transfer of membership interests or "units" in either CB or GR's limited liability company, or the creation or issuance of new membership interests or "units" therein in one or a series of transactions, so long as the result is that an aggregate of at least 51% of each such company's membership interests or "units" shall be vested legally or beneficially in a party or parties who are now members of each of such companies. No such transfers shall require any notice to the Agency or the taking of any act by the Developer or its members as a condition to the effectiveness thereof. Notwithstanding anything contained herein to the contrary and the execution of this Agreement by Lender, the foregoing transfers of interests in Developer shall remain subject to the terms and provisions of the Loan Documents. 162/019740-0016 684427.04 a03/22/06 -3- 4. The City recognizes Lender as a "Mortgagee" (as defined in the Development Agreement). As a recognized Mortgagee, Lender is entitled to all of the rights and benefits contained in Section 3.4 Mortgagee Protection of the Development Agreement. 5. The City has approved the discretionary land uses required to effect the Resort Hotel Project.and has issued a Certificate of Occupancy for the Resort Hotel Project. 6. No default by Mayer or any other developer under the Development Agreement with respect to the Residential Parcel, Third Hotel Portion or Hilton Parcel (as defined therein) shall constitute a default by the Developer with respect to the Development Property and no termination of the Development Agreement or exercise of remedies by the City by reason of a default by Mayer or any other developer under the Development Agreement with respect to the Residential Parcel, Third Hotel Portion or Hilton Parcel shall constitute a default by the Developer with respect to the Development Property nor entitle the City to terminate the Development Agreement or exercise any of its remedies thereunder as they relate to the Development Property. 7. No termination of the Development Agreement by Mayer or any other developer under the Development Agreement as to the Residential Parcel, Third Hotel Portion or Hilton Parcel shall terminate the Development Agreement insofar as it relates to the Development Property. 8. Subject to City's rights and obligations under the Development Agreement during a default thereunder, so long as there is no default under the Development Agreement, City shall not consent to a mutual termination, modification or amendment of the Development Agreement insofar as it affects the Development Property without the prior written consent of Lender. 9. The City acknowledges that Lender is not a party to the Development Agreement and by executing this Agreement does not become a party to the Development Agreement. 10. The collateral assignment of the interest of Developer under (i) that certain License Agreement to Provide Landscaping and Other Improvements in the Public Right-of-Way dated February 20, 2001, by and between City, Mayer and the Waterfront Hotel, LLC ("License Agreement") to Lender in connection with the Loan and the assignment of Developer's ground leasehold interest to Lender for collateral security purposes is a permitted assignment under the terms of the License Agreement and (ii) that certain Agreement Involving the Installation of Pedestrian Overcrossing dated February 20, 2001, by and among City, Mayer and the Orange County Sanitation District ("Pedestrian Overcrossing Agreement") to Lender in connection with the Loan and the assignment of Developer's ground leasehold interest to Lender for collateral security purposes is a permitted assignment under the terms of the Pedestrian Overcrossing Agreement. 11. City acknowledges that Developer's obligations to install, construct and develop certain improvements, including without limitation, the pedestrian overcrossing spanning the Pacific Coast Highway, as such improvements relate to the Development Property and more particularly described in the (i) the License Agreement (as defined in Section 10 above), (ii) Cooperative Agreement (District 12-373), (iii) Cooperative Agreement (District 12-375), (iii) 162/019740-0016 684427.04 a03/22/06 -4- Subdivision Agreement, and (iv) Pedestrian Overcrossing Agreement (as defined in Section 10 above) (collectively, the "Property Agreements") are satisfactorily completed and, to City's best knowledge, no defaults exist under the Property Agreements. 12. City acknowledges and agrees that on May 29, 2003, a Release of Construction Covenants was recorded as Document No. 2003000624371 in the Official Records of Orange County, California, and that such document constitutes the issuance of a "Certificate of Completion" for purposes of Section 4.2.2.2 of the Development Agreement, evidencing satisfactory completion of all construction and development related to the Development Property required under the Development Agreement. 13. City acknowledges that the Development Agreement was terminated with respect to the Development Property as of the recordation of the Release of Construction Covenants/Certificate(s) of Completion, except as set forth in Section 4.2.2.2 of the Development Agreement. 14. City acknowledges that as to the Development Property, the certain Subdivision Agreement by and between City and Mayer for Tract No. 15535 dated August 2, 1999 (the "Subdivision Agreement") has been assigned by Mayer to Developer pursuant to that certain Assignment and Assumption Agreement for Subdivision Agreement dated December 16, 2001 (the "Subdivision Assignment") which Subdivision Assignment has been approved by the City Council of City on December 16, 2001. The Residential Parcel is no longer owned by Mayer. 15. The City agrees to give to Lender any notices the City is required to give to the Developer under the Development Agreement and shall notify Lender of any default by the Developer under the Development Agreement and Lender shall have the same rights as the Developer to cure such default as provided in the Development Agreement. Any notices required hereunder shall be provided in the manner and form required under the Development Agreement and shall be addressed as follows: To Lender: GMAC Commercial Mortgage Bank 6955 Union Park Center, Suite 330 Midvale, UT 84047 Attn: Loan Notices (GMACCM Loan No. 01-1052372) with a copy to: Katten Muchin Rosenman, LLP 1025 Thomas Jefferson Street,N.W. East Lobby, Suite 700 Washington,D.C. 20007-5201 Attn: Christopher J. Hart, Esq. 162/019740-0016 684427.04 a03/22/06 -5- To the City: City of Huntington Beach City Hall 2000 Main Street Huntington Beach, California 92648 Attn: Stanley Smalewitz, Director of Economic Development To the Developer: PCH Beach Resort, LLC c/o The Robert Mayer Corporation Suite 1050 660 Newport Center Drive Newport Beach, California 92660 Attn: Robert L. Mayer, Jr. and Stephen Bone with a copy to: Coast Beach, LLC c/o Hyatt Development Corporation 200 West Madison Avenue Chicago, Illinois 6060 Attn: Dale Moulton 16. Notwithstanding the place of execution of this instrument, the parties to this instrument have contracted for California law to govern this instrument and it is controllingly agreed that this instrument is made pursuant to and shall be construed and governed by the laws of the State of California without regard to the principles of conflicts of law. 17. This Agreement and each and every covenant, agreement and other provision hereof shall be binding upon and shall inure to the benefit of Lender, the Developer, the City and their respective successors and assigns. 18. The unenforceability or invalidity of any provisions hereof shall not render any other provision or provisions herein contained unenforceable or invalid. 19. This Agreement may be executed in any number of counterparts which together shall constitute one and the same instrument. 162/019740-0016 684427.04 a03/22/06 -6- IN FURTHERANCE, this Agreement is executed as of the date first above-written. PCH BEACH RESORT, LLC, a California limited liability company By: GRAND RESORT, LLC, a California limited liability company, Its: Managing Member By: RLM MANAGEMENT, INC., a California corporation, Its: Manager By: Robert L. Its: President l62/019740-0016 684427.04 a03/22/06 -7- CITY OF HUNTINGTON BEACH, a public body, corporate and politic ,'7 By: Dr. Penel pe Culbreth-Graft Its: City Administrator Approved as to Form: y it Attorney Approve to Form Kane B mer& B trkL'City Sp al Counsl 162/019740-0016 684427.04 a03/22/06 -8- GMAC COMMERCIAL MORTGAGE BANK, a Utah industrial bank By: Its: e afi Lewis . Deld Authoriz, ., 162/019740-0016 684427.04 a03/22/06 -9- STATE OF C&L-lre:o?-N t!V ) ) ss COUNTY OF ©V-6 N,6r a ) On 4ND✓1 t ►�� ,before me, CZeX �U✓i4 4-r1 , personally appeared 1Z-V - <-• Nl,a..0 IL personally known to me ( ) to be the person*whose name( is/are-subscribed to the within instrument and acknowledged to me that he/shv'tkey executed the same in his/her1th6r authorized capacity(ies), and that by his/keB4heir signatureW on the instrument the person(a) or the entity upon behalf of which the person(&) acted, executed the instrument. Witness my hand and official seal. REX MORISHITA Commission# 1414842 @MY Notary Public-California Orange County Notary Public Comm.Expires May 1,2007 [SEAL] STATE OF CALIFORNIA ) ss COUNTY OF ) On ,before me, , personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 162/019740-0016 684427.04 a03/22/06 —1 0' State of California ) )ss County of Orange ) On Aprl 5, 2006 , before me, K. Copeland personally appeared Penelope Culbreth-Graft known to me to be the person whose name is subscribed to the within instrument and acknowledged to me that she executed the same in her authorized capacity, and that by her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. K. COPELAND I COMM.#14tl9904 WITNESS my hand and official seal. (� V NOTARY PUBLIC.CALIFORNIA 0 CHANGIliCOUNTY n MY COMM:BMW APRIL @,2007 STATE OF VIRGINIA) ss COUNTY OF ARLINGTON) ° ac OnNA �� b fore me �4AbUln personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] MMBE LY S. KOVACH Notary Public Commonwealth of Virginia My Comm. Up. Jan. 31, 2009 STATE OF CALIFORNIA ) ss COUNTY OF ) On ,before me, , personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 162/019740-0016 684427.04 a03/22/06 —10— EXHIBIT "A" DESCRIPTION OF PROPERTY SUBJECT TO DEVELOPMENT AGREEMENT ALL THAT CERTAIN LAND IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS: THAT PORTION OF SECTION 14, TOWNSHIP 6 SOUTH, RANGE 11 WEST, SAN BERNARDINO BASE AND MERIDIAN, IN THE RANCHO LOS BOLSAS, AS PER MAP FILED IN BOOK 51, PAGE 14 OF MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY,DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF A LINE THAT IS PARALLEL WITH AND 50.00 FEET WEST OF THE EAST LINE OF SAID SECTION 14, WITH THE NORTH LINE OF THE SOUTH HALF OF THE NORTHEAST QUARTER OF SAID SECTION; THENCE SOUTH 00044'22" EAST 1820.36 FEET ALONG SAID PARALLEL LINE TO A POINT IN THE NORTH LINE OF THE LAND DESCRIBED IN BOOK 2351, PAGE 5 OF OFFICIAL RECORDS OF SAID COUNTY; THENCE SOUTH 74°34'12" WEST 45.01 FEET ALONG SAID NORTH LINE TO A POINT IN THE NORTHEAST LINE OF THE LAND DESCRIBED AS PARCEL 2 IN BOOK 826, PAGE 379, OF SAID OFFICIAL RECORDS; THENCE NORTH 53005'49" WEST 172.33 FEET ALONG SAID NORTHEAST LINE TO A POINT IN THE WEST LINE OF THE LAND DESCRIBED IN BOOK 261, PAGE 41 OF DEEDS, RECORDS OF SAID COUNTY; THENCE NORTH 00°44'22" WEST 12.63 FEET ALONG SAID WEST LINE TO A POINT IN THE NORTHEASTERLY RIGHT OF WAY LINE OF PACIFIC COAST HIGHWAY AS DESCRIBED IN BOOK 455, PAGE 400 OF SAID OFFICIAL RECORDS; THENCE NORTH 53°05'49" WEST 1966.76 FEET ALONG SAID NORTHEAST LINE TO THE MOST SOUTHERLY CORNER OF LOT 1, TRACT NO. 13045, RECORDED IN BOOK 628, PAGES 46 AND 47 OF MISCELLANEOUS MAPS, RECORDS OF SAID COUNTY; THENCE NORTH 36054'20" EAST 360.46 FEET ALONG THE SOUTHEASTERLY OF SAID LOT 1 TO THE MOST EASTERLY CORNER OF SAID LOT 1; THENCE SOUTH 48°43'21" EAST 25.00 FEET; THENCE NORTH 41016'39" EAST 97.00 FEET; THENCE NORTH 48°43'21" WEST 38.85 FEET TO THE BEGINNING OF A CURVE CONCAVE SOUTHWESTERLY, HAVING A RADIUS OF 2452.00 FEET; THENCE NORTHWESTERLY 252.68 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 05054'16" TO A POINT ON THE NORTH LINE OF THE SOUTH HALF OF THE NORTHEAST QUARTER OF SAID SECTION 14, A LINE RADIAL TO SAID POINT BEARS NORTH 35022'25" EAST; THENCE NORTH 89042'58" EAST 1658.70 FEET ALONG SAID NORTH LINE TO THE POINT OF BEGINNING. EXHIBIT "A" TO ESTOPPEL AGREEMENT REGARDING DEVELOPMENT 162/019740-0016 684427.04 a03/22/06 AGREEMENT AND PROPERTY AGREEMENTS EXHIBIT `B" DESCRIPTION OF DEVELOPMENT PROPERTY All that certain land situated in the State of California, County of Orange, City of Huntington Beach, and is described as follows: Parcel A: Lot 1 of Tract No. 15535, as shown on a map filed in Book 790, pages 44 to 50 inclusive of Miscellaneous Maps, Records of Orange County, California Parcel B: A non-exclusive revocable license to utilize that certain area defined as "Grand Coast Resort Improvement Area" in that certain "License Agreement to Provide Landscaping and Other Improvements in the Public Right-Of-Way" ("Agreement") recorded April 18, 2001 as Instrument No. 20010232765 of Official Records of Orange County, California, and delineated on Exhibit "F" attached thereto, for the installation, maintenance, repair and replacement of landscaping and other improvements, as said license is set forth in paragraph 2 of the Agreement. Parcel C: A non-exclusive revocable license to utilize that certain area defined as "Overcrossing Improvement Area" in that certain "License Agreement to Provide Landscaping and Other Improvements in the Public Right-Of-Way" ("Agreement") recorded April 18, 2001 as Instrument No. 20010232765 of Official Records of Orange County, California, and delineated on Exhibit "G" attached thereto, for the installation, maintenance, repair and replacement of overcrossing and other improvements, as said license is set forth in paragraph 2 of the Agreement. Parcel D: A non-exclusive appurtenant easement upon, in, over, under and along those portions of the land as described in that certain "Wall and Landscaping Easement and Maintenance Agreement", dated May 30, 2003, executed by and between PCH Beach Resorts, LLC, a California limited liability company and PLC/Lyon Waterfront LLC, a Delaware limited liability company recorded June 12, 2003 as instrument no. 2003000690325, of Official Records of Orange County, State of California. EXHIBIT `B" TO ESTOPPEL AGREEMENT REGARDING DEVELOPMENT 162/019740-0016 684427.04 a03/22/06 AGREEMENT AND PROPERTY AGREEMENTS