HomeMy WebLinkAboutGrand Pacific Carlsbad Hotel LP; 2016-12-15;GUARANTY OF COMPLETION AND LIMITED PAYMENT OBLIGATIONS
THIS GUARANTY OF COMPLETION AND LIMITED PAYMENT OBLIGATIONS
("Guaranty") is executed as of December JS_, 2016, by GRAND PACIFIC CARLSBAD, L.P.,
a California limited partnership (the "Guarantor"), in favor of THE CARLSBAD PUBLIC
FINANCING AUTHORITY, a joint powers authority formed by the City of Carlsbad and the
Carlsbad Municipal Water District ("Landlord"), with reference to the facts set forth below.
RECITALS
Landlord and GRAND PACIFIC CARLSBAD HOTEL, L.P., a Delaware limited
partnership ("Tenant") have entered into that certain Ground Lease dated December £ 2016
(as at any time amended, modified, or supplemented, the "Lease"), covering the Premises
described in the Lease. Capitalized terms not otherwise defined herein shall be as defined in the
Lease.
The Guarantor is an Affiliate of Tenant, or otherwise expects to benefit from the grant by
Landlord to Tenant of the Lease.
As an essential inducement to Landlord's agreement to grant the Lease to Tenant and in
consideration therefor and at the request of Tenant, the Guarantor has agreed to guaranty the
completion of the Hotel Addition and the Additional Sheraton Building and the payment of any
and all rental obligations under the Lease which accrue prior to the Release Date (as defined
below), subject to the limitations, releases, and other provisions provided herein below.
NOW, THEREFORE, in consideration of the premises, and to induce and in
consideration for the granting of the Lease, the Guarantor agrees for the benefit of Landlord, its
successors and assigns, as set forth below.
1. Guaranty.
1.1 Subject to Section 1.2 below, the Guarantor hereby unconditionally and
irrevocably guaranties to Landlord, for a period commencing on the Commencement Date of the
Lease and ending upon the earlier of (A) the date of the termination of the Lease (other than
termination by Landlord for an Event of Default by Tenant under the Lease) or (B) the later of
the date of Substantial Completion of the Hotel Addition or the date of Substantial Completion
of the Additional Sheraton Building (such earlier date being the "Release Date"), the full and
timely payment and performance of all rent, charges, indebtedness and obligations, of any nature
whatsoever, of Tenant under the Lease (and any and all amendments, supplements, and
modifications thereof, whether now in existence or hereafter created) which are due and payable
by Tenant prior to the Release Date including, without limitation, (i) the obligation to pay Rent,
Impositions, and other charges, fees, costs and other amounts due from Tenant under the Lease
which are due and payable by Tenant prior to the Release Date (ii) the full and timely payment of
all contractors, subcontractors, materialmen, engineers, architects and other persons who have
rendered or furnished services or materials that are or become a part of the initial construction of
the Hotel Addition and/or the Additional Sheraton Building, and (ii) the Substantial Completion
of the Hotel Addition to be completed on the Premises and the Substantial Completion of the
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Additional Sheraton Building in accordance with the Lease (all of the foregoing obligations
collectively, the "Guarantied Obligations").
1.2 Notwithstanding any other provision of this Guaranty to the contrary, and
provided no Event of Default under the Lease with respect to any Guarantied Obligations shall
then exist, Guarantor automatically shall be forever released from all liability under this
Guaranty, and this Guaranty shall terminate, on the Release Date without necessity of further
documentation.
1.3 This is a continuing guaranty until the Release Date relating to the Guarantied
Obligations, including, without limitation, obligations and liabilities arising under successive and
future transactions that either increase, decrease, or continue the Guarantied Obligations, or,
from time to time, renew Guarantied Obligations that have been satisfied, independent of and in
addition to any guaranty, endorsement, or collateral now or hereafter held by Landlord, whether
or not furnished by the Guarantor. This Guaranty shall apply and be irrevocable with respect to
any indebtedness created or incurred even after actual receipt by Landlord of any written notice
of purported revocation by the Guarantor and the Guarantor waives any right to revoke this
Guaranty and the benefits of California Civil Code Section 2815.
2. Independent Obligations.
2.1 Guarantor shall pay to (in immediately available funds) and perform for the
benefit of Landlord, when due, on demand of Landlord all Guarantied Obligations. This
Guaranty is an absolute guaranty of payment and performance and not of collection. The
Guarantor's obligations under this Guaranty are independent of those of Tenant and of the
obligations of any other guarantor or person, and are not conditioned or contingent upon the
genuineness, validity, regularity, or enforceability of the Lease or other Guarantied Obligations
or of the obligations of any other guarantor or person. Landlord may bring a separate action
against the Guarantor without first proceeding against Tenant, any other guarantor, or any other
person, or any security held by Landlord, and without pursuing any other remedy. Landlord's
rights under this Guaranty in respect of the Guarantied Obligations shall not be exhausted by any
action of Landlord until all of the Guarantied Obligations have been fully and indefeasibly paid
and performed. Unless otherwise provided herein, this Guaranty and the obligations hereunder
shall survive termination of the Lease.
3. Rights of Landlord.
3.1 The Guarantor consents that Landlord may, and authorizes Landlord at any time
in its discretion without notice or demand to or upon the Guarantor or any other person and
without affecting the indebtedness and liabilities of the Guarantor hereunder to: (i) enter into
agreements with Tenant and renew, extend, amend, waive, restructure, refinance, release,
accelerate, or otherwise change the time for payment of, or otherwise change the terms of, the
indebtedness evidenced by the Lease (including, without limitation, the Guarantied Obligations),
including, without limitation, (a) increase or decrease in the Guarantied Obligations and (b) any
amendment of the Guarantied Obligations to permit Landlord to extend further or additional
accommodations to Tenant in any form, including credit by way of loan, lease, sale or purchase
of assets, guarantee, or otherwise, which shall thereupon be Guaranteed Obligations; (ii) accept
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new or additional documents, instruments, or agreements relative to the Guarantied Obligations;
(iii) consent to the change, restructure or termination of the individual, partnership, corporate or
other organizational structure of existence of Tenant, the Guarantor or any affiliate of Tenant or
the guarantor or any other person and correspondingly restructure the Guarantied Obligations;
(iv) accept partial payments on the Guarantied Obligations; (v) take and hold collateral or
additional guaranties for the Guarantied Obligations and amend, later, exchange, substitute,
transfer, enforce, perfect or fail to perfect, waive, subordinate, terminate, or release any such
collateral or guaranties; (vi) apply any collateral, and direct the order and manner of sale thereof
as Landlord in its sole discretion may determine; (vii) settle, release on terms satisfactory to
Landlord or by operation of law or otherwise, compound, compromise, collect or otherwise
liquidate the Guarantied Obligations and/or the collateral or any guaranty therefore in any
manner, whether in liquidation, reorganization, receivership, bankruptcy, or otherwise;
(viii) release Tenant or any other person for all or any part of the Guarantied Obligations; or
(ix) assign the Guarantied Obligation or any rights related thereto in whole or in part.
4. Tenant's Financial Condition.
4.1 The Guarantor acknowledges that the Guarantor is relying upon the Guarantor's
own knowledge and is fully informed with respect to Tenant's financial condition. The
Guarantor assumes full responsibility for keeping fully informed of the financial condition of
Tenant and all other circumstances affecting Tenant's ability to perform its obligations to
Landlord, and agrees that Landlord will have no duty to report to the Guarantor any information
that Landlord receives about Tenant's ability to perform all or any portion of the Guarantied
Obligations regardless of whether Landlord has reason to believe that any such facts materially
increase the risk beyond that which the Guarantor intends to assume or has reason to believe that
such facts are unknown to the Guarantor or has reasonable opportunity to communicate such
facts to the Guarantor.
5. Exercise of Subrogation Rights; Subordination.
5.1 The Guarantor agrees that (i) the Guarantor shall have no right of subrogation,
reimbursement or indemnity against Tenant or against any collateral for the Guarantied
Obligations unless and until all Guarantied Obligations have been paid and performed in full;
(ii) the Guarantor shall have no right of contribution against any other guarantor or person unless
and until all Guarantied Obligations have been paid and performed in full; and (iii) until the
Guarantor is permitted by the terms of this Section to exercise any such right of subrogation,
reimbursement, indemnity or contribution, the Guarantor hereby waives all rights of subrogation,
reimbursement, indemnity and contribution and any right to enforce any remedy that the
Guarantor might have against Tenant or any other guarantor or person, or to participate in any
security held by Landlord with respect to the Guarantied Obligations, by reason of performance
by the Guarantor under this Guaranty, including, without limitation, any such right or any other
right set forth in Sections 2845, 2848, or 2849 of the California Civil Code.
5.2 Whether or not any or all of the foregoing waivers of rights in respect of
subrogation, reimbursement, indemnity and contribution are held to be unenforceable: (i) all
existing and future obligations of Tenant to the Guarantor (including, without limitation, any
obligations arising by reason of any payment by the Guarantor hereunder) are hereby
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subordinated to the full and indefeasible payment and performance of the Guarantied
Obligations, and, without the prior written consent of Landlord, such obligations shall not be
paid, in whole or in part, nor will the Guarantor accept any payment of or on account of any such
obligations; provided, however, that, if Landlord so requests, the Guarantor shall enforce and/or
collect such obligations, subject to the following clause (ii); (ii) each payment by Tenant,
whether received in violation of this Guaranty or pursuant to the request of the Guarantor,
Guarantor shall cause the same to be paid to Landlord, immediately upon demand by Landlord,
on account of the Guarantied Obligations; and (iii) no such payment under clause (ii) shall
reduce or affect in any manner the liability of the Guarantor under this Guaranty.
6. Impairment of Subrogation and Other Rights/Other Waivers.
6.1 Upon the occurrence of any default under the Lease or the Guarantied Obligations
or by the Guarantor hereunder (but without limiting Landlord's right to resort to any other
remedy it may have in respect hereof, under the Lease, with respect to the Guarantied
Obligations, this Guaranty or otherwise), Landlord may elect to foreclose non-judicially or
judicially against any real or personal property security it holds for the Guarantied Obligations or
any part thereof, or exercise any other remedy against Tenant, any other guarantor or person or
against any security. No such action by Landlord shall release or limit the liability of the
guarantor, even if the effect of that action is to deprive the Guarantor, or any other person or
guarantor, of the right or ability to collect reimbursement by means of any security held by
Landlord for the Guarantied Obligations.
6.2 Guarantor waives all rights and defenses that the Guarantor may have because the
Guarantied Obligations are or may be secured by real property. This means, among other things:
(i) Landlord may collect from the Guarantor without first foreclosing on any real or personal
property collateral pledged by Tenant or otherwise; and (ii) if Landlord forecloses on any real
property collateral (a) the amount of the Guarantied Obligations may be reduced only by the
price for which that collateral was sold at the foreclosure sale, even if the collateral is worth
more than the sale price; and (b) Landlord may collect from Guarantor even if Landlord, by
foreclosing on the real property collateral, has destroyed any right the Guarantor may have to
collect from Tenant or other person. This is an unconditional and irrevocable waiver of any
rights and defenses by real property. These rights and defenses include, but are not limited to,
any rights or defenses based upon Section 580a, 580b, 580d, or 726 of the California Code of
Civil Procedure.
6.3 Guarantor waives all rights and defenses arising out of an election of remedies by
Landlord, even though that election of remedies, such as nonjudicial foreclosure with respect to
security for Guarantied Obligations, has destroyed Guarantor's rights of subrogation and/or
reimbursement against Tenant or other person by the operation of Section 580d of the California
Code of Civil Procedure or otherwise.
6.4 Guarantor waives all rights and defenses arising out of the operation of Section
580a of the California Code of Civil Procedure, and further waives its right to a fair value
hearing under such Section 580a to determine the size of a deficiency judgment following any
foreclosure sale on encumbered real property.
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6.5 No provision or waiver in this Guaranty shall be construed as limiting the
generality of any other waiver contained in this Guaranty.
7. Bankruptcy.
7.1 So long as any Guarantied Obligation shall be owing to Landlord, the Guarantor
shall not, without prior written consent of Landlord, commence, or join with any other person in
commencing, any bankruptcy, reorganization, or insolvency proceeding against Tenant. The
obligations of the Guarantor under this Guaranty shall not be altered, limited, or affected by any
proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership,
reorganization, liquidation, or arrangement of Tenant, or by any defense Tenant may have by
reason of any order, decree, or decision of any court or administrative body resulting from any
such proceeding. In furtherance of the foregoing, the Guarantor agrees that if acceleration of the
time for payment of any amount payable by Tenant under the Lease or in respect of the other
Guarantied Obligations is stayed for any reason, all such amounts otherwise subject to
acceleration shall nonetheless be payable by the Guarantor hereunder forthwith upon demand.
7.2 The Guarantor shall file in any bankruptcy or other proceeding in which the filing
of claims is required or permitted by law claims that the Guarantor may have against Tenant
relating to any indebtedness of Tenant to the Guarantor, and will assign to Landlord all rights of
the Guarantor thereunder. If the Guarantor does not file any such claim, then to the extent
allowed by law Landlord, as attorney-in-fact for the Guarantor, is hereby authorized to do so in
the name of the Guarantor or, in Landlord's discretion, to assign the claim to a nominee, and to
cause such proof of claim to be filed in the name of Landlord's nominee. The foregoing power
of attorney is coupled with an interest and is irrevocable until after the indefeasible payment and
performance in full of all of the Guarantied Obligations. Landlord, or its nominee, shall have the
sole right at its election to accept or reject any plan proposed in such proceedings and to take any
other action that a party filing a claim is entitled to do. In all such cases, whether in
administration, bankruptcy, or otherwise, the person or persons authorized to pay such claim
shall pay to Landlord all of the Guarantor's rights to any such payments or distributions to which
the Guarantor would otherwise be entitled; provided, however, that the Guarantor's obligations
hereunder shall not be satisfied except to the extent that Landlord receives cash by reason of any
such payment or distribution. If Landlord receives anything hereunder other than cash, the same
shall be held as collateral for amounts due under this Guaranty.
8. Continuance of Guaranty.
8.1 The liability of the Guarantor hereunder shall be reinstated and continued in
effect, and the rights of Landlord shall continue, with respect to any payment or performance of
the Guarantied Obligations that Landlord shall be required to restore or return or is avoided in
connection with the bankruptcy, insolvency, or reorganization of Tenant of the Guarantor, or
otherwise, all as though such payment or performance has not occurred. The determination as to
whether any such payment or performance must be restored or returned shall be made by
Landlord in its sole discretion; provided, however, that if Landlord chooses to contest any such
matter, the Guarantor agrees to indemnify, defend and hold harmless Landlord from all costs and
expenses (including, without limitation, reasonable legal fees and disbursements) of such
litigation. Landlord shall be under no obligation to return or deliver this Guaranty to the
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Guarantor, notwithstanding the payment of the Guarantied Obligations. If this Guaranty is
nevertheless returned to the Guarantor or is otherwise released, then the provisions of this
Section 8 and the Guaranty shall survive such return or release, and the liability of the Guarantor
under this Guaranty shall be reinstated and continued under the circumstances provided herein
notwithstanding such return or release.
9. Representations and Warranties.
9.1 The Guarantor represents and warrants as of the date of this Guaranty that:
9.1.1 it has all requisite power and authority to execute, deliver, and be legally
bound by this Guaranty on the terms and conditions herein stated and to transact any other
business with Landlord as necessary to fulfill the terms of this Guaranty;
9.1.2 this Guaranty has been duly authorized, executed, delivered and no
consent, approval or authorization or any person not heretofore obtained is required in
connection with the valid execution, delivery or performance by the Guarantor of this Guaranty
and the obligations hereunder;
9.1.3 the execution, performance and delivery by the Guarantor of this
Guaranty: (i) to Guarantor's knowledge do not and will not violate any provision of any material
law, rule, or regulation or any order, judgment, writ, injunction, demand or decree of any court or
agency of government, or any indenture, agreement or other instrument to which the Guarantor is
a party or by which the Guarantor or its property is bound; (ii) do not and will not result in a
breach of or constitute (with notice and/or lapse of time) a default or breach under any
agreement, note, contract, lease, or other instrument to which the Guarantor is a party or by
which it or its properties may be bound of affected; and (iii) do not and will not result in the
creation or imposition of any lien, charge or encumbrance of any nature whatsoever under any
agreement, mortgage, deed of trust, lease, loan agreement, security agreement, partnership
agreement, corporate charter, bylaws or other document, agreement or instrument to which the
Guarantor is a party or by which it or its property or assets may be bound or affected;
9.1.4 this Guaranty has been duly executed by the Guarantor and constitutes the
legal, valid and binding obligation of the Guarantor, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency, and other similar
laws affecting creditors' rights generally;
9.1.5 all reports, financial statements, papers and written data and information
given to Landlord by the Guarantor with respect to the Guarantor, the Guarantied Obligations or
otherwise relating thereto are accurate and correct in all materials respects and complete insofar
as completeness may be necessary to give Landlord a true and accurate knowledge of the subject
matter;
9.1.6 to the best of its knowledge, the Guarantor is not in default in the
performance, observance or fulfillment of any of the obligations, covenants or conditions set
forth in any material agreement or instrument to which the Guarantor is the party;
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9.1.7 there is not now pending against the Guarantor, nor to the knowledge of
the Guarantor is there threatened, any action, suit or proceeding at law or in equity or by or
before any administrative agencies which, if adversely determined, will materially impair or
affect the financial conditions or operations of the Guarantor; and the Guarantor to its knowledge
is not in default with respect to any order, writ, injunction, decree or demand of any court or any
governmental authority;
9.1.8 it has filed all federal, state, provincial, county, municipal and other
income tax returns required to have been filed by the Guarantor other than those which would
not have a material adverse effect and has paid all taxes that have become due pursuant to such
returns or pursuant to any assessments received by the Guarantor, and the Guarantor does not
know of any basis for any material additional assessment against it in respect of such taxes;
9.1.9 no bankruptcy or insolvency proceedings are pending or to the best of the
Guarantor's knowledge contemplated or threatened by or against the Guarantor;
9 .1.1 0 it is not insolvent, and will not be rendered insolvent by the incurring of its
obligations hereunder; the Guarantor is not engaged, and is not about to engage, in a business or
transaction for which the Guarantor's assets are unreasonably small in relation thereto; the
Guarantor does not intend to incur, and does not believe that the Guarantor has incurred or will
incur, debts beyond the Guarantor's ability to pay as they mature; and the value of the
consideration received and to be received by the Guarantor in connection with the Guarantied
Obligations and this Guaranty is reasonably worth at least as much as the liability and
obligations of the Guarantor incurred or arising under this Guaranty;
9.1.11 it has had full and complete access to the Lease and other documents
relating to the Guarantied Obligations, has reviewed them and is fully aware of the meaning and
the effect of their contents; it is fully informed of all circumstances which bear upon the risks of
executing this Guaranty of which a diligent inquiry would reveal; it has adequate means to obtain
from Tenant on a continuing basis information concerning Tenant's financial condition, and is
not depending on Landlord to provide such information, now or in the future; and agrees that
Landlord shall not have any obligation to advise or notify the Guarantor or to provide the
Guarantor with any data or information; and
9 .1.12 it has all requisite power and authority to transact any other business with
Landlord as necessary to fulfill the terms of this Guaranty.
10. Costs and Expenses.
10.1 The Guarantor agrees to pay, upon Landlord's demand, Landlord's reasonable
out-of-pocket costs and expenses, including (but not limited to) reasonable legal fees and
disbursements and expert witness's fees and disbursements, incurred in connection with (i) any
effort to collect or enforce any of the Guarantied Obligations or this Guaranty (including the
defense of any claims or counterclaims asserted against Landlord arising out of this Guaranty or
the transactions contemplated hereby), (ii) the Guarantor's failure to perform or observe any of
the provisions hereof, and (iii) the representation of Landlord in any insolvency, bankruptcy,
receivership, reorganization or similar proceeding relating to Tenant, the Guarantor, or any
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security for the Guarantied Obligations. Until paid to Landlord, such sums shall bear interest
from the date incurred at the applicable rate of interest set forth in the Lease for past due
obligations. The obligations of the Guarantor under this Section 10 shall include payment of
Landlord's costs and expenses of enforcing any judgments.
11. Lien; Rights of Setoff.
11.1 In addition to all liens upon, and rights of setoff against, the monies, securities or
other property of the Guarantor given to Landlord by law, the Guarantor hereby grants to
Landlord a security interest in, all monies, securities and other property of the Guarantor now or
hereafter in the possession of Landlord, as security for the obligations of the Guarantor
hereunder; and every such lien and right of setoff may be exercise without demand upon or
notice to the Guarantor. No lien or right of setoff shall be deemed to have been waived by any
act or conduct on the part of Landlord, or by any neglect to exercise such right of setoff or to
enforce such lien, or by any delay in doing so; and every right of setoff and lien shall continue in
full force and effect until such right of setoff or lien is specifically waived or released by an
instrument in writing executed by Landlord.
12. Miscellaneous.
12.1 Notice. All notices, demands and other communications with, to, from or upon
the Guarantor and Landlord required or permitted hereunder shall be in writing, addressed to the
parties at their respective addresses as set forth on the signature page hereto, or, as to each party,
at such other address as shall be designated by such party in a written notice to the other parties
complying as to delivery with the terms of this Section 12.1. All such communications shall be
deemed effective upon the earliest of (i) actual delivery if delivered by personal delivery, (ii)
three (3) days following deposit, first class postage prepaid, with the United States mail, (iii)
upon the earliest to occur, if sent by certified postage prepaid mail, of three (3) days following
deposit thereof in the United States mail or receipt (or refusal to accept delivery), or (iv) on the
next business day after timely and proper deposit with an overnight air courier with request for
next business day delivery.
12.2 Agreement Binding. This Guaranty shall be binding upon the Guarantor and the
Guarantor's heirs, executors, personal representatives, successors, assigns, and shall inure to the
benefit of, and be enforceable by, Landlord and Landlord's successors and assigns. The term
"Tenant" means both the named Tenant and any other person at any time assuming or otherwise
becoming primarily liable for all or any part of the Guarantied Obligations. The terms
"Landlord" means both Landlord names herein or any future owner or holder of the Lease, or
any interest therein.
12.3 Severability. If any provision of this Guaranty shall be deemed or held to be
invalid or unenforceable for any reason, such provision shall be adjusted, if possible, rather than
voided, so as to achieve the intent of the parties to the fullest extent possible. In any event such
provision shall be severable from, and shall not be construed to have any effect on, the remaining
provisions ofthis Guaranty, which shall continue in full force and effect.
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12.4 Multiple Obligors. If "Guarantor" refers to more than one person, then (i) the
obligations of each such person shall be joint and several; (ii) all references to the "Guarantor"
herein shall, unless the context otherwise requires, refer to all such parties jointly and severally;
and (iii) each such person hereby waives any and all defenses based upon suretyship or guaranty
or impairment of collateral, including, without limitation, all rights or defenses that are or may
become available under California Civil Code Section 2787 to and including 2855, 2899 and
3433. If the Guarantor is a partnership, such Guarantor and all general partners therein shall be
jointly and severally liable hereunder. Any married person who executes this Guaranty agrees
that recourse may be had against his or her separate and community property. Where the
"Tenant" is more than one person, the word "Tenant" shall mean all and any one or more of
them.
12.5 Governing Law; Jurisdiction. This Guaranty and the obligations hereunder shall
be governed by and construed in accordance with the laws of the State of California applicable to
contracts, between residents thereof, made and to be wholly performed within the State of
California. The Guarantor hereby irrevocably consents to the non-exclusive jurisdiction of the
Courts of the State of California and of any Federal Court located in such State in connection
with any action or proceeding arising out of or relating to this Guaranty.
12.6 Assignment by Landlord. This Guaranty shall be assignable by Landlord to any
assignee of all or any portion of Landlord's rights with respect to the Guarantied Obligations.
12.7 Interpretation. This Guaranty shall be construed without regard to whether it was
prepared or drafted by one party or of the other or either of their attorneys. As used herein: (i)
the terms "include," "including" or form thereof are not exclusive; (ii) the term "day" means
calendar day, except as otherwise expressly provided; (iii) the term "person" means any
individual, corporation, partnership, limited liability company, trust, governmental entity, or any
other entity of any kind; (iv) singular words shall connote the plural as well as the singular and
vice versa, as the context requires; and (v) each gender includes any other gender. Time is of the
essence in the performance of this Guaranty.
12.8 Rights Cumulative; No Waiver. Landlord's options, powers, rights, privileges,
and immunities specified herein or arising hereunder are in addition to, and not exclusive of,
those otherwise created or existing now or at any time, whether by contract, by statute, or by rule
of law. Landlord shall not, by any act, delay, omission or otherwise, be deemed to have
modified, discharged, or waived any of Landlord's options, powers, rights or provisions in
respect of this Guaranty, and no modification, discharge, or waiver of any such option, power,
right or provision of this Guaranty shall be valid unless set forth in writing signed by Landlord,
and then only to the extent therein set forth. A waiver by Landlord of any right, remedy or
provision hereunder on any one occasion shall be effective only in the specific instance and for
the specific purpose for which given, and shall not be construed as a bar to any right or remedy
that Landlord would otherwise have on any other occasion.
12.9 Default. The occurrence of any one of the following events shall, at the election
of Landlord, be deemed an event of default by the Guarantor under this Guaranty: (i) the
Guarantor shall fail to perform, keep or observe any term, provision, condition or covenant
contained in this Guaranty within thirty (30) days following receipt of Landlord's written notice
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thereof, however if Guarantor is not able through the use of commercially reasonable efforts to
cure such failure within such thirty (30) day period, then such failure shall not be deemed to be
an event of default hereunder if Guarantor commences to cure such failure within such initial
thirty (30) day period and thereafter diligently pursues such cure to completion within an
additional thirty (30) day period following the expiration of the initial thirty (30) day period; (ii)
the commencement of any liquidation, reorganization, receivership, bankruptcy, assignment for
the benefit of creditors or other similar proceeding by or against Tenant or Guarantor-unless
Guarantor is replaced with a new guarantor acceptable to Landlord in its sole discretion within
forty-five (45) days thereafter; (iii) if any representation or warranty made in this Guaranty shall
be or become false in any material respect; (iv) the occurrence of an Event of Default under the
Lease with respect to any of the Guarantied Obligations; (v) the death, or legal incapacity of the
Guarantor; or (vi) the Guarantor revokes or attempts to revoke this Guaranty. Upon the
occurrence of an event of default, the Guarantor's obligations hereunder shall, at the option of
Landlord, be enforceable against the Guarantor as such Guarantied Obligations become due and
payable and Landlord may, in its sole discretion, in addition to any other right or remedy
provided by law, all of which are cumulative and non-exclusive, proceed to suit against the
Guarantor, whether suit has been commenced against Tenant.
12.10 Headings. All headings in this Guaranty are for convenience and reference only
and do not define or limit the scope of the provisions of this Guaranty.
12.11 Entire Agreement. This Guaranty contains the entire agreement between the
Guarantor and Landlord with respect to its subject matter, and supercedes all prior
communications relating thereto, including, without limitation, all oral statements or
representations. No supplement to or modification of this Guaranty or its provisions shall be
binding unless executed in writing by the Guarantor and Landlord.
12.12 Waiver of Rights of Trial by Jury. EACH OF THE GUARANTOR AND
LANDLORD (BY ITS ACCEPTANCE HEREOF) HEREBY VOLUNTARILY,
KNOWINGLY, INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE
ANY RIGHT TO HAVE A JURY PARTICIPATE (INCLUDING BY WAY OF JURY TRIAL)
IN RESOLVING ANY DISPUTE OR LITIGATION (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG THE GUARANTOR AND
LANDLORD ARISING OUT OF OR RELATED TO THIS GUARANTY, OR THE
GUARANTIED OBLIGATIONS OR ACTIONS OF THE GUARANTOR OR LANDLORD
RELATING TO THIS GUARANTY AND/OR THE LEASE WHICH IS THE SUBJECT OF
THE GUARANTIED OBLIGATIONS. THIS PROVISION AND THE WAIVERS SET
FORTH HEREIN ARE MATERIAL INDUCEMENTS TO LANDLORD TO ENTER INTO
THE LEASE AND WITH RESPECT TO THE GUARANTIED OBLIGATIONS.
[Signature Page Follows]
-10-
DOCS 121163-000001/2747722.2
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of the date first
written above.
LANDLORD'S ADDRESS FOR NOTICE:
The Carlsbad Public Financing Authority
1200 Carlsbad Village Dr.
Carlsbad, CA 93008
Attn: City Manager
With a copy to:
Michael E. Lyon, Esq.
Procopio, Cory, Hargreaves & Savitch LLP
12544 High Bluff Drive, Suite 300
San Diego, CA 92130
GUARANTOR'S ADDRESS FOR NOTICE:
Grand Pacific Carlsbad, L.P.
5900 Pasteur Court, Suite 200
Carlsbad, CA 92008
Facsimile: (760) 828-4239
GUARANTOR:
GRAND PACIFIC CARLSBAD, L.P., a
California limited partnership
By: Grand Pacific Development, Inc.,
a California corporation, its general partner
Email: tstripe@gpresorts.com and dbrown@gpresorts.com
Attn: Legal Department
[Signature page to Guaranty of Completion}
GROUND LEASE
By and between
THE CARLSBAD PUBLIC FINANCING AUTHORITY, a joint powers authority formed
by the City of Carlsbad and the Carlsbad Municipal Water District, as Landlord
And
GRAND PACIFIC CARLSBAD HOTEL, L.P., a Delaware limited partnership, as Tenant
DOCS 121163-00000112703979.11
TABLE OF CONTENTS
1. Grant of Lease; Definitions ............................................................................................... I
2. Security Deposit ................................................................................................................ 6
3. Payment of Annual Rent ................................................................................................... 6
4. Interest; Late Charge ......................................................................................................... 7
5. Use ofPremises ................................................................................................................. 8
6. Impositions ........................................................................................................................ 8
7. Maintenance, Repairs, Replacements and Compliance with Laws .................................. 9
8. Utilities ............................................................................................................................ ! 0
9. Liens ................................................................................................................................ IO
10. Insurance ......................................................................................................................... IO
11. Indemnities ...................................................................................................................... 12
12. Improvements ................................................................................................................. 13
13. Damage by Fire or Other Casualty ................................................................................. 14
14. Condemnation ................................................................................................................. 14
15. Assignment and Subletting ............................................................................................. 16
16. Intentionally Omitted ...................................................................................................... 18
17. Financing ......................................................................................................................... 18
18. Tenant's Property and Ownership at Termination .......................................................... 19
19. Recorded Documents ...................................................................................................... 19
20. Surrender upon Expiration ofTerm ................................................................................ l9
21. Force Majeure ................................................................................................................. 19
22. Events of Tenant's Default .............................................................................................. 20
23. Landlord's Remedies ....................................................................................................... 20
24. Events of Landlord's Default; Tenant's Remedies .......................................................... 22
25. Exculpation of Landlord ................................................................................................. 22
26. Hazardous Substances ..................................................................................................... 22
27. Brokers ............................................................................................................................ 23
28. Options to Extend Term .................................................................................................. 23
29. Intentionally Omitted ...................................................................................................... 23
30. Storm Water Runoff Compliance ................................................................................... 23
-1-
DOCS 121163-00000112703979.11
TABLE OF CONTENTS (cont.)
Page
31. Water Tank Removal ...................................................................................................... 24
32. Purchase ofGolfRounds ................................................................................................ 24
33. Miscellaneous ................................................................................................................. 24
-ii-
DOCS 121163-000001/2703979.11
INDEX
Page(s)
Additional Sheraton Building ....................................................................................................... 2
Additional Sheraton Building Outside Completion Date ............................................................. 3
Affiliate ......................................................................................................................................... 3
Annual Rent .................................................................................................................................. 3
Appraisal Award ............................................................................................................. Exhibit C
Approved Institution ..................................................................................................................... 3
Approved Plans ............................................................................................................... Exhibit H
Archeological Data Recovery Plan ............................................................................................... 4
Base Index Number ....................................................................................................................... 4
Cap Rate .......................................................................................................................... Exhibit C
Cellular Equipment Agreement .................................................................................................. 18
Claims ............................................................................................................................. 13, 18,24
Commencement Date .................................................................................................................... 4
Condemnation Proceeds .............................................................................................................. 17
Constant Dollars ............................................................................................................................ 4
Converted Improvements .............................................................................................................. 4
Current Index Number .................................................................................................................. 4
Date ofTaking ............................................................................................................................ 16
Default Rate .................................................................................................................................. 5
Deposit .......................................................................................................................................... 5
Event of Default .......................................................................................................................... 21
Expiration Date ............................................................................................................................. 5
Fair Market Land Value .................................................................................................. Exhibit C
Foreclosure Event ........................................................................................................... Exhibit D
Foreclosure Transferee .................................................................................................... Exhibit D
Guarantied Obligations .................................................................................................... Exhibit F
Hazardous Substances ................................................................................................................. 24
Hotel Addition .............................................................................................................................. 5
Hotel Addition Outside Completion Date ..................................................................................... 5
Hotel Standard .............................................................................................................................. 5
Impositions .................................................................................................................................... 9
Improvements ............................................................................................................................... 5
Indemnified Party ........................................................................................................................ 13
Indemnifying Party ..................................................................................................................... 13
Index ............................................................................................................................................. 4
Interest Notice ................................................................................................................. Exhibit C
Landlord .................................................................................................................................. 2, 29
Landlord Parties .................................................................................................................... 13, 18
Laws .............................................................................................................................................. 9
Lease ............................................................................................................................................. 2
Lease Year .................................................................................................................................... 5
Leasehold Estate ........................................................................................................................... 2
Leasehold Mortgage .................................................................................................................... 20
Lender ........................................................................................................................................... 6
-Ill-
DOCS 121163-000001/2703979.11
Page(s)
Loan Document Event of Default ................................................................................... Exhibit D
Loan Documents ............................................................................................................. Exhibit D
Market Rent .................................................................................................................... Exhibit C
mechanic's liens .......................................................................................................................... 11
Monetary Default ........................................................................................................................ 21
New Sheraton Resort .................................................................................................................... 6
Non-Monetary Default ................................................................................................................ 23
Notice and Payment Addresses ..................................................................................................... 6
Notice of Assumption ..................................................................................................... Exhibit D
Occupancy Measurement Period End Date .................................................................................. 8
Occupancy Measurement Period Start Date ................................................................................. 8
Official Records ............................................................................................................................ 2
Operating Sublease ..................................................................................................................... 18
Option Agreement ......................................................................................................................... 6
Option Rent ..................................................................................................................... Exhibit C
Option Rent Notice ......................................................................................................... Exhibit C
Optionee ........................................................................................................................................ 6
Outside Agreement Date ................................................................................................. Exhibit C
Partial Taking .............................................................................................................................. 16
parties ............................................................................................................................................ 2
party .............................................................................................................................................. 2
Permitted Use ................................................................................................................................ 6
person .......................................................................................................................................... 27
Personalty .................................................................................................................................... 20
Phase 2 .......................................................................................................................................... 2
Phase 1 ........................................................................................................................................... 2
Premises ........................................................................................................................................ 7
Proceeding ................................................................................................................................... 29
Release Date ..................................................................................................................... Exhibit F
Rent ............................................................................................................................................... 7
Rent Commencement Date ........................................................................................................... 7
Reversionary Estate ...................................................................................................................... 2
Selected Arbitrator .......................................................................................................... Exhibit C
Sheraton Franchise Agreement ..................................................................................................... 7
Site Plan ........................................................................................................................................ 7
Substantial Completion ................................................................................................... Exhibit H
Substantially All of the Premises ................................................................................................ 16
Taking ......................................................................................................................................... 16
Temporary Taking ...................................................................................................................... 17
Tenant ........................................................................................................................................... 2
Tenant Parties .............................................................................................................................. 13
Tenant's Acceptance ....................................................................................................... Exhibit C
Tenant's Work ............................................................................................................................... 7
Term .............................................................................................................................................. 7
Third Arbitrator ............................................................................................................... Exhibit C
·lV-
DOCS 121163-000001/2703979.11
Page(s)
Westin Franchise Agreement(s) .................................................................................................... 7
Westin Hotel ................................................................................................................................. 7
worth at the time of award .......................................................................................................... 23
-v-
DOCS 121163-000001/2703979.11
GROUND LEASE
This GROUND LEASE (this "Lease") is made as ofDecember/:{.2016, between THE
CARLSBAD PUBLIC FINANCING AUTHORITY, a joint powers authority formed by the City
of Carlsbad and the Carlsbad Municipal Water District ("Landlord"), and GRAND PACIFIC
CARLSBAD HOTEL, L.P., a Delaware limited partnership ("Tenant"). Landlord and Tenant
may sometimes be individually referred to as a "party" and collectively referred to as the
"parties." Based upon the mutual promises contained herein and for good and valuable
consideration, the receipt of which is acknowledged by each party, the parties, intending to be
legally bound, agree as follows:
1. Grant of Lease; Definitions.
1.1 Grant of Lease. Landlord leases the Premises to Tenant and Landlord
grants Tenant exclusive rights of possession of the Premises until the expiration of the Term.
Tenant's interest in the Premises and the rights granted to Tenant under this Lease shall be
referred to herein as the "Leasehold Estate." The rights of Landlord in the Premises after giving
effect to the Leasehold Estate shall be referred to herein as the "Reversionary Estate." The
Reversionary Estate includes all of Landlord's rights pursuant to this Lease. Reference is made
to a Grant Deed in favor of the Carlsbad Municipal Water District recorded on July 27, 1962 in
the Official Records of the San Diego County Recorder's Office (the "Official Records") as
Document No. 127706 and the fact that under such grant deed the Carlsbad Municipal Water
District may have certain rights over the portions of the Premises not owned by it. On behalf of
the Carlsbad Municipal Water District, Landlord agrees that so long as this Lease is in effect,
such rights will not be exercised by Carlsbad Municipal Water District or by Landlord on behalf
of the Carlsbad Municipal Water District in any way in so far as the Premises is concerned and
nothing contained in such grant deed shall prohibit or interfere with the use or development of
the Premises in accordance with the terms of this Lease.
1.2 Definitions. The following are certain definitions applicable to this Lease.
"Additional Sheraton Building" means the three new buildings which will not be a part
of the Converted Improvements initially consisting of at least 79 hotel rooms, new
lobby/reception area, pool and other associated amenities, which shall be constructed by Tenant
or a Tenant Affiliate by no later than the Additional Sheraton Building Outside Completion Date
and, when combined with the existing 121 hotel room building that is now a part of the Sheraton
Carlsbad Resort & Spa, will constitute the New Sheraton Resort, as shown on the Site Plan.
Upon build out following construction on a phased basis, the Additional Sheraton Building shall
consist of at least 79 hotel rooms. The Additional Sheraton Building may be constructed on a
phased basis and in that event, the first phase thereof (referred to herein as "Phase 1 ") shall
consist of at least 48 hotel rooms, new lobby/reception area, pool and other associated amenities
and the second phase thereof (referred to herein as "Phase 2") shall consist of at least 31 hotel
rooms.
"Additional Sheraton Building Outside Completion Date" means two (2) months
following the Hotel Addition Outside Completion Date, as such two (2) month period is
DOCS 121163-000001/2703979.11
extended for each day of delay caused by matters described in Section 21 below; provided,
however, if the Additional Sheraton Building is constructed on a phased basis, then at least Phase
1 thereof will be Substantially Completed by such date and Phase 2 thereof shall be Substantially
Completed no later than eighteen (18) months after the Hotel Addition Outside Completion
Date. If the Additional Sheraton Building is not constructed on a phased basis then the phrase
"Substantial Completion of the Additional Sheraton Building by the Additional Sheraton
Building Outside Completion Date" and similar phrases shall be interpreted to mean Substantial
Completion of both Phase 1 and Phase 2 of the Additional Sheraton Building no later than two
(2) months following the Hotel Addition Outside Completion Date. If the Additional Sheraton
Building is constructed on a phased basis then the phrase "Substantial Completion of the
Additional Sheraton Building by the Additional Sheraton Building Outside Completion Date"
and similar phrases shall be interpreted to mean Substantial Completion of Phase 1 of the
Additional Sheraton Building no later than two (2) months following the Hotel Addition Outside
Completion Dates and Substantial Completion of Phase 2 within eighteen (18) months after the
Hotel Addition Outside Completion Date.
"Affiliate" means with respect to a party (i) a parent or a wholly-owned subsidiary of
such party, (ii) any person or entity which controls, is controlled by or under the common control
with such party, (iii) any entity which purchases all or substantially all of the assets of such
party, or (iv) any entity into which such party is merged or consolidated.
"Annual Rent" means with res~ect to the period from the Rent Commencement Date
until the last day of the fifty-fifth (551 ) Lease Year, the rental amount set forth in Exhibit B
attached hereto. With respect to the period from the first day of the fifty-sixth (56th) Lease Year
for the balance of the initial Term, Landlord shall give Tenant notice of the proposed Annual
Rent for the fifty-sixth (561h) Lease Year not earlier than the commencement of the fifty-fifth
(551h) Lease Year or later than nine (9) months prior to the commencement of the fifty-sixth
(561h) Lease Year. If Tenant does not accept or fails to object to the proposed Annual Rent in
writing to Landlord within thirty (30) days after receipt of Landlord's notice, then the Annual
Rent shall be as determined in the manner set forth in paragraph (iv) of Exhibit C, but in no event
shall be less than the Annual Rent applicable to the immediately preceding Lease Year. If
Tenant does accept the proposed Annual Rent in writing to Landlord within thirty (30) days after
receipt of Landlord's notice, then the Annual Rent shall be as set forth in such notice.
Commencing with the first day of the fifty-seventh (57th) Lease Year and the first day of each
Lease Year thereafter during the initial Term, the Annual Rent shall be increased by two and
one-half percent (2.5%) over the Annual Rent applicable during the prior Lease Year. With
respect to any extended Term, the Annual Rent shall be as determined pursuant to Exhibit C
attached hereto.
"Approved Institution" means a savings bank, a savings or building and loan
association, a commercial bank or trust company (whether acting individually or in any fiduciary
capacity), a finance company, an insurance company, an educational institution or an
institutional pension or retirement fund or system, a charitable or other eleemosynary institution,
a real estate investment trust or any other person or entity whose businesses include interim,
construction or permanent lending secured by real estate.
DOCS 121163-000001/2703979.11 -2-
"Archeological Data Recovery Plan" means Data Recovery Plan and Research Design
For Site SDI-8797 Locus C dated January 15, 2016, revised July 28, 2016 and further revised
August 24, 2016 and approved by the San Luis Rey Band of Mission Indians, Grand Pacific
Resorts, Inc. and the City.
"Commencement Date" means the date of this Lease. Landlord shall deliver possession
of the Premises to Tenant on the Commencement Date; provided, however, as a condition
precedent to the effectiveness of this Lease (and therefore the Commencement Date), Tenant
shall cause to be recorded in the Official Records, at its sole expense, the following items, each
in form and substance reasonably acceptable to Landlord: (i) a lot line adjustment between real
property known as Parcel 4 and Parcel 5 (Parcel 1 of the 2015 Certificate of Compliance and
Parcel A of the 2012 Certificate of Compliance), (ii) a Grant Deed wherein Grand Pacific Land
Holdings, L.P, a California limited partnership, conveys the newly adjusted Parcel 4 to Tenant,
(iii) a Grant Deed wherein Grand Pacific Carlsbad, L.P. conveys real property commonly known
as Parcel 6 (Lot 11 of Map 15332) to Tenant, (iv) Pedestrian Access Easement Agreement and
Grant of Easement Deed; (v) Grant of Restrictive Covenant and Easement Agreement (Hotel
Parcel A No Build and Utilities Easement Agreement); (vi) Easement Agreement (Parcel B
Tunnel and Villa 80 Easement Agreement); (vii) Vehicle and Pedestrian Access, Utility and
Parking Easement Agreement and Grant of Easement Deed, and (viii) Agreement for Shared
Access and Use of Subphase 1.1 Common Area by and among the City of Carlsbad, a California
municipal corporation, and the Carlsbad Municipal Water District, a California municipal water
district, as tenants in common, the City of Carlsbad, a California municipal corporation, Tenant,
Grand Pacific Carlsbad, L.P ., and Grand Pacific Marbrisa Owners Association, Inc., a California
non-profit mutual benefit corporation.
"Constant Dollars" means the present value of the dollars to which such phase refers.
An adjustment shall be made on each anniversary of the Commencement Date. Constant Dollars
shall be determined by multiplying the dollar amount to be adjusted by a fraction, the numerator
of which is the Current Index Number and the denominator of which is the Base Index Number.
The "Base Index Number" shall be the level of the Index for the calendar month in which the
Effective Date occurs; the "Current Index Number" shall be the level of the Index for the
calendar month in which the adjustment is to take place; and the "Index" shall be the Consumer
Price Index -"All Items" for All Urban Consumers in the Los Angeles -Riverside -Orange
County area ( 1982-84= 1 00) or any successor index thereto as hereinafter provided. If
publication of the Index is discontinued, or if the basis of calculating the Index is materially
changed, then the parties shall substitute for the Index comparable statistics as computed by an
agency of the United States Government or, if none, by a substantial and responsible periodical
or publication of recognized authority closely approximating the result which would have been
achieved by the Index.
"Converted Improvements" means the portion of the currently existing, adjacent
Sheraton Carlsbad Resort & Spa containing one hundred twenty-nine (129) hotel rooms,
reception/lobby area, conference center, restaurant, pool and other amenities which, upon
completion of the Hotel Addition, will be joined with the Hotel Addition and, taken together,
will constitute the Westin Hotel, as shown on the Site Plan.
DOCS 121163-000001/2703979.11 -3-
"Default Rate" means an annual rate of interest equal to the lesser of (i) three (3)
percentage points above the rate of interest announced from time to time by the Bank of
America, Downtown Los Angeles, Main Branch, as the prime or reference rate (or, in the event
said bank ceases to announce a prime or reference rate or is acquired or ceases operations and
there is no successor bank, the largest established and financially secure commercial bank,
having a headquarters in California, selected by Landlord), or (ii) the highest rate permitted by
law, if any.
"Deposit" means the One Hundred Thousand Dollars ($100,000.00) "Deposit" under the
Option Agreement.
"Expiration Date" means the last day of the 65th Lease Year, subject to extension
pursuant to Section 28.
"Hotel Addition" means at least seventy-one (71) hotel rooms and other improvements
on the Premises ancillary to the use and operation of the Westin Hotel. The initial construction
of the Hotel Addition may include, at Tenant's election, the construction of subterranean parking
spaces that would be needed for the expansion contemplated under Section 29 below. As more
particularly provided herein, the Hotel Addition will be operationally annexed into the Converted
Improvements and become a part of the Westin Hotel, as shown on the Site Plan.
"Hotel Addition Outside Completion Date" means the date which is the total of the
number of days between the date of this Lease and June 9, 2017 plus eighteen (18) months
following the later of (i) the Commencement Date, (ii) the removal pursuant to Section 31 of the
water tank on the Premises, or (iii) completion of the Archeological Data Recovery Plan (with
completion being determined by the on-site archeologist), as such eighteen (18) month period is
extended for each day of delay caused by matters described in Section 21 below. Tenant
covenants and agrees to diligently pursue the removal of the water tank and the completion of the
Archeological Data Recovery Plan.
"Hotel Standard" means the operation and maintenance standard required under the
management and/or franchise agreement(s) that governs the Hotel Addition and the Converted
Improvements, which, until the expiration or termination of the Westin Franchise Agreement,
shall be the operation and maintenance standard required under the Westin Franchise
Agreement(s). Thereafter, the Hotel Standard shall be equal to or greater than the Hotel
Standard under the most recent prior management and/or franchise agreement(s) that governed
the Hotel Addition and the Converted Improvements.
"Improvements" mean all improvements on and modifications to the Premises.
"Lease Year" means each twelve (12) calendar month period commencing on the Rent
Commencement Date; however, if the Rent Commencement Date is not the first (1st) day of the
month, the first Lease Year shall include the first partial month and the following twelve
(12) calendar months.
"Lender" means any Approved Institution that is the holder of debt from Tenant secured
by an interest in the Leasehold Estate or any Improvements, fixtures or equipment on the
DOCS 121163-000001/2703979.11 -4-
Premises. Tenant acknowledges that neither Landlord's Reversionary Estate nor fee title to the
Premises is, or shall be, subordinate to the security interest of any Lender.
"New Sheraton Resort" means (i) the portion of the existing Sheraton Carlsbad Resort
& Spa remaining after the Converted Improvements along with the Hotel Addition are rebranded
as a Westin resort, together with (ii) the Additional Sheraton Building, as shown on the Site Plan.
"Notice and Payment Addresses" for the parties are as follows:
For Landlord, to:
with a copy of notices to:
For Tenant, to:
The Carlsbad Public Financing Authority
1200 Carlsbad Village Dr.
Carlsbad, CA 93008
Attn: City Manager
The Carlsbad Public Financing Authority
1200 Carlsbad Village Dr.
Carlsbad, CA 93008
Attn: City Attorney
Grand Pacific Carlsbad Hotel, L.P .,
5900 Pasteur Court, Suite 200
Carlsbad, CA 92008
Attn: Timothy J. Stripe, Co-President
"Option Agreement" means that certain Option to Lease Agreement dated December 9,
2014 by Landlord and Grand Pacific Carlsbad Lot 9, L.P. ("Optionee"), as amended by the First
Amendment to Option Agreement dated July 28, 2016 by Landlord and Optionee.
"Permitted Use" means the use of the Hotel Addition for hotel room rentals and other
hotel purposes related to the operation of and use of the Hotel Addition and the Converted
Improvements as an integrated full-service hotel satisfying the Hotel Standard, together with
related amenities, parking and commercial uses, or such other use approved by Landlord in
Landlord's sole and absolute discretion. References in this Agreement to the Sheraton and
Westin hotel brands shall not restrict Tenant from changing the brand or flag of any hotel
operated on the Premises or any adjoining property so long as the hotel continues to operate in
conformance with the Hotel Standard.
"Premises" means the land located in Carlsbad, California, as described in Exhibit "A-1"
and as depicted in Exhibit "A-2", together with all tenements, hereditaments, appurtenances,
easements, development rights, and other rights and privileges appertaining to the foregoing
described land and all rights of ingress and egress at all times from and to the public streets.
"Rent" means Annual Rent and all other sums payable by Tenant to Landlord hereunder.
"Rent Commencement Date" means the earlier to occur of (i) the Hotel Addition
Outside Completion Date and (ii) the date a certificate of occupancy (or its equivalent) is issued
DOCS 121163-000001/2703979.11 -5-
for the Hotel Addition by the City of Carlsbad that permits the occupancy of the Hotel Addition
for the conduct of business. The parties shall, at the election of either party, enter into an
amendment to this Lease to document the Rent Commencement Date.
"Sheraton Franchise Agreement(s)" means franchise and/or hotel management
agreements with Starwood to extend and modify the currently existing franchise/management
agreement applicable to the Carlsbad Sheraton Resort & Spa so that it applies to the New
Sheraton Resort and is co-terminus with the Westin Franchise Agreement(s) as confirmed
pursuant to the terms of the Option Agreement.
"Site Plan" means the site plan attached to this Lease as Exhibit "A-3".
"Tenant's Work" means the Hotel Addition to be initially constructed by Tenant on the
Premises.
"Term" means the period beginning on the Rent Commencement Date and ending on the
Expiration Date, as extended or accelerated in accordance with this Lease.
"Westin Hotel" means the Hotel Addition and the Converted Improvements following
the completion of the Hotel Addition and rebranding the same as a Westin hotel or resort, as
shown on the Site Plan.
"Westin Franchise Agreement(s)" means the franchise and/or hotel management
agreements with Starwood to rebrand the Converted Improvements and the Hotel Addition as a
Westin resort upon completion of the Hotel Addition as confirmed pursuant to the terms of the
Option Agreement.
2. Security Deposit. Pursuant to the terms of the Option Agreement and subject to
Section 7 of the Work Letter attached hereto as Exhibit "H", the Deposit has been delivered to
Landlord. The Deposit shall be held by Landlord as security for the performance by Tenant of its
obligation to construct the Hotel Addition and the Additional Sheraton Building. If Tenant
defaults with respect to its obligation to construct the Hotel Addition by no later than the Hotel
Addition Outside Completion Date or the Additional Sheraton Building by the Additional
Sheraton Building Outside Completion Date, and such default is not cured within the applicable
notice and cure period, Landlord may retain the Deposit to compensate Landlord for any loss or
damage that Landlord may suffer by reason of such default, in addition to all other rights and
remedies available to Landlord. If Tenant satisfies its obligation to construct the Hotel Addition
by no later than the Hotel Addition Outside Completion Date and the Additional Sheraton
Building by no later than the Additional Sheraton Building Outside Completion Date, then
Landlord shall apply the Deposit to the installments of Rent first occurring after the Hotel
Addition Outside Completion Date until fully applied. Landlord shall hold the Deposit in an
interest-bearing account, and all interest earned thereon shall become a portion of the Deposit.
3. Payment of Annual Rent. Beginning on the Rent Commencement Date, and
throughout the Term, Tenant shall pay Landlord monthly one-twelfth (1112) of the Annual Rent,
in advance, on the first (1st) day of each calendar month. If the Rent Commencement Date does
not occur on the first (1st) day of a calendar month, then the first monthly installment shall be
prorated based on a fraction, the numerator of which is the number of days in such calendar
DOCS 121163-000001/2703979.11 -6-
month that fall within the Term, and the denominator of which is the total number of days in
such calendar month. Except as otherwise provided herein, Annual Rent shall be payable
without notice or demand and without any deduction, offset or abatement in lawful money of the
United States of America to Landlord at the address stated herein or to such other persons or at
such other places as Landlord may designate in writing.
In addition to the payment of Annual Rent, if the Additional Sheraton Building is constructed on
a phased basis, then during the period from the first day of the first full calendar month following
the Substantial Completion of Phase 1 thereof (the "Occupancy Measurement Period Start
Date") until the last day of calendar month in which Substantial Completion of Phase 2 thereof
occurs (the "Occupancy Measurement Period End Date"), within thirty (30) days after the
each anniversary of the Occupancy Measurement Period Start Date and within thirty (30) days
after the Occupancy Measurement Period End Date, Tenant shall deliver to Landlord a report for
the New Sheraton Resort which provides a detailed computation of the average occupancy and
the average standard room daily rate for the preceding twelve month period (or in the case of an
Occupancy Measurement Period End Date that is not an anniversary of the Occupancy
Measurement Period Start Date, the period from the last anniversary of the Occupancy
Measurement Period Start Date until the Occupancy Measurement Period End Date) and pay to
Landlord as additional rent the following amount if the average occupancy for such period
equaled or exceeded ninety-eight percent) (98%): The annual average daily rate for a standard
room multiplied by fifteen (15), multiplied by ten percent (10%) and multiplied by three hundred
sixty-five (365) (or in the case of an Occupancy Measurement Period End Date that is not an
anniversary of the Occupancy Measurement Period Start Date, the number of days from the last
anniversary of the Occupancy Measurement Period Start Date until the Occupancy Measurement
Period End Date).
In addition to the payment of Annual Rent and the above additional rent, if Phase 1 of the
Additional Sheraton Building is opened for business to the general public more than five (5)
business days after the Hotel Addition is opened for business to the general public, then within
thirty (30) days after the end of each month that Phase 1 of the Additional Sheraton Building
remains unopen for business to the general public and within thirty (30) days after the end of the
month in which Phase 1 of the Additional Sheraton Building is opened for business to the
general public, Tenant shall report to Landlord the average daily per room transient occupancy
tax attributable to the Hotel Addition rooms and remit to Landlord as additional rent the product
of 48 and such average daily transient occupancy tax amount.
4. Interest; Late Charge. If Tenant shall fail to pay Landlord any Annual Rent
within five (5) days after the date the same is due and payable, or any other amount due by
Tenant to Landlord within ten (1 0) days after Landlord's notice to Tenant that the payment is
delinquent, Tenant promises to pay to Landlord, in addition to such unpaid amounts, interest
upon such unpaid amounts at the Default Rate from the date immediately following such period
until the date Landlord receives payment. In addition to such interest, Tenant acknowledges that
late payment by Tenant to Landlord of any amount due hereunder will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which will be extremely difficult to
ascertain. Accordingly, if: (a) any Annual Rent is not received by Landlord within five (5) days
after it is due; or (b) any other amount due by Tenant to Landlord hereunder is not paid within
ten (10) days after Landlord's notice to Tenant that the payment is delinquent; then Tenant shall
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pay to Landlord a late charge equal to five percent ( 5%) of such overdue amount. The parties
hereby agree that such late charge represents a fair and reasonable estimate of the administrative
costs and foregone interest and other income Landlord will incur and/or suffer by reason of the
late payment by Tenant. Acceptance of such late charge by Landlord shall in no event constitute
a waiver of Tenant's default with respect to such overdue amount, nor prevent Landlord from
exercising any of the other rights and remedies granted hereunder.
5. Use of Premises. Tenant may use the Premises for the Permitted Use and for no
other use without Landlord's consent. Tenant shall comply with all laws and ordinances and the
orders, rules, regulations and requirements of all federal, state and municipal governments and
appropriate departments, commissions, boards and officers thereof that are applicable to the
Premises and the Improvements (collectively, "Laws"). Tenant shall likewise observe and
comply with the requirements of all policies of public liability, fire, and all other policies of
insurance at any time in force with respect to the Improvements. Tenant's obligation to comply
with all Laws, includes the obligation to alter, maintain and restore the Premises and
Improvements in compliance with all Laws, even if the Laws are enacted after the date of this
Lease, even if compliance entails costs to Tenant of a substantial nature, and even if compliance
requires structural alterations. Subject to the terms of Section 21, from the Commencement
Date until Substantial Completion of the Hotel Addition and Phase 1 of Additional Sheraton
Building, Tenant shall maintain and operate, on the property owned by it and located
immediately to the west of the Premises, the existing Sheraton Carlsbad Resort & Spa with two
hundred fifty (250) hotel rooms less the number of hotel rooms being renovated from time to
time.
6. Impositions.
6.1 Impositions in General. Tenant shall pay, before any penalty or interest
may be added thereto for the non-payment thereof, all real and personal property taxes,
assessments, water and sewer charges, and other governmental charges, general and special,
ordinary and extraordinary, unforeseen as well as foreseen, of any kind and nature whatsoever
(all of which taxes, assessments, water and sewer charges, and other governmental charges are
hereinafter referred to as "Impositions") that are assessed, levied, imposed or become a lien
upon the Premises and/or the Improvements, or become payable, during the Term of this Lease;
provided, however, that if, by law, any such Impositions may at the option of the taxpayer be
paid in installments (whether or not interest shall accrue on the unpaid balance of such
Impositions), Tenant may exercise the option to pay the same (and any accrued interest on the
unpaid balance of such Impositions) in installments and shall pay only such installments as may
become due during the Term of this Lease as the same respectively become due and before any
penalty or interest may be added thereto, for the non-payment of any such installment and
interest; and provided, further, that any Impositions relating to a fiscal period of the taxing
authority, a part of which period is included within the Term of this Lease and a part of which is
included outside of the Term of this Lease, shall (whether or not such Impositions shall be
assessed, levied, imposed or become a lien upon the Premises and/or the Improvements, or shall
become payable, during the Term of this Lease) be adjusted between Landlord and Tenant as of
the Rent Commencement Date or the expiration of the Term of this Lease, as applicable, so that
Landlord shall pay that portion of such Impositions (or receive any tax refund or tax credit) that
relates to that part of the fiscal period outside of the Term of this Lease and Tenant shall pay that
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portion of such Impositions (or receive any tax refund or tax credit) which relates to the period
during the Term of this Lease. Nothing contained in this Lease shall require Tenant to pay any
franchise, corporate, estate, inheritance, succession, capital levy, stamp tax or transfer tax of
Landlord, or any income, excess profits or revenue tax or any other tax, assessment, charge or
levy upon the Rent payable by Tenant under this Lease, nor shall any tax, assessment, charge or
levy of the character hereinabove in this Section described be deemed to be included within the
term "Impositions" as defined in this Section 6.1.
6.2 Payment. Except when any Law requires otherwise, Tenant shall pay the
Impositions for the period commencing with the Commencement Date to the applicable
authority, before delinquency. Tenant covenants, upon request of Landlord, to furnish to
Landlord for inspection, official receipts of the appropriate taxing authority, or other evidence
satisfactory to Landlord, evidencing the payment of any Impositions.
6.3 Contest. Tenant shall have the right to contest the amount and/or validity,
or to seek a refund, in whole or in part, of any Impositions by appropriate proceedings, and
notwithstanding the provisions of Section 6.1 above, this shall not be deemed or construed in any
way as relieving, modifying or extending Tenant's covenants to pay any such Impositions at the
time and in the manner as provided in this Section 6 except to the extent permitted by the
procedures and proceedings by which Impositions may be legally contested.
7. Maintenance. Repairs, Replacements and Compliance with Laws. Tenant, at its
sole expense, shall (i) keep the Improvements and the Premises clean and in first class condition
free of accumulations of rubbish, (ii) make all repairs and replacements necessary to cause the
Improvements to satisfy the Hotel Standard or, if the Permitted Use is no longer the operation of
a hotel, be in a first class condition for the then Permitted Use , and (iii) be solely responsible for
any and all repairs, alterations and/or corrective work to the Improvements as may be required
from time to time to comply with applicable Laws, including, but not limited to: seismic
upgrades, handicap access, and fire protection systems. For so long as the Permitted Use is the
operation of a hotel, Tenant shall provide for an annual reserve for capital expenditures for
furniture, fixtures, and equipment for the Improvements, consistent with the requirements of the
hotel franchisor or manager. Further, Tenant shall comply with all governmental laws,
ordinances and regulations now in force, or which may hereafter be in force, applicable to the
use of the Premises by Tenant and its subtenants and the Improvements constructed by Tenant at
the Premises, all at Tenant's sole expense. In the event of any changes in such laws, ordinances
or regulations, Tenant shall be obligated to comply with such changes when and if such
compliance is required under the applicable laws, ordinances and regulations. Without limiting
the foregoing, Tenant shall be responsible for compliance with all requirements of the Americans
With Disabilities Act of 1990 (as it may be amended and as supplemented by further laws from
time to time) as applicable to the Improvements constructed by Tenant. Landlord shall not be
required to furnish any services or facilities or to make any repairs or alterations to the Premises
or the Improvements and Tenant hereby assumes the full and sole responsibility for the
condition, operation, repair, replacement, maintenance, compliance with law and management of
the Premises and the Improvements. Notwithstanding the foregoing, If Tenant refuses or
neglects to complete repairs required of Tenant hereunder within thirty (30) days after
Landlord's written demand (or if such repairs cannot with due diligence be wholly completed
within such 30-day period, within a reasonable period of time thereafter), Landlord shall have
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the right, but not the obligation, to make the repairs, and if Landlord makes such repairs, Tenant
shall pay to Landlord on demand, as additional Rent, the reasonable cost thereof (unless Tenant
in good faith disputes such costs or whether the repairs were required of Tenant hereunder), with
interest at the Default Rate from the date which is ten (10) days following Tenant's receipt of
Landlord's written request therefor until repaid by Tenant.
8. Utilities. Tenant is responsible, at its own cost, for supplying utilities to the
Premises, including the payment of hookup fees, deposits and similar charges. Tenant will pay
directly to the appropriate utility company or governmental agency all bills for gas, water,
sanitary sewer, electricity, telephone and other public or private utilities used by Tenant or
provided to the Premises from and after the Commencement Date.
9. Liens. Tenant shall not suffer or permit any mechanic's, vendor's, laborer's, or
materialman's statutory or similar liens (collectively "mechanic's liens") to be filed against the
Premises or the Improvements by reason of work, labor, services or materials supplied or
claimed to have been supplied to Tenant or anyone holding any interest in the Premises and/or
the Improvements or any part thereof through or under Tenant. If any such mechanic's lien shall
be filed, Tenant shall, within ninety (90) days after written notice ofthe filing thereof(but in any
event prior to the entry of a judgment for foreclosure), cause the same to be discharged of record
by payment, deposit, bond, order of a court of competent jurisdiction or otherwise. Subject to
the foregoing provisions, if Tenant shall fail to cause such lien to be discharged within the
required time period, then, in addition to any other right or remedy of Landlord, Landlord may,
but shall not be obligated to, and following written notice to Tenant of its election to do so,
discharge the same either by paying the amount claimed to be due or by procuring the discharge
of such lien by deposit or by bonding proceedings. Nothing contained in this Lease shall be
deemed or construed in any way as constituting the consent or request of Landlord, express or
implied by inference or otherwise, to any contractor, subcontractor, laborer or materialman for
the performance of any labor or the furnishing of any materials for any specific improvements,
alteration to or repair of the Premises or the Improvements or any part thereof.
10. Insurance.
10.1 Liability Insurance. Tenant shall obtain and keep in force from and after
the Commencement Date a policy or policies of Combined Single Limit Bodily Injury and
Property Damage Insurance, including Personal and Advertising Injury, Blanket Contractual
Liability, Liquor Legal Liability, Garage Liability, Garagekeepers Legal Liability, and Non-
Owned Auto Liability in an amount not less than Five Million Dollars ($5,000,000.00) (in
Constant Dollars) for injury, damages, or death resulting from any one accident or occurrence.
Such policy or policies (i) may provide for a commercially reasonable deductible or self-insured
retention, and (ii) shall insure Tenant and Landlord against liability arising out of the use,
occupancy, or maintenance of the Premises and the Improvements. The policy or policies shall
be stated to be primary and non-contributing with any insurance which may be carried by
Landlord, and shall insure performance by Tenant of the indemnity provisions of Section 11 to
the extent such indemnities are within the scope of coverage under such policies. Landlord, the
City of Carlsbad and the Carlsbad Municipal Water District shall be named as "Additional
Insured" on all of the above policies, and the full limits under such policies that are available to
Tenant as the named insured shall also be available and applicable to each of the "Additional
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Insureds". The purpose and intent of the parties is that Tenant shall have, during the Term, such
amount of liability insurance as will be sufficient to protect Landlord from any reasonable
liability with respect to the Premises. If at any time during the Term, Landlord shall deem the
limits of the liability insurance then carried to be insufficient by reason of any reasonable factor
(e.g., inflation; the risk incident to use of the Premises; the nature and amount of the awards for
liabilities then being given), the parties shall endeavor to agree upon the proper and reasonable
limits for such insurance then to be carried.
10.2 Property Insurance. Tenant shall obtain and keep in full force from and
after the Commencement Date a policy or policies of property insurance covering loss or damage
to the Improvements providing protection against all perils included within the standard
insurance industry coverage classifications of "special form". The above policy or policies shall
include a full replacement cost endorsement, debris removal endorsement, a building code
upgrade or ordinance and law endorsement, and insure all the Improvements and trade fixtures
on the Premises, as well as all personal property located on or used in operation of the Premises
for one hundred percent (100%) of the then current replacement cost. The policy or policies
shall be subject to a commercially reasonable deductible.
I 0.3 Business Interruption Insurance. Tenant shall obtain and keep in force
from and after the Rent Commencement Date a policy of rental loss or business interruption
insurance in an amount at least sufficient to pay, for a period of twenty-four (24) months
following any applicable loss, the sum of the following: (i) twenty-four (24) months' rent at the
then applicable Annual Rent; (ii) the Impositions provided for in Section 6; and (iii) the
insurance premiums provided for in Section 10.
10.4 Insurance Requirements. The insurance required to be carried under
Sections 10.1, 10.2 and 10.3 shall be placed with responsible insurance companies having an
A.M. Best rating of at least A-and an A.M. Best Financial Size Category rating of not less than
Class VII as shall be selected by Tenant. Tenant shall deliver to Landlord certificates of said
insurance and of renewals thereof from time to time promptly following request therefor from
Landlord, and shall obtain the written commitment of each such insurer to provide each
additional insured with thirty (30) days written notice of any cancellation thereof, or amendments
with respect to reductions in policy limits or coverages. Any insurance required to be maintained
by Tenant may be maintained under a so-called "blanket policy" insuring other parties and other
locations so long as the amount of insurance required to be provided hereunder for the Premises
is not thereby diminished.
10.5 Application of Proceeds. Unless this Lease is terminated pursuant to
Section 13, all policies of property insurance described in Section 10.2 shall provide for payment
of loss in excess of One Million Dollars ($1,000,000.00) (in Constant Dollars) to the Lender (or
if there is no Lender, payment of loss shall be to an escrow holder mutually acceptable to
Landlord and Tenant) to be held in trust and applied to the repair and restoration of the Premises,
subject to the conditions set forth in the leasehold mortgage (if applicable) regarding such
application and Sections 13 and 17. When the Improvements have been fully repaired and
restored, any excess shall be paid to Tenant.
DOCS 121163-000001/2703979.11 -11-
10.6 Waiver of Subrogation. Tenant releases Landlord for loss or damage
arising out of or incident to perils insured against pursuant to Sections 10.1 and 10.2, which
perils occur in, on, or about the Premises even if due to the negligence of Landlord or its agents,
employees, contractors, and/or invitees. Tenant shall, upon obtaining the policies of insurance
required under Section 10.1 and 1 0.2, give notice to the insurance carrier or carriers that the
foregoing waiver is contained in this Lease.
11. Indemnities.
11.1 Mutual Indemnities. Tenant shall indemnify, defend and hold Landlord,
the City of Carlsbad, the Carlsbad Municipal Water District and its and their officers, agents,
employees, officials, administrators, representatives and contractors (collectively, "Landlord
Parties") harmless from any and all claims, losses, liens, causes of action, fines, penalties, costs,
liabilities, damages or expenses, including attorneys' fees ("Claims" ), arising from (i) the use or
occupancy of the Premises from and after the Commencement Date by Tenant or any of its
officers, owners, members, agents, representatives, employees, contractors, guests, invitees,
licensees and subtenants (collectively, "Tenant Parties" ), (ii) claims of lien of laborers or
materialmen or others for work performed or materials or supplies furnished for Tenant or
persons validly claiming under it; and (iii) any default on the part of Tenant in the performance
of any obligation to be performed by Tenant pursuant to this Lease; provided, however, that
Tenant's obligations hereunder shall not apply to any Claims to the extent caused by or arising
out of the gross negligence or willful misconduct of Landlord or any Landlord Parties. Landlord
shall indemnify, defend and hold Tenant and the Tenant Parties harmless from any and all
Claims arising from Landlord's or any of the Landlord's Parties' gross negligence or willful
misconduct.
11.2 Notification of Claim. A party entitled to indemnification pursuant to
Section 11.1 above (the "Indemnified Party") shall notify the other party (the "Indemnifying
Party") promptly of any claim, action or proceeding and cooperate fully in the defense. Upon
receipt of such notification, the Indemnifying Party shall assume the defense of the claim, action,
or proceeding, including the employment of counsel acceptable to the Indemnified Party and the
prompt payment of the attorneys' fees and costs of such counsel. If the Indemnified Party at any
time reasonably determines that having common counsel would present such counsel with a
conflict of interest, or if the Indemnifying Party fails to promptly assume the defense of the
claim, action, or proceeding or to promptly employ counsel acceptable to the Indemnified Party,
then the Indemnified Party may, in its sole discretion, employ separate counsel to represent or
defend the Indemnified Party, and the Indemnifying Party shall pay the reasonable attorneys' fees
and costs of such separate counsel within thirty (30) days of receiving an itemized billing
therefor. At its sole discretion, the Indemnified Party may participate at its own expense in the
defense of any claim, action or proceeding, but such participation shall not relieve the
Indemnifying Party of any obligation imposed by this Lease. Failure to promptly defend or
indemnify the Indemnified Party is a material breach which shall entitle the Indemnified Party to
all remedies available under law, including but not limited to specific performance and claims
for damages.
11.3 Survivability. The Indemnifying Party's obligations to hold harmless,
indemnify and defend the Indemnified Party shall survive the expiration of the Term or earlier
DOCS 121163-000001/2703979.11 -12-
termination of this Lease with respect to matters occurrmg pnor to such expiration or
termination.
12. Improvements.
12.1 Initial Construction of Hotel Addition. Prior to commencement of
construction, Tenant shall perform or cause to be performed the survey work required under the
Archeological Data Recovery Plan. Tenant shall, at Tenant's sole cost and expense, commence
promptly following the later of the Commencement Date and the removal pursuant to Section 31
of the water tank on the Premises, and thereafter diligently pursue to completion, construction of
the Hotel Addition in accordance with the terms and conditions provided in this Lease, the Work
Letter attached hereto as Exhibit "H", the Westin Franchise Agreement(s) and in compliance
with Law. Subject to the terms of Section 7 of Exhibit H, Tenant shall cause Substantial
Completion (as defined in the Work Letter) of the Hotel Addition by no later than the Hotel
Addition Outside Completion Date.
12.2 Construction of Additional Sheraton Building. Tenant shall commence
promptly following the Commencement Date, and thereafter diligently pursue to completion
construction of the Additional Sheraton Building in accordance with the terms and conditions
provided in the Sheraton Franchise Agreement(s) and in compliance with Law. Tenant shall
cause Substantial Completion of the Additional Sheraton Building by no later than the
Additional Sheraton Building Outside Completion Date.
12.3 Alterations to Hotel Addition. Following the completion of the initial
construction of the Hotel Addition, Tenant may make alterations, repairs, demolitions and
modifications to the Improvements or construct new Improvements as Tenant may deem
desirable for its Permitted Use of the Premises, subject to the following conditions, which Tenant
covenants to observe and perform:
(i) No work shall be undertaken until Tenant shall have procured and
paid for, so far as the same may be required, from time to time, all municipal and other
governmental permits and authorizations of the various municipal departments and governmental
subdivisions having jurisdiction and Landlord agrees, at no cost to Landlord, to consent to the
application for such permits or authorizations whenever such action is necessary;
(ii) Any structural work shall be engineered under the supervision of
an architect or engineer licensed as such in the State of California (who may be an employee of
Tenant) selected by Tenant;
(iii) All work shall be of such a character that, when completed, the
value and utility of the Improvements shall be not substantially less than the value and utility of
the Improvements immediately before any such additional Improvements;
12.4 All work done in connection with any Improvements shall be done in a
good and workmanlike manner and in compliance with all Laws. The work of any
Improvements shall be prosecuted with reasonable dispatch. General liability and property
damage insurance (which may be effected by endorsement, if obtainable, on the insurance
required to be carried pursuant to Section 10 above) with limits of not less than those required to
DOCS 121163-000001/2703979.11 -13-
be carried pursuant to Section 10, shall be maintained by Tenant at all times when any work is in
process in connection with any Improvements.
12.5 No work involving an expenditure in excess of Two Hundred Fifty
Thousand Dollars ($250,000) (in Constant Dollars) shall commence until Tenant shall have
given Landlord ten (1 0) days prior written notice of such work in order that Landlord may post
and/or file notices of non-responsibility or notices of a similar nature.
12.6 If the estimated cost of any work shall be in excess of One Million Dollars
($1,000,000.00) (in Constant Dollars), Tenant shall, prior to the commencement of any such
Improvements, deliver to Landlord evidence that Tenant has sufficient funds available to pay for
the anticipated costs of such Improvements, which evidence may include, without limitation, a
construction loan from a Lender.
13. Damage by Fire or Other Casualty.
13.1 Material Destruction. Subject to Section 13.2 below, in the event of a fire,
earthquake or other casualty, Tenant shall promptly, at Tenant's sole cost and expense, restore,
repair, replace or rebuild the Improvements as nearly as possible to the condition, quality and
class it was in immediately prior to such damage or destruction, or with such changes or
alterations as Tenant shall elect to make in conformity with Section 12 above. Such restoration,
repairs, replacement or rebuilding shall be commenced promptly and prosecuted with diligence.
13.2 Before/After Last Ten Years. Notwithstanding the foregoing, if any
damage or destruction occurs within the last ten (10) years of the Term and has a material impact
on Tenant's ability to conduct business, this Lease shall terminate at Tenant's option, such option
to be exercised by Tenant giving not less than thirty (30) days' prior written notice to Landlord
sent within ninety (90) days of the damage or destruction. If Tenant elects to terminate the
Lease, Tenant shall raze the damaged Improvements, remove all debris, and restore the Premises
to a safe and clean condition. In the event of any casualty occurring more than ten (1 0) years
before the expiration of the Term, Tenant shall restore the Improvements.
13.3 No Abatement of Rent. Tenant's obligations to pay Rent will continue
notwithstanding the damage or casualty and Rent will not be abated. Tenant hereby waives the
provisions of Sections 1932(2) and 1933( 4) of the California Civil Code and of any other statute
or law now or hereafter in effect contrary to such obligations of the Tenant as set forth in this
Lease, or which relieves Tenant from such obligation.
14. Condemnation.
14.1 Definition of Taking and Substantial Taking. A "Taking" means any
condemnation or exercise of the power of eminent domain by any authority vested with such
power or any other taking for public use, including a private purchase in lieu of condemnation by
an authority vested with the power of eminent domain; the "Date of Taking" means the earlier
of the date on which title to the Premises or any portion thereof so taken is vested in the
condemning authority or the date on which possession of the Premises or any portion thereof is
taken by the condemning authority; and "Substantially All of the Premises" means (i) so much
of the Premises or Improvements as, when taken, leaves the un-taken portion unsuitable for the
DOCS 121163-000001/2703979.11 -14-
continued feasible and economic operation of the Premises by Tenant for the same purposes as
immediately before the Taking, or (ii) so many of the parking spaces within the Premises as
reduces the parking ratio below that ratio which is required by the zoning ordinance applicable to
the Premises and Landlord's failure to provide substantially equivalent alternative parking
reasonably acceptable to Tenant within sixty (60) days after such Taking.
14.2 Tenant's Rights Upon Taking or Substantial Taking. In the event of a
Taking of Substantially All of the Premises, Tenant may, by thirty (30) days' prior written notice
to Landlord, given no later than ninety (90) days following the Date of Taking, terminate this
Lease. All Rent shall be apportioned and paid through and including the Date of Taking, and
neither Landlord nor Tenant shall have any rights in any compensation or damages payable to
the other in connection with such Taking.
14.3 Tenant's Rights Upon Less Than Substantial Taking. In the event of a
Taking that is not a Taking of Substantially All of the Premises ("Partial Taking"), Tenant, at its
sole cost and expense, shall proceed with due diligence to restore, repair, replace or rebuild the
remaining part of the Improvements to substantially its former condition or with such changes or
alterations as Tenant may elect to make in conformity with Section 12 above so as to constitute a
complete project. In the event of a Partial Taking, this Lease shall terminate as to the portion of
the Premises so taken and the Rent payable for the balance of the Term of this Lease shall be
reduced in the same ratio that the value of Tenant's interest in the Premises and Improvements
immediately prior to the Taking is reduced, such reduction to be effective as of the Date of
Taking. Until the amount of the reduction of the Rent shall have been determined, Tenant shall
continue to pay to Landlord full Rent, at which time Landlord shall refund any excess Rent paid
based upon such reduction being effective as of the Date of Taking.
14.4 Rights Upon Temporary Taking. If, at any time during the Term, the
whole or any part of the Premises or of the Improvements shall be taken in condemnation
proceedings or by any right of eminent domain for temporary use or occupancy not exceeding
one (1) year (a "Temporary Taking") the foregoing provisions of this Section shall not apply
and Tenant shall continue to pay, in the manner at the times specified in this Lease, the full
amounts of the Rent payable by Tenant under this Lease, and, except only to the extent that
Tenant may be prevented from so doing pursuant to the terms of the order of the condemning
authority Tenant shall perform and observe all of the other terms, covenants, conditions and
obligations of this Lease upon the part of Tenant to be performed and observed, as though such
Temporary Taking had not occurred. If any Taking is for one (1) year or more, then the Taking
will be considered a permanent Taking and shall be subject to the provisions of Section 14.1 or
14(b), as applicable. In the event of any such Temporary Taking, Tenant shall be entitled to
receive the entire amount of the Condemnation Proceeds (as defined below) made for such
Temporary Taking, whether paid by way of damages, rent or otherwise unless such period of
temporary use or occupancy shall extend beyond the termination of this Lease, in which case the
Condemnation Proceeds shall be apportioned between Landlord and Tenant as of the date of
termination of this Lease.
14.5 Condemnation Proceeds-Termination. In the event of a Taking of
Substantially All of the Premises and the termination of this Lease, the award or awards for such
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Taking, less the costs of the determination and collection of the amount of the award or awards
("Condemnation Proceeds"), shall be distributed as follows:
(i) Landlord shall first be entitled to receive and retain as its own
property, and Tenant hereby assigns to Landlord, such portion of the Condemnation Proceeds as
shall equal the fair market value of the Premises as encumbered by this Lease, exclusive of the
Improvements;
(ii) Tenant shall then be entitled to receive, and Landlord hereby
assigns to Tenant, the balance of the Condemnation Proceeds.
14.6 Condemnation Proceeds-No Termination. In the event of a Partial Taking,
this Lease shall not terminate or be affected in any way, except as provided in Section 14.3
above, and Landlord shall first be entitled to receive and retain as its own property, that portion
of the Condemnation Proceeds applicable to the Premises as encumbered by this Lease, equal to
the fair market value of the portion of the Premises as encumbered by this Lease so taken
exclusive of the Improvements. Tenant shall then be entitled to receive the balance of the
Condemnation Proceeds and the same shall be payable in trust to Tenant for application by
Tenant to the cost of restoring, repairing, replacing or rebuilding the Improvements; however, if
such proceeds are in excess of One Million Dollars ($1,000,000.00) (in Constant Dollars), then
such proceeds shall be paid to the Lender (or if no Lender, then to an escrow holder mutually
acceptable to Landlord and Tenant) for disbursement to Tenant for payment of the cost of
restoring, repairing, replacing or rebuilding the Improvements, subject to the conditions set forth
in the leasehold mortgage (if applicable), with any excess being disbursed to Tenant.
14.7 Waiver. Tenant hereby waives any and all rights it might otherwise have
pursuant to Section 1265.130 of the California Code of Civil Procedure, or any other Law, to
seek termination of this Lease in the event of a Taking.
15. Assignment and Subletting.
15.1 Assignment. Tenant may not assign this Lease prior to the date Tenant
opens the Hotel Addition for business, except to an Affiliate and except that Tenant shall be
obligated to assign this Lease and convey the Hotel Addition to the owner of the Westin Hotel
(including the Converted Improvements) not later than the date the Hotel Addition opens for
business. Prior to an assignment of this Lease to an Affiliate of Tenant, Tenant shall provide
notice of the assignment to Landlord along with evidence reasonably satisfactory to Landlord to
determine that the assignee is in fact an Affiliate of Tenant. Thereafter, Tenant may only assign
this Lease to a purchaser of the Westin Hotel, such that at all times after the opening of the Hotel
Addition the Tenant under this Lease is the same person as the owner of the Westin Hotel.
Landlord's consent shall not be required for an assignment of this Lease to any purchaser/owner
of the Westin Hotel; any assignment of this Lease to any other person shall require Landlord's
consent. Notwithstanding the foregoing, no assignment shall be effective unless and until there
shall be delivered to Landlord a copy of the instrument or instruments of assignment of this
Lease in recordable form, containing the name and address of the assignee and an assumption by
the assignee of all of Tenant's obligations under this Lease arising from and after the effective
date of the assignment. Upon the effective date of such assignment, the assignor shall be
DOCS 121163-000001/2703979.11 -16-
released from all obligations and liability under this Lease first accruing after the effective date
of the assignment.
15.2 Sublease. Landlord recogmzes that Tenant will rent rooms in the
Improvements to third parties in a manner consistent with its use as a hotel, which room rentals
shall not require Landlord's consent. In addition, Landlord's consent shall also not be required
for the subleasing or licensing in connection with the hotel use of the Premises and/or time share
and hotel use of adjacent property to retail/commercial subtenants, licensees or operators of any
retail/commercial use, restaurant, spa, lounge, guest services or parking uses (which parking uses
are exclusively for guests of the Westin Hotel and/or the owners (and their guests) oftime share
units located adjacent to the Premises)(each, an "Operating Sublease"), provided that the
provisions in clauses (i) -(v) below are complied with. A sublease or license for placement or
use of cellular or other communications equipment or facilities (a "Cellular Equipment
Agreement") shall not be an Operating Sublease and shall be permitted only if such sublease or
license contains an acknowledgement by the sublessee or licensee (on behalf of itself and any of
its successors and assigns including co-locating licensees) that (i) the interest of the sublessee or
licensee in the Premises shall terminate upon the expiration or sooner termination of this Lease,
(ii) sublessee or licensee is required to remove its equipment and installations following such
termination, (iii) Landlord shall have no obligation to recognize such sublease or license and not
to disturb the sublessee/licensee following such termination, and (iv) the sublease or license is
subject and subordinate to this Lease and the term of the sublease or license shall not extend
beyond the Term of this Lease. Prior to entering into any Cellular Equipment Agreement, the
proposed agreement shall be provided to Landlord for its confirmation that the Cellular
Equipment Agreement contains the above required acknowledgements of the sublessee/licensee,
such confirmation not to be unreasonably withheld or delayed. Tenant shall indemnify, defend
and hold Landlord Parties harmless from any and all Claims arising from such Cellular
Equipment Agreement, including, without limitation, the failure of such sublessee or licensee to
remove its equipment and installations following such termination and/or such sublessee or
licensee asserting that it has a right of recognition and/or non-disturbance from Landlord. All
other subleases or licenses shall require Landlord's consent and, if consented to will also be an
"Error! Bookmark not defined.Operating Sublease" provided that the provisions in clauses (i)
-(v) below are complied with.
(i) The term of any Operating Sublease shall not extend beyond the
Term ofthis Lease.
(ii) Any and all Operating Subleases shall be subject and subordinate
to this Lease, and any amendments hereto.
(iii) Each Operating Sublease will provide that (A) the Operating
Sublease is subject to this Lease; (B) the Operating Sublease does not alter this Lease; (C) the
Operating Sublease term will not extend beyond the Term of this Lease; and (D) the Operating
Sublease subtenant will attorn to Landlord, as the landlord under the Operating Sublease, if this
Lease is terminated. Landlord agrees that following a termination of this Lease, an Operating
Sublease shall automatically become a direct lease between Landlord and such subtenant
provided the attornment provision thereof shall provide (1) that subtenant's right of possession
pursuant to the terms of the Operating Sublease shall not be disturbed by Landlord (except in the
DOCS 121163-000001/2703979.11 -17-
event of damage, destruction, condemnation, or subtenant is in default in the payment of rentals
or otherwise in default under the Operating Sublease beyond applicable cure periods), (2) that
the subtenant shall pay the rent prescribed in the Operating Sublease to Landlord from the date of
such attornment, (3) that Landlord shall not be responsible to the subtenant under the Operating
Sublease except for obligations accruing subsequent to the date of such attornment, nor for any
security deposits of subtenant except those actually received by or credited to Landlord, and (4)
that the subtenant, in the event of the termination of this Lease, will enter into a new lease with
Landlord on the same terms and conditions as the existing Operating Sublease and for the
balance of the term thereof. Each Operating Sublease shall also contain a provision requiring
such subtenant to execute any further documents as may be reasonably required by Landlord to
confirm such arrangements.
(iv) Tenant shall, promptly after execution of each Operating Sublease,
notify Landlord of the name and mailing address of the subtenant. Tenant shall, on demand by
Landlord, permit Landlord to examine and copy the Operating Sublease, however, Landlord will
not make any such Operating Sublease available to examination by the general public.
(v) Tenant shall not accept, directly or indirectly, more than one
month's prepaid rent from any subtenant. However, Tenant may accept security deposits or
letters of credit greater than one month's rent from subtenants.
16. Intentionally Omitted.
17. Financing.
17.1 Tenant's Financing. Notwithstanding any other provisions of this Lease,
Tenant may, without Landlord's consent, from time to time, secure financing and grant the
Lenders thereof: (i) a security interest in Tenant's interest in the Improvements, (ii) a security
interest in Tenant's trade fixtures, furnishings, inventory, equipment, and machinery and all other
items of personal property installed by Tenant or its subtenants (collectively, "Personalty"),
(iii) the right to enter the Premises to realize upon any Personalty so pledged, and (iv) a collateral
assignment of or leasehold encumbrance in the Leasehold Estate (collectively, "Leasehold
Mortgage"); provided, however, the foregoing shall not (x) constitute a lien against the
Reversionary Estate or encumber the fee title to the Premises at any time, (y) be cross-defaulted
with any other loans to Tenant other than a loan respecting the adjacent hotel properties owned
by Tenant and/or Tenant's Affiliates described in Exhibit "G" attached hereto (i.e., following
completion of the Hotel Addition and Phase 1 of the Additional Sheraton Building, the Westin
Hotel and/or the New Sheraton Resort) or a mortgage relating to pooled assets owned by Tenant
and/or Tenant's Affiliates provided that Tenant demonstrates to Landlord's reasonable
satisfaction that the loan to value ratio of such pooled assets does not exceed seventy percent
(70%) at the time the Leasehold Estate is proposed to be encumbered, and (z) cover any interest
in real property other than the leasehold estate created by this Lease (other than the adjacent
hotel properties owned by Tenant and/or Tenant's Affiliates described in Exhibit "G" attached
hereto). If Tenant grants any of the rights described in this Section 17 to a Lender, (A) the
provisions of Exhibit "D" will apply, (B) Tenant shall provide Landlord with a true copy of such
Leasehold Mortgage and the name and address of the Lender, and (C) immediately after the
recording of any Leasehold Mortgage executed by Tenant, Landlord may at Landlord's own cost
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and expense record in the office of the County Recorder of San Diego County, California, a
written request executed and acknowledged by Landlord for a copy of any notice of sale under
such Leasehold Mortgage to be mailed to Landlord at the address specified in the request by
Landlord.
17.2 Landlord's Financing. Landlord shall have the right to encumber the
Reversionary Estate and the fee title to the Premises at any time with a mortgage or deed of trust
provided that the mortgage or deed of trust shall be and remain at all times subject and
subordinate to (i) this Lease (and all amendments, extensions and renewals) and any new lease
entered into in accordance with Section 7 of Exhibit "D" and (ii) the rights of Tenant under this
Lease (and all amendments, extensions and renewals) and any new lease entered into in
accordance with Section 7 of Exhibit "D". As a condition to Landlord encumbering the
Reversionary Estate, Landlord shall have delivered to Tenant a subordination and non-
disturbance agreement from the holder of the mortgage or deed of trust reaffirming the
provisions of this Section 17.2 in form and substance reasonably acceptable to Tenant.
18. Tenant's Property and Ownership at Termination. All of the Improvements shall
be and remain the property ofTenant during the Term and shall become the property of Landlord
upon the expiration of the Term or earlier termination of the Lease. Personalty shall be and
remain the property of Tenant at all times, subject to Section 20 below.
19. Recorded Documents. This Lease is not to be recorded, but Landlord and Tenant
shall execute a Memorandum of Lease in recordable form, in the form of the attached
Exhibit "E", and shall cause it to be recorded in the Official Records, concurrent with entering
into this Lease. The provisions of this Lease shall control, however, with regard to any
omissions from, or provisions hereof which may be in conflict with, the Memorandum of Lease.
Tenant shall be responsible for all recording fees and any documentary transfer taxes imposed in
connection with recordation of the Memorandum of Lease.
20. Surrender upon Expiration of Term. At the expiration of the Term or earlier
termination of this Lease, Tenant shall surrender the Premises and Improvements to Landlord in
good condition and repair, subject to Sections 13 and 14. Tenant shall remove the Personalty
from the Premises and repair any resulting damage. If, after expiration of the Term, Tenant fails
to remove any or all of its Personalty within thirty (30) days after receiving written notice from
Landlord, Landlord may dispose of such Personalty as Landlord deems appropriate.
21. Force Majeure. Except as otherwise specifically provided in this Lease, in the
event that Landlord or Tenant shall be delayed or hindered in, or prevented from, the
performance of any act required hereunder (other than the payment of money) by reason of delay
by the other party (in excess often days), riots, insurrection, or war or other unforeseeable reason
not the fault of such party or not within its control , then performance of such act shall be
excused for the period of delay, and the period for the performance of any such act shall be
extended for a period equivalent to the period of such delay; provided, the party so delayed,
hindered or prevented shall use its commercially reasonable efforts to deliver written notice to
the other party as soon as reasonably practicable following the commencement thereof, which
written notice shall specify the nature of the delay, the date of commencement of delay and the
expected period of delay.
DOCS 121163-00000112703979.11 -19-
22. Events of Tenant's Default. Any of the following occurrences, conditions, or acts
by Tenant constitutes an "Event of Default" under this Lease:
22.1 Tenant's failure to make any payment of Rent to Landlord when due,
which failure is not cured within ten (1 0) days following Tenant's receipt of written notice
thereof from Landlord ("Monetary Default").
22.2 Tenant's failure to observe or perform any other material provision of this
Lease within thirty (30) days after receipt of written notice from Landlord to Tenant specifying
such default and demanding that the same be cured; provided that, if such default cannot with
due diligence be wholly cured within such 30-day period, Tenant shall have such longer period
as is reasonably necessary to cure the default, so long as Tenant proceeds promptly to commence
the cure of same within such 30-day period and diligently prosecutes the cure to completion.
22.3 To the extent permitted by law, (i) the making by Tenant of any general
arrangement or general assignment for the benefit of creditors; (ii) Tenant becoming a "debtor"
as defined in the Bankruptcy Code unless, in the case of an involuntary petition filed against
Tenant, the same is dismissed within sixty (60) days after filing; (iii) the appointment of a trustee
or receiver to take possession of substantially all of Tenant's assets located at the Premises or of
Tenant's interest in this Lease, where possession is not restored to Tenant within sixty (60) days;
or (iv) the attachment, execution or other judicial seizure of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, where such seizure is not discharged
within sixty (60) days.
22.4 Abandonment of the Premises. Abandonment is herein defined to be any
cessation of continuous operation of the Permitted Use on the Premises for more than thirty
continuous (30) days other than as a result of an event described in Section 21 and other than
during reconstruction, refurbishment and/or remodeling in accordance with Section 12.
22.5 If Tenant is a corporation, limited liability company or a partnership, the
dissolution or liquidation of Tenant.
Any notice required under this Section 22 shall be in lieu of, and not in addition to, any notice
required under California Code of Civil Procedure Section 1161 or any successor Law.
23. Landlord's Remedies.
23.1 While an Event of Default exists, Landlord is entitled to all remedies
available at law or in equity, including, without limitation, the right to:
(i) Continue this Lease in effect by not terminating Tenant's right to
possession of the Premises, in which event Landlord shall be entitled to enforce all Landlord's
rights and remedies under this Lease, including the right to recover Rent specified in this Lease
as it becomes due;
(ii) Terminate this Lease and bring an action to recover from Tenant
the amounts set forth in Section 23.3 below and/or to re-enter and retain possession of the
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Premises in the manner provided by the laws of unlawful detainer in the State of California then
in effect.
23.2 In the event of any termination and entry or taking possession of the
Property as provided above, Landlord shall have the right, but not the obligation, to remove from
the Property all or any part of the personal property located therein and may place the same in
storage at a public warehouse at the expense and risk of the owner or owners thereof.
23.3 Should Landlord elect to terminate this Lease under the provisions of
Sections 23.1(ii) above, Landlord may recover from Tenant as damages:
(i) the worth at the time of award of any unpaid Rent which had been
earned at the time of such termination; plus
(ii) the worth at the time of award of the amount by which the unpaid
Rent which would have been earned after termination until the time. of award exceeds the amount
of such rental loss Tenant proves could have been reasonably avoided; plus
(iii) the worth at the time of award of the amount by which the unpaid
Rent for the balance of the Term after the time of award exceeds the amount of such rental loss
that Tenant proves could be reasonably avoided; plus
(iv) any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform its obligations under this Lease or
which in the ordinary course of things would be likely to result therefrom; plus
(v) at Landlord's election, such other amounts in addition to or in lieu
of the foregoing as may be permitted from time to time by the laws ofthe State of California.
As used in the foregoing provisions, the "worth at the time of award" is computed by
allowing interest at the Default Rate. As used herein, the "worth at the time of award" is
computed by discounting such amount at the discount rate of the San Francisco Federal Reserve
Bank, at the time of award, plus one percent (1 %).
23.4 Limitation on Termination for Non-Monetary Default.
Notwithstanding anything in Section 23 above or elsewhere in this Lease to the contrary,
if, within ten (1 0) business days following Tenant's receipt of a notice of default under Section
22.2 above (a "Non-Monetary Default"), Tenant gives Landlord written notice that Tenant
disputes the existence of such Non-Monetary Default, then Landlord may not exercise its right to
terminate this Lease on account of such Non-Monetary Default unless (i) the parties have
participated in good faith in mediation of the dispute as provided below, and (ii) following the
conclusion or termination of such mediation, Tenant has failed to cure the alleged Non-Monetary
Default within the time required under Section 22.2 with the 30-day period described thereunder
running from the date of the conclusion or termination of such mediation. In the event of a
dispute regarding the existence of a Non-Monetary Default, the parties shall first attempt to
resolve the dispute informally. In the event the dispute is not resolved informally, prior to and as
a precondition to the initiation of any legal action or proceeding, the parties shall refer the
DOCS 121163-000001/2703979.11 -21-
dispute to mediation before a retired State or Federal judge mutually selected by the parties. The
dispute shall be mediated through informal, nonbinding joint conferences or separate caucuses
with an impartial third party mediator who will seek to guide the parties to a consensual
resolution of the dispute. The mediation proceeding shall be conducted within thirty (30) days
(or any mutually agreed longer period) after referral by Landlord or Tenant, and shall continue
until any party involved concludes, in good faith, that there is no reasonable possibility of
resolving the dispute without resort to a legal action or proceeding. All costs of the mediation
shall be shared equally by the parties involved. Each party shall bear its own attorneys' fees and
other costs incurred in connection with the mediation. In the event the parties are unable to
resolve the dispute through mediation, in addition to any other rights or remedies, any party may
institute a legal action.
24. Events of Landlord's Default: Tenant's Remedies. Landlord shall not be deemed
to be in default in the performance of any obligation required to be performed by it under this
Lease until it has failed to perform such obligation within thirty (30) days after written notice by
Tenant to Landlord specifying the nature of Landlord's default; provided, however, that if the
nature of Landlord's obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be deemed to be in default if it shall commence such
performance within such thirty (30) day period and thereafter diligently prosecute the same to
completion. If Landlord is in default under this Lease, Tenant shall have all rights and remedies
available at law or in equity.
25. Exculpation of Landlord. Notwithstanding anything in this Lease to the contrary,
it is expressly understood and agreed that any judgment against Landlord resulting from any
default or other claim under this Lease shall be satisfied only out of the net rents, issues, profits
and other income actually received from or in connection with Landlord's interest in the
Premises, and Tenant shall, except as otherwise expressly permitted pursuant to this Section 25,
have no claim against Landlord or any of its personal assets, for satisfaction of any judgment
with respect to this Lease.
26. Hazardous Substances.
26.1 Tenant shall comply fully with all laws pertaining to the use, generation,
storage, transportation, treatment, disposal or other handling of Hazardous Substances at the
Premises, excepting those Hazardous Substances that are (i) present at the Premises prior to the
Commencement Date or (ii) caused by Landlord or its agents, employees or contractors. Tenant
shall not use, generate, store, transport, treat, dispose or otherwise handle any Hazardous
Substances upon the Premises, except in accordance with all Laws. The term "Hazardous
Substauces" shall mean and include, but is not limited to, all hazardous substances, materials
and wastes listed by the U.S. Environmental Protection Agency, the State of California, the
County of San Diego or the City of Carlsbad, under the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA), the Resource Conservation and
Recovery Act (RCRA), the Toxic Substances Control Act (TSCA), and the Federal Water
Pollution Control Act (FWPCA), and any other statute, ordinance or rule promulgated by a
government entity or agency thereof.
DOCS 121163-000001/2703979.11 -22-
26.2 Tenant agrees to defend, indemnify, and hold harmless the Landlord
Parties from and against any and all damages, penalties, fines, losses, liabilities, causes of action,
suits, claims, demands, costs, and expenses (including all out-of-pocket litigation costs and the
reasonable fees and expenses of counsel) (collectively, "Claims") of any nature, directly or
indirectly, arising out of or in connection with:
(i) The existence, use, generation, migration, storage, release,
threatened release, or disposal of Hazardous Materials on, from or under the Premises, except to
the extent caused by Landlord or its agents, employees or contractors, or to the extent involving
Hazardous Materials which were present on, in or under the Premises prior to the
Commencement Date; provided, however, if the Hazardous Materials migrated to the Premises
from other property not owned or controlled by Tenant or an Affiliate of Tenant, then the
foregoing indemnity shall be limited to Claims resulting from Tenant's failure to comply with the
terms of any order of any federal, state or municipal authority having regulatory authority over
the presence of such Hazardous Substances on, in or under the Premises; and
(ii) Any failure by Tenant to comply with the terms of any order of
any federal, state, or municipal authority having regulatory authority over environmental matters
which is applicable under this Lease to the Premises excepting those that pertain to Hazardous
Substances that were (i) present at the Premises prior to the Commencement Date or (ii) caused
by Landlord or its agents, employees or contractors. Tenant's obligations under this Section 26
shall survive the termination of this Lease.
If any claim is made or brought against Landlord which is subject to the indemnifications
set forth in this Section 26, Tenant shall defend the same, if necessary in Landlord's name, by
attorneys reasonably approved by Landlord.
27. Brokers. Landlord and Tenant each represents, warrant, and covenant that it has
not dealt with any real estate broker or finder with respect to this Lease, and each party shall hold
the other party harmless from all damages, claims, liabilities or expenses, including reasonable
and actual attorneys' fees (through all levels of proceedings), resulting from any claims that may
be asserted against the other party by any real estate broker or finder with whom the
indemnifying party either has or is purported to have dealt.
28. Options to Extend Term. Tenant shall have the right to extend the Term of this
Lease for two (2) separate successive periods of ten (10) years each, upon all the terms,
covenants and conditions contained in Exhibit C attached hereto.
29. Intentionally Omitted.
30. Storm Water Runoff Compliance. Landlord agrees to cause the City of Carlsbad,
through the grading, drainage and storm water plan review and approval process for the Hotel
Addition, and as allowable by Law, to cooperate with Tenant (should it be beneficial for the
development of the Premises) in utilizing the adjacent land owned by the City of Carlsbad for the
purpose of complying with and accommodating storm water runoff requirements for the
Premises. If the adjacent land owned by the City of Carlsbad is utilized for the purpose of
complying with and accommodating storm water runoff requirements for the Premises, Tenant
DOCS 121163-000001/2703979.11 -23-
shall indemnify, defend and hold the Landlord Parties harmless from all claims, costs, liability,
damage or expense, including attorneys' fees, arising from any damage or injury to persons or
property as a result of such utilization, and from any penalties imposed by the Regional Water
Quality Control Board or other governmental entity regulating draining and/or water run off
occurring on the Premises during or after installation of the storm water improvements on
Landlord's adjacent property by Tenant.
31. Water Tank Removal. If not removed by Landlord or Tenant prior to the
Commencement Date, then immediately following the Commencement Date but before Tenant is
required to commence construction of the Hotel Addition, Landlord agrees to remove the above
grade portions of the water tank located on the Premises (but not the below grade foundation or
water lines) at Landlord's expense. However, if Tenant can complete such work at a lesser cost,
at Landlord's option, Tenant may perform such removal work to Landlord's satisfaction and
requirements, in which event Landlord will reimburse Tenant for its out of pocket costs and
expenses in connection with such work within thirty (30) days following Landlord's receipt of an
invoice therefor together with reasonable back-up documentation evidencing such costs and
expenses.
32. Purchase of Golf Rounds. Tenant shall, during each Lease Year, purchase at least
one thousand five hundred (1 ,500) rounds of golf from The Crossings Golf Course on the same
conditions, pricing scale and subject to the same price increases as are currently in place with
respect to the existing Sheraton Carlsbad Resort & Spa. If Tenant has not purchased at least one
thousand five hundred ( 1 ,500) rounds of golf by the end of a Lease Year, then within sixty ( 60)
days thereafter Tenant shall pay to Landlord an amount equal to of the difference between the
cost of one thousand five hundred (1,500) rounds of golf and the cost of the actual number of
rounds purchased by Tenant. The foregoing obligation of Tenant to purchase golf rounds is
conditioned on The Crossings Golf Course continuing to be an 18-hole course maintained in
substantially similar or better condition as of the date of this Lease.
33. Miscellaneous.
33.1 Governing Law, Venue and Jurisdiction. This Lease is governed by and
construed in accordance with the laws of the State of California, irrespective of California's
choice-of-law principles. All actions and proceedings arising in connection with this Lease must
be tried and litigated exclusively in the State or Federal courts located in the County of San
Diego, State of California, which courts have personal jurisdiction and venue over each of the
parties to this Lease for the purpose of adjudicating all matters arising out of or related to this
Lease.
33.2 Further Assurances and Estoppels. Each party to this Lease shall execute
and deliver all instruments and documents and take all actions as may be reasonably required or
appropriate to carry out the purposes of this Lease (but the foregoing does not imply an
obligation to modify any of the provisions of this Lease). Landlord shall ensure that Tenant's
quiet enjoyment of the Premises throughout the Term is not interrupted by Landlord or anyone
lawfully or equitably claiming by, through or under Landlord, subject to Tenant fulfilling its
obligations hereunder and Landlord's rights and remedies under this Lease. Landlord and Tenant
shall each promptly forward to the other any notice or other communication affecting the
DOCS 121163-000001/2703979.11 -24-
Premises received by it from any owner of property adjoining, adjacent or nearby to the Premises
or from any municipal or governmental authority, in connection with any hearing or other
administrative procedure relating to the use or occupancy of the Premises or any neighboring
property. Within ten (1 0) business days after notice from the other party to this Lease, Landlord
or Tenant, as applicable, shall execute and deliver to other party's designee, in recordable form, a
certificate stating, to the current, actual knowledge of such party (i) that this Lease is unmodified
and in full force and effect, or in full force and effect as modified, and stating all modifications,
(ii) the then current Rent, (iii) the dates to which Rent has been paid in advance, (iv) the amount
of any security deposit, prepaid Rent or other payment constituting Rent which has been paid, (v)
whether or not Tenant or Landlord is in default under this Lease (and the nature of any such
default) and if Tenant is the certifying party) whether there currently exist any defenses or rights
of offset under the Lease, and (vi) such other matters as the requesting party reasonably requests.
Such certificate shall also state that the certifying party will be estopped from asserting any claim
or defense against the receiving party to the extent (a) such claim or defense is based upon facts
now known to the certifying party which are contrary to the statements contained therein, (b) the
receiving party has acted in reasonable reliance upon such statements without knowledge of facts
to the contrary, and (c) the statements contained in such certificate shall only give rise to the
estoppel referenced above, without further liability to the certifying party for not disclosing
correct or relevant information. Notwithstanding the foregoing, if the certifying party fails to
execute and deliver to the other party the certificate referred to in this Section with in the ten ( 1 0)
business day period set forth above, Lender shall deliver to Landlord a second written notice
containing the following sentence, in bold, capital letters: "SECOND NOTICE: THIS IS A
REQUEST FOR AN ESTOPPEL", and the certifying party shall have an additional five (5)
business days to deliver the certificate to the other party.
33.3 Prior Understandings. This Lease: (a) contains the entire and final
agreement of the parties to this Lease with respect to the subject matter of this Lease, and
(b) supersedes all negotiations, stipulations, understandings, agreements, representations and
warranties, if any, with respect to such subject matter, which precede or accompany the
execution of this Lease.
33.4 Waivers and Consents. No delay or omission in the exercise of any right
or remedy of Landlord or Tenant in the event of any default by the other shall impair such right
or remedy or be construed as a waiver. The receipt and acceptance by Landlord of delinquent
Rent does not constitute a waiver of any default other than the particular rent payment accepted.
No act or conduct of Landlord, including the acceptance of the keys to the Premises, constitutes
an acceptance by Landlord of the surrender of the Premises by Tenant before the Expiration
Date. Only a written notice from Landlord to Tenant stating Landlord's election to terminate
Tenant's right to possession of the Premises constitutes acceptance of the surrender of the
Premises and accomplishes a termination of this Lease. Landlord's consent to or approval of any
act by Tenant requiring Landlord's consent or approval may not be deemed to waive or render
unnecessary Landlord's consent to or approval of any other or subsequent act by Tenant.
33.5 Notices. Any notice permitted or required to be given pursuant to this
Lease shall be in writing and shall be delivered by hand, be sent by registered or certified mail,
postage prepaid, return receipt requested, or be sent by nationally recognized commercial courier
for next business day delivery, to the addresses set forth in Article 1, or to such other addresses
DOCS 121163-000001/2703979.11 -25-
as are specified by written notice given in accordance herewith. All notices, demands or requests
delivered by hand shall be deemed given upon the date so delivered; those given by mailing as
hereinabove provided shall be deemed given on the earlier of actual delivery or three (3)
business days after the date of deposit in the United States Mail; those given by commercial
courier as hereinabove provided shall be deemed given on the date of actual delivery as
evidenced by the commercial courier's record of delivery ..
33.6 Interpretation. Whenever the context so requires in this Lease, all words
used in the singular may include the plural (and vice versa) and the word "person" includes a
natural person, a corporation, a firm, a partnership, a joint venture, a trust, an estate or any other
entity. The terms "includes" and "including" do not imply any limitation. Except as otherwise
expressly provided herein, no remedy or election under this Lease is exclusive, but rather, to the
extent permitted by applicable law, each such remedy and election is cumulative with all other
remedies at law or in equity. The paragraph headings in this Lease: (i) are included only for
convenience, (ii) do not in any manner modify or limit any of the provisions of this Lease, and
(iii) may not be used in the interpretation of this Lease.
33.7 Partial Invalidity. Each provision of this Lease is valid and enforceable to
the fullest extent permitted by law. If any provision of this Lease (or the application of such
provision to any person or circumstance) is or becomes invalid or unenforceable, the remainder
of this Lease, and the application of such provision to persons or circumstances other than those
as to which it is held invalid or unenforceable, are not affected by such invalidity or
unenforceability.
33.8 Successors-in-Interest and Assigns. Subject to the provisions of Article
15, this Lease is binding on and inures to the benefit of the successors-in-interest and assigns of
each party to this Lease.
33.9 Drafting Ambiguities. Each party to this Lease and its legal counsel have
negotiated, reviewed, and revised this Lease. The rule of construction that ambiguities are to be
resolved against the drafting party or in favor of the party receiving a particular benefit under an
agreement may not be employed in the interpretation of this Lease or any amendment to this
Lease.
33.10 Usury. In the event Landlord receives any sums under this Lease which
constitute interest in an amount in excess of that permitted by any applicable Law, then, all such
sums constituting interest in excess of that permitted to be paid under applicable Law shall, at
Landlord's option, either be credited to the payment of Rent owing hereunder or returned to the
Tenant.
33.11 No Merger. There shall be no merger ofthis Lease or any interest in this
Lease or of the Leasehold Estate created by this Lease with the Reversionary Estate in the
Premises by reason of the fact that this Lease or such interest therein, or such Leasehold Estate
may be directly or indirectly held by or for the account of any person who holds title to the
Reversionary Estate in the Premises or any interest in such Reversionary Estate, nor shall there
be any such merger by reason of the fact that all or any part of the Leasehold Estate created by
this Lease may be conveyed or mortgaged in a leasehold mortgage or deed of trust to a
DOCS 121163-000001/2703979.11 -26-
mortgagee or beneficiary who holds title to the Reversionary Estate or any interest of Landlord
under the Lease.
33.12 As-Is. Except as set forth in this Lease, Landlord hereby disclaims any
warranty, guaranty or representation of the nature and condition of the Premises, including (but
not by way of limitation) the soil and geology and suitability thereof for any and all activities and
uses which Tenant may elect to conduct thereon at any time during the Term, the manner of
construction and the conditions and state of repair or lack of repair of all Improvements located
thereon, and the nature and extent of the rights of others with respect to the Premises, whether by
way of easement, right of way, lease, possession, lien, encumbrance, license, reservation,
condition or otherwise.
(i) Tenant acknowledges that neither Landlord nor any of the
Landlord Parties has made any representation or warranty as to the suitability of the Premises for
the erection of the Tenant's Work or for the conduct of Tenant's business except to the extent
expressly set forth in this Lease, and that Tenant accepts them in their present condition, "as is,
"where is," and without any warranty whatsoever, except to the extent expressly set forth in this
Lease, and with no recourse whatsoever to Landlord Parties, except for fraud or breach of an
express representation or warranty.
(ii) Tenant acknowledges that Tenant has made or will make its own
independent investigation as to the usability and suitability of the Premises for the Permitted
Use; the types of governmental permits that may be required; the nature and extent of applicable
laws, ordinances, regulations, plans, covenants, conditions, and restrictions, that Tenant may be
required to comply with in order to complete and operate the Premises for the Permitted Use; the
soils, geologic, and seismic conditions existing on the Premises; the presence of any
contaminants, hazardous wastes, or toxic substances in, upon, or about the soil or groundwater
in, upon, under, or about the Premises and the potential for migration of the same from adjacent
lands; the availability and cost of all services that are necessary or desirable to serve the
Premises, including, but not limited to, electricity, natural gas, water, sewer, streets, telephone,
television cable, fire protection, and police protection; and the usability of the same by Tenant as
the Tenant and occupant of the Premises; all other physical facts, legal issues, and potential
governmental regulations or actions including, but not limited to, regulatory building
moratoriums by one or more of the governmental agencies having jurisdiction of the Premises;
all other matters deemed by Tenant to be material to Tenant or of concern to Tenant with respect
to Tenant entering into this Lease and undertaking the erection and construction of the Tenant's
Work; and Tenant agrees that except to the extent expressly set forth in this Lease, neither
Landlord nor any of the Landlord Parties has made any warranties or representations whatsoever
with respect to any of the foregoing. Except as otherwise expressly set forth in this Lease,
Tenant hereby releases the Landlord Parties from all future claims, actions, or demands that
Tenant may have or may hereinafter have, known and unknown, in any way relating to the
quality, fitness, or condition of the Premises as existing as of the Commencement Date and
Tenant specifically waives all rights under California Civil Code section 1542 with respect to
such release, which provides as follows:
DOCS 121163-000001/2703979.11 -27-
"A general release does not extend to claims which the creditor does not know or suspect
to exist in his or her favor at the time of executing the release, which if known by him or
her must have materially affected his or her settlement with the debtor."
33.13 Attorney's Fees. The prevailing party in any litigation, reference,
arbitration, bankruptcy, insolvency or other proceeding ("Proceeding") relating to the
enforcement or interpretation of this Lease may recover from the unsuccessful party all costs,
expenses, and actual attorney's fees (including expert witness and other consultants' fees and
costs) relating to or arising out of (i) the Proceeding, and (ii) any post-judgment or post-award
proceeding including, without limitation, one to enforce or collect any judgment or award
resulting from the Proceeding. All such judgments and awards shall contain a specific provision
for the recovery of all such subsequently incurred costs, expenses, and actual attorney's fees.
33.14 Approval. Unless provision is made for a different standard or specific
time period, approval or consent required pursuant to this Lease shall not be unreasonably
withheld or conditioned and response to a request for an approval or consent shall be given by
the party to whom directed within thirty (30) days of receipt. Each disapproval shall be in
writing and the reasons shall be clearly stated if the consent or approval may not be unreasonably
withheld. If a response is not given within the required time period, the requested party shall be
deemed to have withheld its approval or consent.
33.15 Limitation on Landlord's Liability. The term "Landlord" as used in this
Lease so far as covenants or obligations on the part of Landlord are concerned shall be limited to
mean and include only the owner or owners at the time in question of the Reversionary Estate
and in the event of any transfer or transfers of the title to such Reversionary Estate, Landlord
herein named (and in case of any subsequent transfers or conveyances the then grantor) shall be
automatically freed and relieved from and after the date of such transfer or conveyance from all
obligations on the part of Landlord contained in this Lease to be performed thereafter, provided
that any prepaid Rent, security deposit or trust funds in the hands of such Landlord or the then
grantor at the time of such transfer, shall be transferred to the grantee or transferee, who shall
expressly assume, subject to the limitations of this Section 33.15, all of the terms, covenants and
conditions in this Lease contained on the part of Landlord thereafter to be performed, it being
intended by this Section 33.15 that the covenants and obligations contained in this Lease on the
part of Landlord shall, subject to the provisions ofthis Section 33.15, be binding on Landlord, its
successors and assigns, only during and in respect of their respective successive periods of
ownership.
33.16 Landlord's Right of Entry. Landlord reserves the right at all reasonable
times and upon not less than 48 hours prior written notice to Tenant (except in the case of an
emergency) and subject to the rights of Tenant's subtenants and guests, to enter the Premises to
(i) inspect them; (ii) post notices of non-responsibility, and (iii) perform any covenants of Tenant
which Tenant fails to perform (provided Landlord has the right to do so under this Lease and
subject to any notice and/or grace periods contained in this Lease). Landlord may make any
such entries without the abatement of Rent and may take such reasonable steps as required to
accomplish the stated purposes; provided, however, each such entry shall be made in reasonable
manner which, to the maximum extent reasonably possible, does not interfere with the business
operations or security systems of Tenant or any of its subtenants or licensees. Further, Tenant or
DOCS 121163-000001/2703979.11 -28-
any of its subtenants shall have the right to accompany Landlord during any such entry (except in
the case of an emergency). Nothing herein contained shall imply any duty on the part of
Landlord to do any such work which under any provision of this Lease Tenant is required to do,
nor shall it constitute a waiver of Tenant's default in failing to do the same.
33.17 Authority; Signatories. Landlord and Tenant hereby represent and warrant
to each other that it has the full power, right and authority to enter into and execute this Lease,
and that those persons whose signatures are hereinafter evidenced on this Lease on behalf of it
are duly authorized signatories of it, fully empowered to commit and bind it to those certain
terms, covenants and conditions set forth herein for the Term of this Lease.
33.18 Counterparts and Signature Pages. For convenience, Landlord and Tenant
may execute this Lease on separate counterpart pages, which when attached to this Lease shall
constitute one fully-executed complete original Lease.
[Remainder of Page Intentionally Left Blank]
DOCS 121163-000001/2703979.11 -29-
EXHIBIT II A-1 II
LEGAL DESCRIPTION
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF SAN
DIEGO, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
PARCEL A OF THAT CERTAI~RTIFICATE OF COMPLIANCE FOR ADJUSTMENT PLAT (ADJ 16-08)
RECORDED DECEMBER I~ ' 2016, AS DOCUMENT NO. 2016-~"8~ t OF
OFFICIAL RECORDS OF SAN DIEGO COUNTY, BEING MORE PARTICULARLY DES RIBED AS
FOLLOWS:
THOSE PORTIONS OF LOTS F AND H OF RANCHO AGUA HEDIONDA, ACCORDING TO PARTITION
MAP NO. 823, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY,
NOVEMBER 16, 1896 AND A PORTION OF LOT 9 OF CITY OF CARLSBAD CT 09-03, ACCORDING TO
MAP THEREOF NO. 15902, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO
COUNTY, MARCH 4, 2013, BOTH IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST SOUTHERLY CORNER OF THE SAID LOT 9;
THENCE ALONG THE WESTERLY LINE OF SAID LOT 9, NORTH 00°04'15" EAST, A DISTANCE OF
110.04 FEET TO SOUTHEAST CORNER OF SAID LOT F, THE NEXT THREE (3) COURSES BEING ALONG
THE BOUNDARY LINES OF SAID LOT F;
THENCE NORTH 89°55'45" WEST, A DISTANCE OF 120.00 FEET TO THE SOUTHWEST CORNER OF
SAIDLOTF;
THENCE NORTH 00°04'15" EAST, A DISTANCE OF 160.00 FEET TO THE NORTHWEST CORNER OF
SAIDLOTF;
THENCE SOUTH 89°55'45" EAST, A DISTANCE OF 120.00 FEET TO THE NORTHEAST CORNER OF SAID
LOT F, SAID POINT ALSO BEING ON THE WESTERLY LINE OF SAID LOT 9;
THENCE NORTHERLY ALONG THE WESTERLY LINE OF SAID LOT 9, NORTH 00°04'15" EAST, A
DISTANCE OF 181.30 FEET TO THE NORTHWEST CORNER;
THENCE LEAVING SAID NORTHWEST CORNER AND ALONG THE NORTHERLY LINE OF SAID LOT 9,
NORTH 79°29'29" EAST, A DISTANCE OF 122.80 FEET;
THENCE LEAVING SAID NORTHERLY LINE, SOUTH 12°39'48" WEST, A DISTANCE OF 195.66 FEET;
THENCE SOUTH 44°59'43" EAST, A DISTANCE OF 135.72 FEET; THENCE SOUTH 45°00'17" WEST, A
DISTANCE OF 134.38 FEET;
THENCE SOUTH 00°00'17" WEST, A DISTANCE OF 65.23 FEET TO A POINT ON THE SOUTHERLY LINE
OF SAID LOT 9;
THENCE WESTERLY ALONG SAID SOUTHERLY LINE, SOUTH 71°27'08" WEST, A DISTANCE OF 83.68
FEET TO THE POINT OF BEGINNING.
DOCS 121163-00000112703979.11
EXHIBIT A-1
-1-
EXHIBIT "B"
ANNUAL RENT SCHEDULE
(Initial Term)
Lease Year Annual Rent
Year 1 $79,983
Year2 $79,983
Year3 $79,983
Year4 $79,983
Year 5 $79,983
Year6 $81,582
Year7 $83,214
YearS $84,878
Year9 $86,576
Year10 $88,307
Yearll $90,073
Year12 $91,875
Year13 $93,712
Year14 $95,586
Year 15 $97,498
Year 16 $99,448
Year 17 $101,437
Year18 $103,466
Year 19 $105,535
Year20 $107,646
EXHIBIT "B"
-1-
DOCS 121163-000001/2703979.11
Year 21
Year 22
Year23
Year24
Year 25
Year26
Year27
Year28
Year29
Year30
Year 31
Year32
Year 33
Year34
Year35
Year36
Year 37
Year38
Year39
Year40
Year41
Year42
Year43
Year44
DOCS 121163-000001/2703979.11
$109,799
$111,995
$114,235
$116,519
$118,850
$121,821
$124,867
$127,988
$131,188
$134,468
$137,829
$141,275
$144,807
$148,427
$152,138
$155,941
$159,840
$163,836
$167,932
$172,130
$176,433
$180,844
$185,365
$189,999
EXHIBIT "B"
-2-
DOCS 121163-000001/2703979.11
Year45 $194,749
Year46 $199,618
Year47 $204,608
Year48 $209,724
Year49 $214,967
Year SO $220,341
Year 51 $225,849
Year 52 $231,496
Year 53 $237,283
Year 54 $243,215
Year 55 $249,295
Rent set at $79,982.50 in years 1-5
Rent escalates and resets at 2%/annum
for years 6-25
Rent escalates and resets at 2.5%/annum
for years 26-55
EXHIBIT "B"
-3-
EXHIBIT "C"
ANNUAL RENT DURING OPTION TERMS
(i) Tenant has two (2) separate options to extend the Term of this
Lease for two (2) separate successive periods of ten (1 0) years each, upon all the terms,
covenants and conditions contained in this Lease except that the Annual Rent shall be
determined as set forth below in this Exhibit C. Each such option shall be exercisable by Tenant
giving to Landlord notice of stating that Tenant is interested in exercising the option to extend
(the "Interest Notice") not less than twelve (12) months prior to the expiration date of the initial
Term or of the then expiration date of the Term of this Lease if the Term is theretofore extended
pursuant to this Exhibit C. Notwithstanding the foregoing, if Tenant shall fail to give the Interest
Notice within the aforesaid time limit, Tenant's right to exercise its option shall nevertheless
continue until thirty (30) days after Landlord shall have given Tenant notice of Landlord's
election to terminate such option (which notice may be given by Landlord at any time after the
expiration of the aforesaid twelve-month period) and Tenant may give the Interest Notice at any
time until the expiration of said thirty-day period after Landlord's notice. If Tenant thereafter
timely gives the Interest Notice and exercises any such option pursuant to the terms set forth in
paragraph (ii) below, the extended portion of the Term to which such option relates shall
commence or shall be deemed to have commenced at the time it would have commenced if such
notice had been given at the time prescribed in the first sentence of this paragraph (i).
(ii) Within thirty (30) days of Landlord's receipt of the Interest Notice,
Landlord shall deliver notice ("Option Rent Notice") to Tenant setting forth the proposed
Annual Rent for the first year of the option term (the "Option Rent"). If Tenant desires to
exercise such Option, Tenant shall provide Landlord written notice thereof within thirty (30)
days after receipt of the Option Rent Notice ("Tenant's Acceptance") provided, however, upon,
and concurrent with such exercise, Tenant may, at its option, object to the Option Rent contained
in the Option Rent Notice. Tenant's failure to deliver the Tenant's Acceptance on or before the
dates specified above shall be deemed to constitute Tenant's election not to exercise the Option.
If Tenant timely provides Tenant's Acceptance, the Term shall be extended for the Option Term
upon all of the terms and conditions set forth in this Lease, except that, subject to the terms of
paragraph (v) below, the Option Rent for the then current option term shall be as indicated in the
Option Rent Notice unless Tenant, concurrently with Tenant's Acceptance, objects to the Option
Rent contained in the Option Rent Notice, in which case the parties shall follow the procedure
set forth in paragraphs (iii) and (iv) below to determine the Option Rent.
(iii) Annual Rent During Option Terms. If the Term is extended
pursuant to the above terms of this Exhibit C but Tenant objected to the Option Rent proposed by
Landlord in the Option Rent Notice, than the Option Rent shall be equal to the "Market Rent"
(defined below), but in no event shall be less than the Annual Rent applicable to the immediately
preceding Lease Year. "Market Rent" as of any date in question, shall mean an amount equal to
the product of the Cap Rate and the Fair Market Land Value as of the date in question. The
"Cap Rate" shall mean the hotel land cap rate that is most appropriate to apply to the Premises
by reference and comparison to the cap rates applied or referred to in the most recent comparable
sales of land for hotel development or sales of leased fee interests in land under existing hotels
DOCS 121163-000001/2703979.11
EXHIBIT "C"
-1-
including those disclosed or described in a nationally-published survey and/or the data bases of
national hospitality consulting and appraisal firms. "Fair Market Land Value" shall mean the
most probable sale price in terms of money which the Premises (with all easements and rights
appurtenant thereto) should bring in a competitive and open market under the conditions
requisite to a fair sale, the buyer and seller, each acting prudently and knowledgeably. Implicit
in this definition is the consummation of a sale as of the applicable date of determination of Fair
Market Land Value and the passing of title from seller to buyer under conditions whereby:
(i) the buyer and seller are arms-length parties; (ii) both parties are well informed or well advised
and each acting in what they consider their own best interests; (iii) a reasonable time is allowed
for exposure in the open market; (iv) payment is made in terms of cash in U.S. dollars or in terms
of financial arrangements comparable thereto; (v) the price represents the normal consideration
for the property sold unaffected by special or creative financing or sales concessions granted by
anyone associated with the sale; (vi) the Premises is vacant, clean and uncontaminated and is free
of all encumbrances except the use and development restriction terms of this Lease applicable to
the Premises at that time; and (vii) assuming the then actual uses of the improvements on the
Land.
(iv) Determination of Market Rent. If in Tenant's Acceptance Tenant
objects to the Option Rent, Landlord and Tenant shall attempt to agree upon the Market Rent
using their diligent good-faith efforts. If Landlord and Tenant fail to reach agreement within
thirty (30) days following Tenant's Acceptance ("Outside Agreement Date"), then each party
shall make a separate determination of the Market Rent which shall be submitted to each other
and to arbitration in accordance with the following items (1) through (10):
(1) Landlord and Tenant shall each appoint one arbitrator
(each, a "Selected Arbitrator") who shall by profession be a real estate appraiser who is a
Member of the Appraisal Institute (MAl) and who shall have been active over the five (5) year
period ending on the date of such appointment in the appraisal of first-class hotels in the
Southern California. Each such arbitrator shall be appointed within fifteen (15) days after the
Outside Agreement Date. Landlord and Tenant may have developed its Market Rent (being the
product of the Cap Rate and Fair Market Land Value) and otherwise consult with their Selected
Arbitrators prior to appointment and its Selected Arbitrator may be favorable to their respective
positions.
(2) The two Selected Arbitrators so appointed shall be
specifically required pursuant to its engagement letter with Landlord or Tenant to mutually
appoint, within thirty (30) days of the date of the appointment of the last appointed Selected
Arbitrator, a third arbitrator ("Third Arbitrator ") who shall be qualified under the same criteria
set forth hereinabove for qualification of the two Selected Arbitrators; provided, however,
neither Landlord nor Tenant or either party's Selected Arbitrator may, directly or indirectly,
consult with the Third Arbitrator regarding the determination of the Fair Market Land Value
prior to his or her appointment. The Third Arbitrator shall be an independent party and shall not
have been previously engaged by either Landlord or Tenant or their principals during the five (5)
year period preceding the Third Arbitrator's appointment and the Third Arbitrator shall so certify
in its engagement letter or by other means satisfactory to Landlord and Tenant. The Third
Arbitrator shall be retained via an engagement letter jointly prepared by Landlord and Tenant.
DOCS 121163-000001/2703979.11
EXHIBIT "C"
-2-
(3) The determination of the Third Arbitrator shall be limited
solely to the issue of whether Landlord's or Tenant's determination of Market Rent submitted
most recently but prior to ten (1 0) days before the Outside Agreement Date is the closest to the
actual Market Rent as of the Outside Agreement Date, taking into account the assumptions and
requirements set forth in the definition of "Fair Market Land Value".
(4) Each party shall submit to the other party's Selected
Arbitrator and to the Third Arbitrator, such party's determination of Market Rent last submitted
to the other party at least ten (10) days prior to the Outside Agreement Date. Each submittal may
include such supporting information that was also made available to the other party at least ten
(10) days prior to the Outside Agreement Date. Such submittal shall be made concurrently
within five (5) business days after learning of such appointment.
(5) The Third Arbitrator shall within sixty (60) days of his or
her appointment reach a decision as to whether the Landlord's or Tenant's determination of
Market Rent as submitted pursuant to the above terms is closest to Market Rent as of the Outside
Agreement Date as determined by the Third Arbitrator in accordance with Exhibit C. The Third
Arbitrator shall simultaneously publish a ruling ("Appraisal Award") indicating whether
Landlord's or Tenant's submitted Market Rent as of the Outside Agreement Date is closest to the
Market Rent. The determination of the Third Arbitrator may be based on its own appraisal or
investigation and/or its review and evaluation of Landlord's and Tenant's submittal and
discussion of the same with the Selected Arbitrators. Following notification of the Appraisal
Award, Landlord's or Tenant's submitted Market Rent determination, whichever is selected by
the Third Arbitrator as being closest to the Market Rent determined as of the Outside Agreement
Date by the Third Arbitrator shall become the then applicable Market Rent for the subject Option
Term.
( 6) The Appraisal A ward shall be binding upon Landlord and
Tenant.
(7) The parties hereto agree that until the Appraisal Award is
issued, Tenant shall continue to pay Annual Rent at the same rate as applicable just before the
option term. At the time such dispute is resolved, the parties shall make appropriate adjustments
to any amounts paid by Tenant for the period from the commencement of the applicable option
term that were based upon the Annual Rent applicable just before the option term, and to the
extent necessary, Tenant shall within thirty (30) days of the resolution of such dispute pay any
and all amounts then due to Landlord, together with interest, at the Prime Rate plus three percent
(3%) per annum, resulting from an underpayment by Tenant.
(8) If either Landlord or Tenant fail to appoint a Selected
Arbitrator within fifteen (15) days after the applicable Outside Agreement Date, either party may
petition the presiding judge of the Superior Court of San Diego County to appoint such Selected
Arbitrator subject to the criteria in this Exhibit C, or if he or she refuses to act, either party may
petition any judge having jurisdiction over the parties to appoint such Selected Arbitrator.
(9) If the two Selected Arbitrators fail to agree upon and
appoint the Third Arbitrator or if either party frustrates the engagement of the Third Arbitrator,
DOCS 121163-000001/2703979.11
EXIDBIT "C"
-3-
then either party may petition the presiding judge of the Superior Court of San Diego County to
appoint the Third Arbitrator, subject to criteria in this Exhibit C, or if he or she refuses to act,
either party may petition any judge having jurisdiction over the parties to appoint such Third
Arbitrator.
(10) Each party shall pay the fees and expenses of the appraiser
appointed by or on behalf of it, and each shall pay one-half of the fees and expenses of the Third
Arbitrator, if any.
(v) During each option term, commencing with the first day of the
second Lease Year of the option term and the first day of each Lease Year thereafter during the
option term, the Annual Rent shall be increased by two and one-half percent (2.5%) over the
Annual Rent applicable during the prior Lease Year.
DOCS 121163-000001/2703979.11
EXHIBIT "C"
-4-
EXHIBIT "D"
LENDER'S RIGHTS UNDER THE LEASE
Landlord and Tenant acknowledge and agree that a Lender shall have, in addition to all
rights and remedies provided for in the Lease, all of the following rights:
1. Abandonment of Property. Notwithstanding any provision in the Lease to the
contrary, Landlord acknowledges and agrees that if Tenant defaults on its obligations to a Lender
and the Lender undertakes to enforce its security interest in the Lease, the Improvements, or any
collateral constituting personal property and/or trade fixtures, and thereafter prosecutes such
enforcement proceeding to completion with due diligence and continuity, then such property
shall not be deemed abandoned.
2. Lender's Entry onto Property. For the purpose of curing any default by Tenant
under the Lease or under any instruments executed in favor of a Lender (the "Loan
Documents"), Landlord and Tenant authorize Lender to enter upon the Premises and to exercise
any of the rights and powers granted to Lender under the Lease or the Loan Documents,
provided the latter powers would, if exercised by Tenant, not breach the Lease, and provided
further that Lender shall indemnify, defend and hold Landlord and the other Landlord Parties
harmless from all claims, costs, liability, damage or expense, including attorneys' fees, arising
from Lender's entry upon the Premises.
3. Lender's Rights to Notice. Landlord agrees that any notice of default, termination
of the Lease or termination of Tenant's right to possession delivered to Tenant shall not be valid
or of any force or effect as to Lender only unless a duplicate copy thereof shall be delivered to
the Lender concurrently therewith by any method provided for in Section 33.5 of the Lease, but
only if Tenant or the Lender previously gave written notice to Landlord of the name and address
of the Lender; provided, however, in no event shall the failure to deliver such notice to Lender be
applied to allow a defaulting Tenant to remain in possession of the Premises so long as the
enforcement against the Tenant does not prejudice Lender's rights hereunder. Landlord further
agrees that a duplicate copy of any notice given to Tenant pursuant to Exhibit C of this Lease
shall be delivered to the Lender concurrently therewith by any method provided for in Section
33.5 ofthe Lease, but only if Tenant or the Lender previously gave written notice to Landlord of
the name and address of the Lender.
4. Removal of Personal Property. Notwithstanding any provision to the contrary
contained in the Lease, in the event of Tenant's default under the Lease, Lender shall not be
required to remove from the Premises any Personalty unless and until Lender has acquired
possession of the Premises or title to the Leasehold Estate.
5. Cure of Defaults by Lender.
(a) In the event of any default by Tenant under the provisions of this Lease,
any Lender will have the same periods as are given Tenant for remedying such default or causing
it to be remedied, plus, in each case, an additional period of thirty (30) days after the expiration
DOCS 121163-000001/2703979.11
EXHIBIT "D"
-1-
of the initial period or after Landlord has served a notice or a copy of a notice of such default
upon the Lender, whichever is later.
(b) In the event that Tenant shall default under any of the provisions of this
Lease, any Lender, without prejudice to its rights against Tenant, shall have the right to cure such
default within the applicable grace periods provided for in the preceding Section 5(a), above,
whether the same consists of the failure to pay Rent or the failure to perform any other matter or
thing which Tenant is hereby required to do or perform, and Landlord shall accept such
performance on the part of such Lender as though the same had been done or performed by
Tenant. For such purpose, Landlord and Tenant hereby authorize such Lender to enter upon the
Premises and to exercise any of its rights and powers under this Lease and subject to the
provisions of this Lease, provided that Lender shall indemnify, defend and hold Landlord and the
other Landlord Parties harmless from all claims, costs, liability, damage or expense, including
attorneys' fees, arising from Lender's entry upon the Premises.
(c) In the event of any nonmonetary default by Tenant that is not reasonably
susceptible of being cured by Lender prior to the expiration of the applicable grace period
specified in Section 5(a) above or which can only be cured by Lender after having obtained
possession of the Premises, a Lender shall give Landlord written notice that it intends to
undertake the curing of such default, or to cause the same to be cured, or to exercise its rights to
acquire the Leasehold Estate by foreclosure or otherwise, and shall immediately commence and
then proceed with all due diligence to do so, whether by performance on behalf of Tenant of its
obligations under this Lease, or by entry on the Premises and/or the Improvements by
foreclosure or otherwise, and provided that Lender or Tenant shall have cured any prior
monetary default and fulfills all of Tenant's monetary obligations under the Lease as they
become due, then Landlord will not terminate or take any action to effect a termination of this
Lease or re-renter, take possession of or relet the Premises or the Improvements or similarly
enforce performance of this Lease in a mode provided by law so long as such Lender is with all
due diligence and in good faith engaged in the curing of such default, or effecting such
foreclosure and all of Tenant's monetary obligations under the Lease are paid when due;
provided, however, that the Lender shall not be required to continue such possession or continue
such foreclosure proceedings if such default shall be cured.
6. Termination of Lease. In the event of a termination of this Lease as to Tenant by
reason of the bankruptcy of Tenant and rejection of this Lease by the trustee in bankruptcy or by
Tenant as debtor in possession, or by operation of law or for any other reason, Landlord agrees
that this Lease shall not terminate as to Lender and that this Lease shall, without any further act
or action, automatically continue upon the same terms in favor of Lender as the lessee under this
Lease provided that (i) Lender delivers to Landlord within ten (1 0) days of such event of
termination written notice ("Notice of Assumption") that it elects to assume this Lease, and (ii)
Lender immediately then cures or engages in good faith to cure any then existing default of
Tenant under this Lease which is reasonably susceptible of cure by Lender; and Lender may take
all appropriate actions necessary to remove Tenant from the Premises and such actions may be
undertaken in its own name or, if Lender has obtained Landlord's consent and Lender
indemnifies Landlord with respect to such actions, the name of Landlord. If the Lender fails to
deliver the Notice of Assumption within such ten (10) day period, the Lender shall be deemed to
have waived the right to assume the Lease pursuant to this Section 6. Without limiting the
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EXIDBIT"D"
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foregoing, the parties agree to execute such additional documents as may be reasonably required
from time to time to confirm or carry out the intent of this Section, including entering into a new
ground lease if Lender so elects upon the terms described below.
7. New Ground Lease. In the event that Tenant's interest under this Lease shall be
terminated by a sale, assignment or transfer pursuant to the exercise of any remedy of a Lender,
or pursuant to judicial proceedings, or as a result of the rejection of this Lease by reason of
bankruptcy of Tenant or otherwise, and if (i) Lender delivers to Landlord within ten (1 0) days of
the date of such termination written notice that it elects to enter into a new lease of the Premises,
and (ii) either, (A) no Rent or other charges shall then be due and payable by Tenant under this
Lease, or (B) the Lender shall have arranged to the reasonable satisfaction of Landlord for the
prompt payment of all Rent and other charges (less a credit for any income received by Landlord
during such period) due and payable by Tenant under this Lease as of the date of such
termination, together with the Rent and other charges that but for such termination would have
become so due and payable from the date of such termination through the date of execution of a
new lease, and upon payment of all Rent, other charges and expenses, including attorneys' fees,
incident thereto, Landlord will execute and deliver to such Lender or its nominee a new lease of
the Premises. If the Lender fails to deliver such notice within such ten (1 0) day period, the
Landlord's obligation to execute a new lease pursuant to this Section 7 shall terminate and be of
no further force or effect. Such new lease shall be for a term equal to the remainder of the Term
of this Lease before giving effect to such termination and shall contain the same covenants,
agreements, terms, provisions and limitations as this Lease, and shall be subject only to the
encumbrances and other matters in effect as of the recordation of the memorandum of this Lease
and matters done or suffered by Tenant or Lender. Upon the execution and delivery of such new
lease, the new tenant may take all appropriate actions as shall be necessary to remove Tenant
from the Premises and the Improvements and such actions may be undertaken in its own name
or, if Lender has obtained Landlord's consent and Lender indemnifies Landlord with respect to
such actions, the name of Landlord, but Landlord shall not be subject to any liability for the
payments of fees, including reasonable attorneys' fees, costs or expenses in connection with such
removal; and such new tenant shall pay all such fees, including attorneys' fees costs and
expenses or, on demand make reimbursements therefor to Landlord.
8. No Amendment or Surrender. The Lease shall not be cancelled or surrendered by
agreement between Landlord and Tenant without Lender's sole discretion consent. Landlord
agrees, for the benefit of Lender, that Landlord will not enter into any agreement with Tenant to
amend or modify this Lease without the prior written consent of Lender, which consent shall not
be unreasonably withheld, conditioned or delayed, and any such action without Lender's written
consent shall not be binding on Lender, its successors and assigns. Lender shall respond in
writing to any request by Tenant or Landlord that Lender consent to an amendment or
modification of the Lease within thirty (30) days of the Tenant's or Landlord's request for such
consent (which response shall include, in the case of any denial or withholding of consent by the
Lender, the reason(s) that the Lender has denied or withheld such consent). In the event the
Landlord does not receive a written response from the Lender to any such request within such
thirty (30) day period, then Tenant or Landlord may give Lender a second notice requesting such
consent which notice shall prominently identify in bold and all capital type face that such notice
is a second notice and that Lender's failure to respond within fifteen (15) days shall result in
Lender's deemed approval of the proposed amendment or modification. In the event the
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EXHIBIT "D"
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Landlord does not receive a written response from the Lender to any such request within such
fifteen (15) day period after such second notice, the Lender shall irrevocably be deemed to have
consented to such amendment or modification of the Lease, and the Tenant and Landlord shall be
free to enter into such amendment or modification of the Lease without further notice to Lender.
9. Lender's Performance. In all events, Landlord will accept performance of the
obligations of Tenant under this Lease by or at the instance of Lender as if the same had been
made by Tenant.
10. Participation in Proceedings. Notwithstanding any provisions contained in this
Lease to the contrary, so long as the Loan Documents remain in effect, all policies of insurance
called for in this Lease or otherwise in effect for the Leasehold Estate and the Improvements
shall, in addition to any provisions required under this Lease, contain a standard mortgagee
protection endorsement. Until such time as any indebtedness secured by the Loan Documents is
repaid in full, Lender shall be entitled to participate in (and following a Loan Document Event of
Default, vis-a-vis Tenant, control) the settlement or adjustment of any losses covered by such
policies of insurance and no such settlement or adjustment shall be accepted or approved without
the specific consent in writing of Lender, which consent shall not be unreasonably withheld,
conditioned or delayed. In addition, until such time as any indebtedness secured by any Loan
Document is repaid in full, Lender shall have the right to participate in (and following a Loan
Document Event of Default, vis-a-vis Tenant, control) any settlement of or stipulation of
judgment with respect to any condemnation proceeding affecting all or any portion of the
Leasehold Estate and Improvements or any agreement to sell all or any portion of the Leasehold
Estate and Improvements in lieu of condemnation, and no such settlement, stipulation or
agreement shall be made or entered into without Lender's prior written consent, which consent
shall not be unreasonably withheld, conditioned or delayed. Notwithstanding anything to the
contrary contained herein, Lender agrees that (i) all proceeds from policies of insurance called
for in the Lease or otherwise in effect for the Leasehold Estate and the Improvements and (ii) all
Condemnation Proceeds shall be received, held, and/or applied as set forth in the Loan
Documents For the purposes ofthis Section 10, "Loan Document Event of Default" shall mean
an "Event of Default," as defined in the Loan Documents.
11. Foreclosure Event. Lender may exercise all of its rights, benefits, and remedies
under the Loan Documents, including the commencement and consummation of a foreclosure or
conveyance of a deed in lieu of foreclosure under the Leasehold Mortgage (a "Foreclosure
Event"), in accordance with their terms without such actions constituting a default of any kind
under this Lease. For the purposes of this Exhibit D, "Leasehold Mortgage" shall mean the
deed of trust which is a part of the Loan Documents. From and after the consummation of a
Foreclosure Event, the person that succeeds to the ownership of the Premises pursuant to the
Foreclosure Event (the "Foreclosure Transferee") shall be subject to all of the terms and
conditions set forth in the Lease, including, without limitation, the provisions of Section 17 of
this Lease.
12. Liability of Lender and Foreclosure Transferee. Landlord agrees that neither
Lender nor any Foreclosure Transferee has become personally liable under the terms and
obligations of this Lease and neither Lender nor any Foreclosure Transferee shall become so
liable unless and until (i) a Foreclosure Event is consummated (in which case, liability under the
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EXIDBIT"D"
-4-
terms and obligations of this Lease shall apply only prospectively, to actions taken by the
Foreclosure Transferee after the Foreclosure Event, and specifically excluding any liability for
defaults by the Tenant prior to the Foreclosure Event); or (ii) Lender or its successors and assigns
assumes said obligations in writing pursuant to Section 6 of this Exhibit D above or enters into a
new lease with Landlord pursuant to Section 7 of this Exhibit D above, and, notwithstanding any
such assumption or new lease, Lender or any Foreclosure Transferee shall be liable under this
Lease or any such new lease only so long as Lender or such Foreclosure Transferee maintains
ownership of the leasehold interest or estate.
13. No Restrictions On Certain Transfers. Landlord has consented to (or no consent
by Landlord is required for) any of the following: (a) any transfer, conveyance, assignment, or
encumbrance of the Lender's collateral interest in this Lease, or any other collateral securing the
Loan otherwise permitted under the applicable Loan Documents; (b) the right to transfer the
Lender's interest in this Lease pursuant to a Foreclosure Event; and (c) from and after the
consummation of a Foreclosure Event, the right of the Lender to transfer, convey, and assign its
interest in this Lease without restriction; provided, however, that
(1) with respect to any transfer pursuant to clauses (b) and (c) above such
transfer shall be subject to the following:
(A) the assignor's interest in the Improvements shall be transferred to
the assignee concurrently with the Leasehold Estate;
(B) there shall be delivered to Landlord (A) a duplicate original of the
instrument or instruments of transfer of this Lease and of the assignor's interest in the
Improvements in recordable form, containing the name and address of the transferee and (B) an
instrument of assumption by the transferee of all of Tenant's obligations under this Lease arising
from and after the effective date of the transfer;
(C) no such assignment and assumption shall operate or be deemed to
operate as a release of the previous Tenant and/or the liabilities of the previous Tenant (and/or
any guarantor or guarantors of the duties, obligations and liabilities of the previous Tenant) or a
waiver of any of Landlord's rights or remedies against the previous Tenant for any defaults by
the previous Tenant under this Lease prior to the Foreclosure Event;
(D) following the transfer, the transferee of this Lease shall be the
same person as the owner of the Westin Hotel including the Converted Improvement;
(2) any encumbrance of this Lease with a Leasehold Mortgage shall be
subject to Section 17 of this Lease.
14. Recognition. In each case where a transfer, conveyance, or assignment permitted
as provided above results in a change in the identity of the Tenant under this Lease, Landlord
agrees, upon notice of such transfer, to recognize such new Tenant as the "Tenant" under this
Lease, subject to the terms and provisions of this Lease.
15. Modifications. Landlord acknowledges that a proposed Lender may review the
provtstons of this Exhibit "D" and based upon such review may request changes to or
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EXHIBIT "D"
-5-
clarifications of such provisions. Landlord agrees to make such changes or clarifications
reasonably requested by Lender as a condition to its financing provided the Lender's requested
changes are commercially reasonable and consistent with the customary leasehold financing
practices of Approved Institutions and do not increase any of Landlord's obligations, or decrease
or adversely affect Landlord's rights and remedies hereunder in any material respect. Tenant
shall reimburse Landlord for Landlord's reasonable attorneys' fees incurred in connection with
reviewing, negotiating or documenting any such amendment.
16. Estoppels. Within ten (10) business days after notice from Lender requesting the
same, Landlord shall promptly forward to Lender, Landlord shall execute and deliver to Lender,
in recordable form, a certificate stating that, to the current, actual knowledge of the City Manager
of the City of Carlsbad (i) that this Lease is unmodified and in full force and effect, or in full
force and effect as modified, and stating all modifications, (ii) the then current Rent, (iii) the
dates to which Rent has been paid in advance, (iv) the amount of any security deposit, prepaid
Rent or other payment constituting Rent which has been paid, (v) whether or not Tenant is in
default under this Lease (and the nature of any such default) and whether there currently exist
any defenses or rights of offset under the Lease, and (vi) such other matters as Lender reasonably
requests. Such certificate shall also state that the Landlord will be estopped from asserting any
claim or defense against the Lender to the extent (a) such claim or defense is based upon facts
now known to the certifying party which are contrary to the statements contained therein, (b) the
receiving party has acted in reasonable reliance upon such statements without knowledge of facts
to the contrary, (c) the statements contained in such certificate shall only give rise to the estoppel
referenced above, without further liability to the certifying party for not disclosing correct or
relevant information, and (d) Lender is a bona fide encumbrancer for value of the Premises
which is subject to the Lease. Notwithstanding the foregoing, if Landlord fails to execute and
deliver to Lender the certificate referred to in this Section with in the ten ( 1 0) business day
period set forth above, Lender shall deliver to Landlord a second written notice containing the
following sentence in bold, capital letters: "SECOND NOTICE: THIS IS A REQUEST FOR
AN ESTOPPEL", and Landlord shall have an additional five (5) business days to deliver the
certificate to Lender.
17. Conflict. If there is any conflict between the provisions of the Lease and the
provisions of this Exhibit "D", the provisions ofthis Exhibit "D" shall control.
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EXIDBIT "D"
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EXHIBIT "E"
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
Grand Pacific Carlsbad Hotel, L.P.
5900 Pasteur Court, Suite 200
Carlsbad, CA 92008
Attn: David Brown
(Above Space for Recorder's Use Only)
MEMORANDUM OF LEASE
This MEMORANDUM OF LEASE is made as of December, 2016, by THE
CARLSBAD PUBLIC FINANCING AUTHORITY, a joint powers authority formed by the City
of Carlsbad and the Carlsbad Municipal Water District ("Landlord"), and GRAND PACIFIC
CARLSBAD HOTEL, L.P., a Delaware limited partnership ("Tenant").
1. Landlord leases to Tenant the real property (the "Property") described in Exhibit
A and depicted in Exhibit B attached hereto pursuant to the Ground Lease between Landlord and
Tenant dated as of December_, 2016 (the "Lease").
2. The Lease provides for a term commencing on the Rent Commencement Date (as
defined in the Lease) and expiring sixty-five (65) years thereafter, subject to two (2) options to
extend for ten (1 0) years each.
3. Reference is made to a Grant Deed in favor of the Carlsbad Municipal Water
District recorded on July 27, 1962 in the Official Records of the San Diego County Recorder's
Office as Document No. 127706 and the fact that under such grant deed the Carlsbad Municipal
Water District may have certain rights over the portions of the Premises not owned by it. On
behalf of the Carlsbad Municipal Water District, Landlord agrees that so long as the Lease is in
effect, such rights will not be exercised by Carlsbad Municipal Water District or by Landlord on
behalf of the Carlsbad Municipal Water District in any way in so far as the Premises is
concerned and nothing contained in such grant deed shall prohibit or interfere with the use or
development of the Premises in accordance with the terms of the Lease.
4. Other terms and conditions pertaining to the Lease are set forth in the Lease, all of
which are incorporated into this Memorandum by this reference. If there is any inconsistency
between the terms and conditions of the Lease and the terms and conditions of this
Memorandum, the terms and conditions of the Lease shall control.
[Signature page follows; Balance of page intentionally left blank.]
DOCS 121163-000001/2703979.11
EXHIBIT"E"
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LANDLORD: THE CARLSBAD PUBLIC FINANCING
AUTHORITY,
a joint powers authority formed by the City of
Carlsbad and the Carlsbad Municipal Water District
By: _______________ _
Name: ----------------Title: ______________ _
Attest:
Barbara Engelson, City Clerk
(Seal)
Approved as to form and legality:
Celia Brewer, City Attorney
TENANT:
DOCS 121163-000001/2703979.11
GRAND PACIFIC CARLSBAD HOTEL, L.P., a
Delaware limited partnership
By: Grand Pacific Carlsbad Hotel, Inc., a
Delaware corporation, its General Partner
By: -------------------
Timothy J. Stripe, Co-President
By: _______________ _
EXlllBIT "E"
-2-
DavidS. Brown, Co-President
JOINDER
This Joinder is attached to and shall form a part of that certain Memorandum of Lease
dated as of December_, 2016 ("Memorandum of Lease"), by and between The Carlsbad Public
Financing Authority, a joint powers authority formed by the City of Carlsbad and the Carlsbad
Municipal Water District, as "Landlord," and Grand Pacific Carlsbad Hotel, L.P., a Delaware
limited partnership, as "Tenant." This Joinder shall be deemed effective as of the date of the
Memorandum of Lease.
For good and valuable consideration, the receipt of which is hereby acknowledged, the
undersigned each hereby ratify, join in and agree to be bound by the Memorandum of Lease, and
agree that all of their respective ownership interests in the property that is the subject of the
Memorandum of Lease are covered by and subject to the Memorandum of Lease.
Approved as to form and legality:
Celia Brewer, City Attorney
Approved as to form and legality:
Celia Brewer, City Attorney
DOCS 121163-000001/2703979.11
City:
The City of Carlsbad,
a California municipal corporation
By: __________ _
Name: __________ _
Its: --------------
Attest: __________ _
Barbara Engelson, City Clerk
Water District:
The Carlsbad Municipal Water District,
a California municipal water district
By: __________ _
Name: -----------Its: ___________ ___
Attest: -----------Barbara Engelson, City Clerk
EXHIBIT"E"
-3-
A Notary Public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the truthfulness,
accuracy, or validity of that document.
State of California
County of San Diego
)
)
On _______________________ ,beforeme, ________________ __
(insert name and title of the officer)
Notary Public, personally appeared---------------------
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies ), and that by his/her/their signature( s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature ______________ _
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EXHIBIT "E"
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(Seal)
A Notary Public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the truthfulness,
accuracy, or validity of that document.
State of California
County of San Diego
)
)
On _______________________ ,beforeme, ____________________________ __
(insert name and title of the officer)
Notary Public, personally appeared ------------------------------------------
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature __________________________ _
DOCS 121163-000001/2703979.11
EXHIBIT"E"
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(Seal)
EXHIBIT A TO EXHIBIT E
LEGAL DESCRIPTION
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF SAN
DIEGO, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
PARCEL A OF THAT CERTAIN CERTIFICATE OF COMPLIANCE FOR ADJUSTMENT PLAT (ADJ 16-08)
RECORDED DECEMBER , 2016, AS DOCUMENT NO. 2016-OF
OFFICIAL RECORDS OF SAN DIEGO COUNTY, BEING MORE PARTICULARLY DESCRIBED AS
FOLLOWS:
THOSE PORTIONS OF LOTS F AND H OF RANCHO AGUA HEDIONDA, ACCORDING TO PARTITION
MAP NO. 823, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY,
NOVEMBER 16, 1896 AND A PORTION OF LOT 9 OF CITY OF CARLSBAD CT 09-03, ACCORDING TO
MAP THEREOF NO. 15902, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO
COUNTY, MARCH 4, 2013, BOTH IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST SOUTHERLY CORNER OF THE SAID LOT 9;
THENCE ALONG THE WESTERLY LINE OF SAID LOT 9, NORTH 00°04'15" EAST, A DISTANCE OF
110.04 FEET TO SOUTHEAST CORNER OF SAID LOT F, THE NEXT THREE (3) COURSES BEING ALONG
THE BOUNDARY LINES OF SAID LOT F;
THENCE NORTH 89°55'45" WEST, A DISTANCE OF 120.00 FEET TO THE SOUTHWEST CORNER OF
SAIDLOTF;
THENCE NORTH 00°04'15" EAST, A DISTANCE OF 160.00 FEET TO THE NORTHWEST CORNER OF
SAIDLOTF;
THENCE SOUTH 89°55'45" EAST, A DISTANCE OF 120.00 FEET TO THE NORTHEAST CORNER OF SAID
LOT F, SAID POINT ALSO BEING ON THE WESTERLY LINE OF SAID LOT 9;
THENCE NORTHERLY ALONG THE WESTERLY LINE OF SAID LOT 9, NORTH 00°04'15" EAST, A
DISTANCE OF 181.30 FEET TO THE NORTHWEST CORNER;
THENCE LEAVING SAID NORTHWEST CORNER AND ALONG THE NORTHERLY LINE OF SAID LOT 9,
NORTH 79°29'29" EAST, A DISTANCE OF 122.80 FEET;
THENCE LEAVING SAID NORTHERLY LINE, SOUTH 12°39'48" WEST, A DISTANCE OF 195.66 FEET;
THENCE SOUTH 44°59'43" EAST, A DISTANCE OF 135.72 FEET; THENCE SOUTH 45°00'17" WEST, A
DISTANCE OF 134.38 FEET;
THENCE SOUTH 00°00'17" WEST, A DISTANCE OF 65.23 FEET TO A POINT ON THE SOUTHERLY LINE
OF SAID LOT 9;
THENCE WESTERLY ALONG SAID SOUTHERLY LINE, SOUTH 71°27'08" WEST, A DISTANCE OF 83.68
FEET TO THE POINT OF BEGINNING.
DOCS 121163-000001/2703979.11
EXHIBIT A TO
EXHIBITE
-1-
EXHIBIT "F"
GUARANTY OF COMPLETION AND LIMITED PAYMENT OBLIGATIONS
THIS GUARANTY OF COMPLETION AND LIMITED PAYMENT OBLIGATIONS
("Guaranty") is executed as of _, 2016, by GRAND PACIFIC CARLSBAD,
L.P., a California limited partnership (the "Guarantor"), in favor of THE CARLSBAD PUBLIC
FINANCING AUTHORITY, a joint powers authority formed by the City of Carlsbad and the
Carlsbad Municipal Water District ("Landlord"), with reference to the facts set forth below.
RECITALS
Landlord and GRAND PACIFIC CARLSBAD HOTEL, L.P., a Delaware limited
partnership ("Tenant") have entered into that certain Ground Lease dated __ ,
2016 (as at any time amended, modified, or supplemented, the "Lease"), covering the Premises
described in the Lease. Capitalized terms not otherwise defined herein shall be as defined in the
Lease.
The Guarantor is an Affiliate of Tenant, or otherwise expects to benefit from the grant by
Landlord to Tenant of the Lease.
As an essential inducement to Landlord's agreement to grant the Lease to Tenant and in
consideration therefor and at the request of Tenant, the Guarantor has agreed to guaranty the
completion of the Hotel Addition and the Additional Sheraton Building and the payment of any
and all rental obligations under the Lease which accrue prior to the Release Date (as defined
below), subject to the limitations, releases, and other provisions provided herein below.
NOW, THEREFORE, in consideration of the premises, and to induce and in
consideration for the granting of the Lease, the Guarantor agrees for the benefit of Landlord, its
successors and assigns, as set forth below.
1. Guaranty.
1.1 Subject to Section 1.2 below, the Guarantor hereby unconditionally and
irrevocably guaranties to Landlord, for a period commencing on the Commencement Date of the
Lease and ending upon the earlier of (A) the date of the termination of the Lease (other than
termination by Landlord for an Event of Default by Tenant under the Lease) or (B) the later of
the date of Substantial Completion of the Hotel Addition or the date of Substantial Completion
of the Additional Sheraton Building (such earlier date being the "Release Date"), the full and
timely payment and performance of all rent, charges, indebtedness and obligations, of any nature
whatsoever, of Tenant under the Lease (and any and all amendments, supplements, and
modifications thereof, whether now in existence or hereafter created) which are due and payable
by Tenant prior to the Release Date including, without limitation, (i) the obligation to pay Rent,
Impositions, and other charges, fees, costs and other amounts due from Tenant under the Lease
which are due and payable by Tenant prior to the Release Date (ii) the full and timely payment of
all contractors, subcontractors, materialmen, engineers, architects and other persons who have
rendered or furnished services or materials that are or become a part of the initial construction of
the Hotel Addition and/or the Additional Sheraton Building, and (ii) the Substantial Completion
DOCS 121163-000001/2703979.11
EXHIBIT"F"
-1-
of the Hotel Addition to be completed on the Premises and the Substantial Completion of the
Additional Sheraton Building in accordance with the Lease (all of the foregoing obligations
collectively, the "Guarantied Obligations").
1.2 Notwithstanding any other provision of this Guaranty to the contrary, and
provided no Event of Default under the Lease with respect to any Guarantied Obligations shall
then exist, Guarantor automatically shall be forever released from all liability under this
Guaranty, and this Guaranty shall terminate, on the Release Date without necessity of further
documentation.
1.3 This is a continuing guaranty until the Release Date relating to the Guarantied
Obligations, including, without limitation, obligations and liabilities arising under successive and
future transactions that either increase, decrease, or continue the Guarantied Obligations, or,
from time to time, renew Guarantied Obligations that have been satisfied, independent of and in
addition to any guaranty, endorsement, or collateral now or hereafter held by Landlord, whether
or not furnished by the Guarantor. This Guaranty shall apply and be irrevocable with respect to
any indebtedness created or incurred even after actual receipt by Landlord of any written notice
of purported revocation by the Guarantor and the Guarantor waives any right to revoke this
Guaranty and the benefits of California Civil Code Section 2815.
2. Independent Obligations.
2.1 Guarantor shall pay to (in immediately available funds) and perform for the
benefit of Landlord, when due, on demand of Landlord all Guarantied Obligations. This
Guaranty is an absolute guaranty of payment and performance and not of collection. The
Guarantor's obligations under this Guaranty are independent of those of Tenant and of the
obligations of any other guarantor or person, and are not conditioned or contingent upon the
genuineness, validity, regularity, or enforceability of the Lease or other Guarantied Obligations
or of the obligations of any other guarantor or person. Landlord may bring a separate action
against the Guarantor without first proceeding against Tenant, any other guarantor, or any other
person, or any security held by Landlord, and without pursuing any other remedy. Landlord's
rights under this Guaranty in respect of the Guarantied Obligations shall not be exhausted by any
action of Landlord until all of the Guarantied Obligations have been fully and indefeasibly paid
and performed. Unless otherwise provided herein, this Guaranty and the obligations hereunder
shall survive termination of the Lease.
3. Rights of Landlord.
3.1 The Guarantor consents that Landlord may, and authorizes Landlord at any time
in its discretion without notice or demand to or upon the Guarantor or any other person and
without affecting the indebtedness and liabilities of the Guarantor hereunder to: (i) enter into
agreements with Tenant and renew, extend, amend, waive, restructure, refinance, release,
accelerate, or otherwise change the time for payment of, or otherwise change the terms of, the
indebtedness evidenced by the Lease (including, without limitation, the Guarantied Obligations),
including, without limitation, (a) increase or decrease in the Guarantied Obligations and (b) any
amendment of the Guarantied Obligations to permit Landlord to extend further or additional
accommodations to Tenant in any form, including credit by way of loan, lease, sale or purchase
DOCS 121163-000001/2703979.11
EXlllBIT "F"
-2-
of assets, guarantee, or otherwise, which shall thereupon be Guaranteed Obligations; (ii) accept
new or additional documents, instruments, or agreements relative to the Guarantied Obligations;
(iii) consent to the change, restructure or termination of the individual, partnership, corporate or
other organizational structure of existence of Tenant, the Guarantor or any affiliate of Tenant or
the guarantor or any other person and correspondingly restructure the Guarantied Obligations;
(iv) accept partial payments on the Guarantied Obligations; (v) take and hold collateral or
additional guaranties for the Guarantied Obligations and amend, later, exchange, substitute,
transfer, enforce, perfect or fail to perfect, waive, subordinate, terminate, or release any such
collateral or guaranties; (vi) apply any collateral, and direct the order and manner of sale thereof
as Landlord in its sole discretion may determine; (vii) settle, release on terms satisfactory to
Landlord or by operation of law or otherwise, compound, compromise, collect or otherwise
liquidate the Guarantied Obligations and/or the collateral or any guaranty therefore in any
manner, whether in liquidation, reorganization, receivership, bankruptcy, or otherwise;
(viii) release Tenant or any other person for all or any part of the Guarantied Obligations; or
(ix) assign the Guarantied Obligation or any rights related thereto in whole or in part.
4. Tenant's Financial Condition.
4.1 The Guarantor acknowledges that the Guarantor is relying upon the Guarantor's
own knowledge and is fully informed with respect to Tenant's financial condition. The
Guarantor assumes full responsibility for keeping fully informed of the financial condition of
Tenant and all other circumstances affecting Tenant's ability to perform its obligations to
Landlord, and agrees that Landlord will have no duty to report to the Guarantor any information
that Landlord receives about Tenant's ability to perform all or any portion of the Guarantied
Obligations regardless of whether Landlord has reason to believe that any such facts materially
increase the risk beyond that which the Guarantor intends to assume or has reason to believe that
such facts are unknown to the Guarantor or has reasonable opportunity to communicate such
facts to the Guarantor.
5. Exercise of Subrogation Rights; Subordination.
5.1 The Guarantor agrees that (i) the Guarantor shall have no right of subrogation,
reimbursement or indemnity against Tenant or against any collateral for the Guarantied
Obligations unless and until all Guarantied Obligations have been paid and performed in full;
(ii) the Guarantor shall have no right of contribution against any other guarantor or person unless
and until all Guarantied Obligations have been paid and performed in full; and (iii) until the
Guarantor is permitted by the terms of this Section to exercise any such right of subrogation,
reimbursement, indemnity or contribution, the Guarantor hereby waives all rights of subrogation,
reimbursement, indemnity and contribution and any right to enforce any remedy that the
Guarantor might have against Tenant or any other guarantor or person, or to participate in any
security held by Landlord with respect to the Guarantied Obligations, by reason of performance
by the Guarantor under this Guaranty, including, without limitation, any such right or any other
right set forth in Sections 2845, 2848, or 2849 of the California Civil Code.
5.2 Whether or not any or all of the foregoing waivers of rights in respect of
subrogation, reimbursement, indemnity and contribution are held to be unenforceable: (i) all
existing and future obligations of Tenant to the Guarantor (including, without limitation, any
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obligations ansmg by reason of any payment by the Guarantor hereunder) are hereby
subordinated to the full and indefeasible payment and performance of the Guarantied
Obligations, and, without the prior written consent of Landlord, such obligations shall not be
paid, in whole or in part, nor will the Guarantor accept any payment of or on account of any such
obligations; provided, however, that, if Landlord so requests, the Guarantor shall enforce and/or
collect such obligations, subject to the following clause (ii); (ii) each payment by Tenant,
whether received in violation of this Guaranty or pursuant to the request of the Guarantor,
Guarantor shall cause the same to be paid to Landlord, immediately upon demand by Landlord,
on account of the Guarantied Obligations; and (iii) no such payment under clause (ii) shall
reduce or affect in any manner the liability of the Guarantor under this Guaranty.
6. Impairment of Subrogation and Other Rights/Other Waivers.
6.1 Upon the occurrence of any default under the Lease or the Guarantied Obligations
or by the Guarantor hereunder (but without limiting Landlord's right to resort to any other
remedy it may have in respect hereof, under the Lease, with respect to the Guarantied
Obligations, this Guaranty or otherwise), Landlord may elect to foreclose non-judicially or
judicially against any real or personal property security it holds for the Guarantied Obligations or
any part thereof, or exercise any other remedy against Tenant, any other guarantor or person or
against any security. No such action by Landlord shall release or limit the liability of the
guarantor, even if the effect of that action is to deprive the Guarantor, or any other person or
guarantor, of the right or ability to collect reimbursement by means of any security held by
Landlord for the Guarantied Obligations.
6.2 Guarantor waives all rights and defenses that the Guarantor may have because the
Guarantied Obligations are or may be secured by real property. This means, among other things:
(i) Landlord may collect from the Guarantor without first foreclosing on any real or personal
property collateral pledged by Tenant or otherwise; and (ii) if Landlord forecloses on any real
property collateral (a) the amount of the Guarantied Obligations may be reduced only by the
price for which that collateral was sold at the foreclosure sale, even if the collateral is worth
more than the sale price; and (b) Landlord may collect from Guarantor even if Landlord, by
foreclosing on the real property collateral, has destroyed any right the Guarantor may have to
collect from Tenant or other person. This is an unconditional and irrevocable waiver of any
rights and defenses by real property. These rights and defenses include, but are not limited to,
any rights or defenses based upon Section 580a, 580b, 580d, or 726 of the California Code of
Civil Procedure.
6.3 Guarantor waives all rights and defenses arising out of an election of remedies by
Landlord, even though that election of remedies, such as nonjudicial foreclosure with respect to
security for Guarantied Obligations, has destroyed Guarantor's rights of subrogation and/or
reimbursement against Tenant or other person by the operation of Section 580d of the California
Code of Civil Procedure or otherwise.
6.4 Guarantor waives all rights and defenses arising out of the operation of Section
580a of the California Code of Civil Procedure, and further waives its right to a fair value
hearing under such Section 580a to determine the size of a deficiency judgment following any
foreclosure sale on encumbered real property.
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6.5 No provtston or waiver in this Guaranty shall be construed as limiting the
generality of any other waiver contained in this Guaranty.
7. Bankruptcy.
7.1 So long as any Guarantied Obligation shall be owing to Landlord, the Guarantor
shall not, without prior written consent of Landlord, commence, or join with any other person in
commencing, any bankruptcy, reorganization, or insolvency proceeding against Tenant. The
obligations of the Guarantor under this Guaranty shall not be altered, limited, or affected by any
proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership,
reorganization, liquidation, or arrangement of Tenant, or by any defense Tenant may have by
reason of any order, decree, or decision of any court or administrative body resulting from any
such proceeding. In furtherance of the foregoing, the Guarantor agrees that if acceleration of the
time for payment of any amount payable by Tenant under the Lease or in respect of the other
Guarantied Obligations is stayed for any reason, all such amounts otherwise subject to
acceleration shall nonetheless be payable by the Guarantor hereunder forthwith upon demand.
7.2 The Guarantor shall file in any bankruptcy or other proceeding in which the filing
of claims is required or permitted by law claims that the Guarantor may have against Tenant
relating to any indebtedness of Tenant to the Guarantor, and will assign to Landlord all rights of
the Guarantor thereunder. If the Guarantor does not file any such claim, then to the extent
allowed by law Landlord, as attorney-in-fact for the Guarantor, is hereby authorized to do so in
the name of the Guarantor or, in Landlord's discretion, to assign the claim to a nominee, and to
cause such proof of claim to be filed in the name of Landlord's nominee. The foregoing power
of attorney is coupled with an interest and is irrevocable until after the indefeasible payment and
performance in full of all of the Guarantied Obligations. Landlord, or its nominee, shall have the
sole right at its election to accept or reject any plan proposed in such proceedings and to take any
other action that a party filing a claim is entitled to do. In all such cases, whether in
administration, bankruptcy, or otherwise, the person or persons authorized to pay such claim
shall pay to Landlord all of the Guarantor's rights to any such payments or distributions to which
the Guarantor would otherwise be entitled; provided, however, that the Guarantor's obligations
hereunder shall not be satisfied except to the extent that Landlord receives cash by reason of any
such payment or distribution. If Landlord receives anything hereunder other than cash, the same
shall be held as collateral for amounts due under this Guaranty.
8. Continuance of Guaranty.
8.1 The liability of the Guarantor hereunder shall be reinstated and continued in
effect, and the rights of Landlord shall continue, with respect to any payment or performance of
the Guarantied Obligations that Landlord shall be required to restore or return or is avoided in
connection with the bankruptcy, insolvency, or reorganization of Tenant of the Guarantor, or
otherwise, all as though such payment or performance has not occurred. The determination as to
whether any such payment or performance must be restored or returned shall be made by
Landlord in its sole discretion; provided, however, that if Landlord chooses to contest any such
matter, the Guarantor agrees to indemnify, defend and hold harmless Landlord from all costs and
expenses (including, without limitation, reasonable legal fees and disbursements) of such
litigation. Landlord shall be under no obligation to return or deliver this Guaranty to the
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Guarantor, notwithstanding the payment of the Guarantied Obligations. If this Guaranty is
nevertheless returned to the Guarantor or is otherwise released, then the provisions of this
Section 8 and the Guaranty shall survive such return or release, and the liability of the Guarantor
under this Guaranty shall be reinstated and continued under the circumstances provided herein
notwithstanding such return or release.
9. Representations and Warranties.
9.1 The Guarantor represents and warrants as of the date of this Guaranty that:
9.1.1 it has all requisite power and authority to execute, deliver, and be legally
bound by this Guaranty on the terms and conditions herein stated and to transact any other
business with Landlord as necessary to fulfill the terms of this Guaranty;
9.1.2 this Guaranty has been duly authorized, executed, delivered and no
consent, approval or authorization or any person not heretofore obtained is required in
connection with the valid execution, delivery or performance by the Guarantor of this Guaranty
and the obligations hereunder;
9.1.3 the execution, performance and delivery by the Guarantor of this
Guaranty: (i) to Guarantor's knowledge do not and will not violate any provision of any material
law, rule, or regulation or any order, judgment, writ, injunction, demand or decree of any court or
agency of government, or any indenture, agreement or other instrument to which the Guarantor is
a party or by which the Guarantor or its property is bound; (ii) do not and will not result in a
breach of or constitute (with notice and/or lapse of time) a default or breach under any
agreement, note, contract, lease, or other instrument to which the Guarantor is a party or by
which it or its properties may be bound of affected; and (iii) do not and will not result in the
creation or imposition of any lien, charge or encumbrance of any nature whatsoever under any
agreement, mortgage, deed of trust, lease, loan agreement, security agreement, partnership
agreement, corporate charter, bylaws or other document, agreement or instrument to which the
Guarantor is a party or by which it or its property or assets may be bound or affected;
9.1.4 this Guaranty has been duly executed by the Guarantor and constitutes the
legal, valid and binding obligation of the Guarantor, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency, and other similar
laws affecting creditors' rights generally;
9.1.5 all reports, financial statements, papers and written data and information
given to Landlord by the Guarantor with respect to the Guarantor, the Guarantied Obligations or
otherwise relating thereto are accurate and correct in all materials respects and complete insofar
as completeness may be necessary to give Landlord a true and accurate knowledge of the subject
matter;
9.1.6 to the best of its knowledge, the Guarantor is not in default in the
performance, observance or fulfillment of any of the obligations, covenants or conditions set
forth in any material agreement or instrument to which the Guarantor is the party;
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9.1.7 there is not now pending against the Guarantor, nor to the knowledge of
the Guarantor is there threatened, any action, suit or proceeding at law or in equity or by or
before any administrative agencies which, if adversely determined, will materially impair or
affect the financial conditions or operations of the Guarantor; and the Guarantor to its knowledge
is not in default with respect to any order, writ, injunction, decree or demand of any court or any
governmental authority;
9.1.8 it has filed all federal, state, provincial, county, municipal and other
income tax returns required to have been filed by the Guarantor other than those which would
not have a material adverse effect and has paid all taxes that have become due pursuant to such
returns or pursuant to any assessments received by the Guarantor, and the Guarantor does not
know of any basis for any material additional assessment against it in respect of such taxes;
9.1.9 no bankruptcy or insolvency proceedings are pending or to the best of the
Guarantor's knowledge contemplated or threatened by or against the Guarantor;
9.1.1 0 it is not insolvent, and will not be rendered insolvent by the incurring of its
obligations hereunder; the Guarantor is not engaged, and is not about to engage, in a business or
transaction for which the Guarantor's assets are unreasonably small in relation thereto; the
Guarantor does not intend to incur, and does not believe that the Guarantor has incurred or will
incur, debts beyond the Guarantor's ability to pay as they mature; and the value of the
consideration received and to be received by the Guarantor in connection with the Guarantied
Obligations and this Guaranty is reasonably worth at least as much as the liability and
obligations of the Guarantor incurred or arising under this Guaranty;
9.1.11 it has had full and complete access to the Lease and other documents
relating to the Guarantied Obligations, has reviewed them and is fully aware of the meaning and
the effect of their contents; it is fully informed of all circumstances which bear upon the risks of
executing this Guaranty of which a diligent inquiry would reveal; it has adequate means to obtain
from Tenant on a continuing basis information concerning Tenant's financial condition, and is
not depending on Landlord to provide such information, now or in the future; and agrees that
Landlord shall not have any obligation to advise or notify the Guarantor or to provide the
Guarantor with any data or information; and
9 .1.12 it has all requisite power and authority to transact any other business with
Landlord as necessary to fulfill the terms of this Guaranty.
10. Costs and Expenses.
10.1 The Guarantor agrees to pay, upon Landlord's demand, Landlord's reasonable
out-of-pocket costs and expenses, including (but not limited to) reasonable legal fees and
disbursements and expert witness's fees and disbursements, incurred in connection with (i) any
effort to collect or enforce any of the Guarantied Obligations or this Guaranty (including the
defense of any claims or counterclaims asserted against Landlord arising out of this Guaranty or
the transactions contemplated hereby), (ii) the Guarantor's failure to perform or observe any of
the provisions hereof, and (iii) the representation of Landlord in any insolvency, bankruptcy,
receivership, reorganization or similar proceeding relating to Tenant, the Guarantor, or any
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security for the Guarantied Obligations. Until paid to Landlord, such sums shall bear interest
from the date incurred at the applicable rate of interest set forth in the Lease for past due
obligations. The obligations of the Guarantor under this Section 10 shall include payment of
Landlord's costs and expenses of enforcing any judgments.
11. Lien: Rights of Setoff.
11.1 In addition to all liens upon, and rights of setoff against, the monies, securities or
other property of the Guarantor given to Landlord by law, the Guarantor hereby grants to
Landlord a security interest in, all monies, securities and other property of the Guarantor now or
hereafter in the possession of Landlord, as security for the obligations of the Guarantor
hereunder; and every such lien and right of setoff may be exercise without demand upon or
notice to the Guarantor. No lien or right of setoff shall be deemed to have been waived by any
act or conduct on the part of Landlord, or by any neglect to exercise such right of setoff or to
enforce such lien, or by any delay in doing so; and every right of setoff and lien shall continue in
full force and effect until such right of setoff or lien is specifically waived or released by an
instrument in writing executed by Landlord.
12. Miscellaneous.
12.1 Notice. All notices, demands and other communications with, to, from or upon
the Guarantor and Landlord required or permitted hereunder shall be in writing, addressed to the
parties at their respective addresses as set forth on the signature page hereto, or, as to each party,
at such other address as shall be designated by such party in a written notice to the other parties
complying as to delivery with the terms of this Section 12.1. All such communications shall be
deemed effective upon the earliest of (i) actual delivery if delivered by personal delivery, (ii)
three (3) days following deposit, first class postage prepaid, with the United States mail, (iii)
upon the earliest to occur, if sent by certified postage prepaid mail, of three (3) days following
deposit thereof in the United States mail or receipt (or refusal to accept delivery), or (iv) on the
next business day after timely and proper deposit with an overnight air courier with request for
next business day delivery.
12.2 Agreement Binding. This Guaranty shall be binding upon the Guarantor and the
Guarantor's heirs, executors, personal representatives, successors, assigns, and shall inure to the
benefit of, and be enforceable by, Landlord and Landlord's successors and assigns. The term
"Tenant" means both the named Tenant and any other person at any time assuming or otherwise
becoming primarily liable for all or any part of the Guarantied Obligations. The terms
"Landlord" means both Landlord names herein or any future owner or holder of the Lease, or
any interest therein.
12.3 Severability. If any provision of this Guaranty shall be deemed or held to be
invalid or unenforceable for any reason, such provision shall be adjusted, if possible, rather than
voided, so as to achieve the intent of the parties to the fullest extent possible. In any event such
provision shall be severable from, and shall not be construed to have any effect on, the remaining
provisions of this Guaranty, which shall continue in full force and effect.
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12.4 Multiple Obligors. If "Guarantor" refers to more than one person, then (i) the
obligations of each such person shall be joint and several; (ii) all references to the "Guarantor"
herein shall, unless the context otherwise requires, refer to all such parties jointly and severally;
and (iii) each such person hereby waives any and all defenses based upon suretyship or guaranty
or impairment of collateral, including, without limitation, all rights or defenses that are or may
become available under California Civil Code Section 2787 to and including 2855, 2899 and
3433. If the Guarantor is a partnership, such Guarantor and all general partners therein shall be
jointly and severally liable hereunder. Any married person who executes this Guaranty agrees
that recourse may be had against his or her separate and community property. Where the
"Tenant" is more than one person, the word "Tenant" shall mean all and any one or more of
them.
12.5 Governing Law; Jurisdiction. This Guaranty and the obligations hereunder shall
be governed by and construed in accordance with the laws of the State of California applicable to
contracts, between residents thereof, made and to be wholly performed within the State of
California. The Guarantor hereby irrevocably consents to the non-exclusive jurisdiction of the
Courts of the State of California and of any Federal Court located in such State in connection
with any action or proceeding arising out of or relating to this Guaranty.
12.6 Assignment by Landlord. This Guaranty shall be assignable by Landlord to any
assignee of all or any portion of Landlord's rights with respect to the Guarantied Obligations.
12.7 Interpretation. This Guaranty shall be construed without regard to whether it was
prepared or drafted by one party or of the other or either of their attorneys. As used herein: (i)
the terms "include," "including" or form thereof are not exclusive; (ii) the term "day" means
calendar day, except as otherwise expressly provided; (iii) the term "person" means any
individual, corporation, partnership, limited liability company, trust, governmental entity, or any
other entity of any kind; (iv) singular words shall connote the plural as well as the singular and
vice versa, as the context requires; and (v) each gender includes any other gender. Time is of the
essence in the performance of this Guaranty.
12.8 Rights Cumulative; No Waiver. Landlord's options, powers, rights, privileges,
and immunities specified herein or arising hereunder are in addition to, and not exclusive of,
those otherwise created or existing now or at any time, whether by contract, by statute, or by rule
of law. Landlord shall not, by any act, delay, omission or otherwise, be deemed to have
modified, discharged, or waived any of Landlord's options, powers, rights or provisions in
respect of this Guaranty, and no modification, discharge, or waiver of any such option, power,
right or provision of this Guaranty shall be valid unless set forth in writing signed by Landlord,
and then only to the extent therein set forth. A waiver by Landlord of any right, remedy or
provision hereunder on any one occasion shall be effective only in the specific instance and for
the specific purpose for which given, and shall not be construed as a bar to any right or remedy
that Landlord would otherwise have on any other occasion.
12.9 Default. The occurrence of any one of the following events shall, at the election
of Landlord, be deemed an event of default by the Guarantor under this Guaranty: (i) the
Guarantor shall fail to perform, keep or observe any term, provision, condition or covenant
contained in this Guaranty within thirty (30) days following receipt of Landlord's written notice
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thereof, however if Guarantor is not able through the use of commercially reasonable efforts to
cure such failure within such thirty (30) day period, then such failure shall not be deemed to be
an event of default hereunder if Guarantor commences to cure such failure within such initial
thirty (30) day period and thereafter diligently pursues such cure to completion within an
additional thirty (30) day period following the expiration of the initial thirty (30) day period; (ii)
the commencement of any liquidation, reorganization, receivership, bankruptcy, assignment for
the benefit of creditors or other similar proceeding by or against Tenant or Guarantor-unless
Guarantor is replaced with a new guarantor acceptable to Landlord in its sole discretion within
forty-five (45) days thereafter; (iii) if any representation or warranty made in this Guaranty shall
be or become false in any material respect; (iv) the occurrence of an Event of Default under the
Lease with respect to any of the Guarantied Obligations; (v) the death, or legal incapacity of the
Guarantor; or (vi) the Guarantor revokes or attempts to revoke this Guaranty. Upon the
occurrence of an event of default, the Guarantor's obligations hereunder shall, at the option of
Landlord, be enforceable against the Guarantor as such Guarantied Obligations become due and
payable and Landlord may, in its sole discretion, in addition to any other right or remedy
provided by law, all of which are cumulative and non-exclusive, proceed to suit against the
Guarantor, whether suit has been commenced against Tenant.
12.10 Headings. All headings in this Guaranty are for convenience and reference only
and do not define or limit the scope of the provisions of this Guaranty.
12.11 Entire Agreement. This Guaranty contains the entire agreement between the
Guarantor and Landlord with respect to its subject matter, and supercedes all prior
communications relating thereto, including, without limitation, all oral statements or
representations. No supplement to or modification of this Guaranty or its provisions shall be
binding unless executed in writing by the Guarantor and Landlord.
12.12 Waiver of Rights of Trial by Jury. EACH OF THE GUARANTOR AND
LANDLORD (BY ITS ACCEPTANCE HEREOF) HEREBY VOLUNTARILY,
KNOWINGLY, INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE
ANY RIGHT TO HAVE A JURY PARTICIPATE (INCLUDING BY WAY OF JURY TRIAL)
IN RESOLVING ANY DISPUTE OR LITIGATION (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG THE GUARANTOR AND
LANDLORD ARISING OUT OF OR RELATED TO THIS GUARANTY, OR THE
GUARANTIED OBLIGATIONS OR ACTIONS OF THE GUARANTOR OR LANDLORD
RELATING TO THIS GUARANTY AND/OR THE LEASE WHICH IS THE SUBJECT OF
THE GUARANTIED OBLIGATIONS. THIS PROVISION AND THE WAIVERS SET
FORTH HEREIN ARE MATERIAL INDUCEMENTS TO LANDLORD TO ENTER INTO
THE LEASE AND WITH RESPECT TO THE GUARANTIED OBLIGATIONS.
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[Signature Page Follows]
EXHIBIT "F"
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IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of the date first
written above.
GUARANTOR:
GRAND PACIFIC CARLSBAD, L.P., a California limited partnership
By: Grand Pacific Development, Inc.,
a California corporation, its general partner
By: __________________ _
Timothy J. Stripe, Co-President
By: __________________ __
DavidS. Brown, Co-President
LANDLORD'S ADDRESS FOR NOTICE:
The Carlsbad Public Financing Authority
1200 Carlsbad Village Dr.
Carlsbad, CA 93008
Attn: City Manager
With a copy to:
Michael E. Lyon, Esq.
Procopio, Cory, Hargreaves & Savitch LLP
12544 High Bluff Drive, Suite 300
San Diego, CA 92130
GUARANTOR'S ADDRESS FOR NOTICE:
Grand Pacific Carlsbad, L.P.
5900 Pasteur Court, Suite 200
Carlsbad, CA 92008
Facsimile: (760) 828-4239
Email: tstripe@gpresorts.com and dbrown@gpresorts.com
Attn: Legal Department
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EXHIBIT "G"
LEGAL DESCRIPTION OF ADJACENT HOTEL PROPERTY
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF SAN
DIEGO, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:PARCEL A OF
THAT CERTAIN CERTIFICATE OF COMPLIANCE FOR ADJUSTMENT PLAT (ADJ
___ ___,RECORDED DECEMBER , 2016, AS DOCUMENT NO. 2016-
-------OF OFFICIAL RECORDS OF SAN DIEGO COUNTY, BEING MORE
PARTICULARLY DESCRIBED AS FOLLOWS:
ALL OF PARCEL 1 OF ADJ 15-02, CERTIFICATE OF COMPLIANCE FOR ADJUSTMENT
PLAT, RECORDED ON NOVEMBER 19, 2015 AS DOCUMENT NO. 2015-0601382 AND A
PORTION OF PARCEL A OF ADJ 12-02, CERTIFICATE OF COMPLIANCE FOR
ADJUSTMENT PLAT, RECORDED ON APRIL 2, 2012 AS DOCUMENT NO. 2012-0187408,
BOTH RECORDED IN THE OFFICE OF THE COUNTY RECORDER, COUNTY OF SAN
DIEGO, STATE OF CALIFORNIA, BEING MORE PARTICULARLY DESCRIBED AS
FOLLOWS:
BEGINNING AT THE MOST NORTHERLY CORNER OF SAID PARCEL 1; THENCE
SOUTH 36° 02' 20" EAST, A DISTANCE OF 65.81 FEET; THENCE SOUTH 88° 02' 53"
EAST, A DISTANCE OF 79.30 FEET; THENCE SOUTH 63° 51' 08" EAST, A DISTANCE
OF 96.38 FEET; THENCE SOUTH 11° 56' 19" EAST, A DISTANCE OF 96.12 FEET;
THENCE SOUTH 00° 02' 37" WEST, A DISTANCE OF 142.42 FEET; THENCE SOUTH 14°
42' 30" EAST, A DISTANCE OF 128.67 FEET; THENCE SOUTH 03° 24' 48" WEST, A
DISTANCE OF 27.80 FEET; THENCE NORTH 79° 58' 33" WEST, A DISTANCE OF 91.62
FEET; THENCE SOUTH 58° 37' 29" WEST, A DISTANCE OF 114.57 FEET; THENCE
SOUTH 31° 22' 31" EAST, A DISTANCE OF 16.75 FEET; THENCE SOUTH 58° 37' 29"
WEST, A DISTANCE OF 176.70 FEET TO A POINT ON A NON-TANGENT 353.00 FOOT
RADIUS CURVE, CONCAVE NORTHEASTERLY, A RADIAL TO SAID POINT BEARS
SOUTH 60° 34' 17" WEST; THENCE NORTHWESTERLY ALONG THE ARC OF SAID
CURVE THROUGH A CENTRAL ANGLE OF 04° 10' 38", AN ARC LENGTH OF 25.74
FEET TO THE BEGINNING OF A 522.00 FOOT RADIUS REVERSE CURVE, CONCAVE
SOUTHWESTERLY, A RADIAL TO SAID POINT BEARS NORTH 64° 44' 55" EAST;
THENCE NORTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A
CENTRAL ANGLE OF 31° 30' 30", AN ARC LENGTH OF 287.06 FEET TO THE
BEGINNING OF A 358.00 FOOT RADIUS REVERSE CURVE, CONCAVE
NORTHEASTERLY, A RADIAL TO SAID POINT BEARS SOUTH 33° 14' 25" EAST;
THENCE NORTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A
CENTRAL ANGLE OF 33° 23' 30", AN ARC LENGTH OF 208.64 FEET; THENCE NORTH
23° 22' 05" WEST, A DISTANCE OF 32.96 FEET; THENCE NORTH 14° 56' 33" EAST, A
DISTANCE OF 34.93 FEET; THENCE NORTH 34° 44' 54" WEST, A DISTANCE OF 1.93
FEET; THENCE NORTH 66 o 37' 55" EAST, A DISTANCE OF 446.92 FEET TO THE POINT
OF BEGINNING.
APN 211-131-16
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EXHIBIT "G"
-1-
PARCEL B OF THAT CERTAIN CERTIFICATE OF COMPLIANCE FOR ADJUSTMENT
PLAT (ADJ RECORDED DECEMBER , 2016, AS DOCUMENT
NO. 2016-OF OFFICIAL RECORDS OF SAN DIEGO COUNTY,
BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
A PORTION OF PARCEL A OF A.DJ 12-02, CERTIFICATE OF COMPLIANCE FOR
ADJUSTMENT PLAT, RECORDED ON APRIL 2, 2012 AS DOCUMENT NO.
2012-.0187408, RECORDED IN THE OFFICE OF THE COUNTY RECORDER, COUNTY
OF SAN DIEGO, STATE OF CALIFORNIA, BEING MORE PARTICULARLY DESCRIBED
AS FOLLOWS:
BEGINNING AT THE MOST SOUTHERLY CORNER OF SAID PARCEL A; THENCE
NORTH 10° 08' 50" WEST, A DISTANCE OF 63.54 FEET; THENCE NORTH 68° 20' 14"
WEST, A DISTANCE OF 99.46 FEET; THENCE SOUTH 90° 00' 00" WEST, A DISTANCE
OF 140.00 FEET TO A POINT ON A NON-TANGENT 30.00 FOOT RADIUS CURVE,
CONCAVE EASTERLY, A RADIAL TO SAID POINT BEARS SOUTH 71 o 25' 52" WEST;
THENCE NORTHERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL
ANGLE OF 31° 39' 06", AN ARC LENGTH OF 16.57 FEET; THENCE NORTH 13° 04' 58"
EAST, A DISTANCE OF 17.33 FEET TO THE BEGINNING OF A 19.00 FOOT RADIUS
CURVE, CONCAVE WESTERLY; THENCE NORTHERLY ALONG THE ARC OF SAID
CURVE THROUGH A CENTRAL ANGLE OF 36° 36' 21 ", AN ARC LENGTH OF 12.14
FEET; THENCE NORTH 23° 31' 23" WEST, A DISTANCE OF 251.65 FEET TO THE
BEGINNING OF A 373.00 FOOT RADIUS CURVE, CONCAVE EASTERLY; THENCE
NORTHERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF
15° 04' 59", AN ARC LENGTH OF 98.19 FEET; THENCE NORTH 08° 26' 24" WEST, A
DISTANCE OF 167.48 FEET TO THE BEGINNING OF A 410.00 FOOT RADIUS CURVE,
CONCAVE SOUTHWESTERLY; THENCE NORTHWESTERLY ALONG THE ARC OF
SAID CURVE THROUGH A CENTRAL ANGLE OF 48° 48' 15", AN ARC LENGTH OF
349.24 FEET TO THE BEGINNING OF A 353.00 FOOT RADIUS REVERSE CURVE,
CONCAVE NORTHEASTERLY, A RADIAL TO SAID POINT BEARS SOUTH 32° 45' 21"
WEST; THENCE NORTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A
CENTRAL ANGLE OF 27° 48' 56", AN ARC LENGTH OF 171.37 FEET; THENCE NORTH
58° 37' 29" EAST, A DISTANCE OF 176.70 FEET; THENCE NORTH 31° 22' 31" WEST, A
DISTANCE OF 16.75 FEET; THENCE NORTH 58° 37' 29" EAST, A DISTANCE OF 114.57
FEET; THENCE SOUTH 79° 58' 33" EAST, A DISTANCE OF 91.62 FEET; THENCE
SOUTH 03° 24' 48" WEST, A DISTANCE OF 57.39 FEET; THENCE SOUTH 31° 23' 04"
EAST, A DISTANCE OF 176.86 FEET; THENCE SOUTH 36° 41' 28" EAST, A DISTANCE
OF 85.59 FEET; THENCE SOUTH 72° 17' 24" EAST, A DISTANCE OF 202.23 FEET;
THENCE SOUTH 26° 30' 12" EAST, A DISTANCE OF 272.68 FEET; THENCE SOUTH 00°
03' 41" WEST, A DISTANCE OF 283.64 FEET; THENCE NORTH 89° 56' 19" WEST, A
DISTANCE OF 120.00 FEET; THENCE SOUTH 00° 03' 41" WEST, A DISTANCE OF 160.04
FEET; THENCE SOUTH 89° 56'19" EAST, A DISTANCE OF 120.00 FEET; THENCE
SOUTH 00° 03' 41" WEST, A DISTANCE OF 110.04 FEET; THENCE SOUTH 50° 54' 01"
WEST, A DISTANCE OF 73.43 FEET TO A POINT ON A NON-TANGENT 317.00 FOOT
RADIUS CURVE, CONCAVE SOUTHERLY, A RADIAL LINE TO SAID POINT BEARS
NORTH 14° 27' 53" WEST; THENCE SOUTHWESTERLY ALONG THE ARC OF SAID
DOCS 121163-000001/2703979.11
EXHIBIT"G"
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CURVE THROUGH A CENTRAL ANGLE OF 06° 15' 49", AN ARC LENGTH OF 34.65
FEET TO THE POINT OF BEGINNING.
APN 211-130-10
LOT 11 OF CITY OF CARLSBAD TRACT NO. 03-02 CARLSBAD RANCH HOTEL AND
TIMESHARE CONDOMINIUM, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO
OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 15332, FILED IN THE OFFICE
OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, MAY 3, 2006.
APN 211-130-04
DOCS 121163-000001/2703979.11
EXHIBIT "G"
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EXHIBITH
WORK LETTER
1. Tenant acknowledges and agrees that in order to construct the Hotel Addition,
Tenant is to obtain all necessary developmental plan approvals, entitlements and permits, as well
as comply with all zoning and environmental laws as required by the City of Carlsbad and the
Carlsbad Public Finance Authority and other applicable governmental authorities with
jurisdiction over the development of the Premises. Terms with capitalized initial letters used
herein without definition have the meanings given them in that certain Ground Lease between
the Carlsbad Public Financing Authority, a joint powers authority formed by the City of Carlsbad
and the Carlsbad Municipal Water District, and Grand Pacific Carlsbad Hotel, L.P ., a Delaware
limited partnership ("Lease") to which this Exhibit "H" is made a part.
2. Tenant shall, at Tenant's sole cost and expense, cause construction of the Hotel
Addition on the Premises in accordance with the Lease, including this Work Letter, and the plans
and specifications, including elevations and proposed landscape plans previously approved by
the City of Carlsbad in connection with the issuance of a building permit for the Hotel Addition
(the "Approved Plans"). All of Tenant's signage during construction shall be subject to all
applicable ordinances of the City of Carlsbad and any other relevant governmental authority with
jurisdiction over the Premises. The Approved Plans shall be prepared by a licensed architect or
engineer.
3. No structure or other improvement of any kind shall be erected or maintained on
the Premises, other than the Hotel Addition as shown in the Approved Plans, unless and until the
plans, specifications, elevations and proposed locations of such all structures and improvements
have been approved by the· City of Carlsbad and any other applicable governmental authorities
with jurisdiction over the development of the Premises. Review and approval of the plans for the
Hotel Addition shall create no liability or responsibility on the part of the City of Carlsbad, the
Carlsbad Municipal Water District or any other relevant reviewing entity for the completeness of
such plans or their design sufficiency.
4. Tenant's construction requirements and fees shall include any and all fees
required to obtain construction entitlements and complete the Hotel Addition, including all
excavation, grading, paving, landscaping, signage, utility connections, and the cost of bringing
utility connections to the Premises. Landlord, the City of Carlsbad or the Carlsbad Municipal
Water District shall not be responsible for any costs associated with Tenant's construction of the
Hotel Addition except as may be otherwise provided in the Lease.
5. Prior to commencement of construction, Tenant shall perform or cause to be
performed the survey work required under the Archeological Data Recovery Plan. Except as
permitted under the Option Agreement, no work of any kind shall be commenced and no
building or other material shall be delivered for the Hotel Addition, nor shall any other building
or land development work or work the required under the Archeological Data Recovery Plan be
commenced or building materials be delivered on the Premises until after the Commencement
Date and at least ten (1 0) days shall have passed since Tenant has delivered a written notice to
DOCS 121163-000001/2703979.11
EXHIBIT "H"
-1-
Landlord of the commencement of such work or the delivery of such materials. Landlord shall,
at any and all times during the term of the Lease, have the right to post and maintain on the
Premises and to record as required by law, any notice or notices of non-responsibility provided
for by the mechanics' lien law of the State of California. The work prohibited by this Section
until the Commencement Date and prior written notice of work commencement has been given
to Landlord includes, in addition to any actual construction work, any site preparation work,
installation of utilities, street construction or improvements work, or any grading or filling of the
Premises. All work required in the construction of the Hotel Addition, including any site
preparation work, landscaping work, utility installation work, as well as actual construction
work, shall be performed only by competent contractors duly licensed as such under the laws of
the State of California and, if relating to work having a contract amount of over $500,000,
approved by Landlord, which approval shall not be unreasonably withheld, conditioned or
delayed.
6. All work performed on the Premises shall be in accordance with all valid laws,
ordinances, regulations and orders of all federal, state, county or local governmental agencies or
entities having jurisdiction over the Premises. All work performed on the Premises shall be done
in a good, workmanlike and lien-free manner and only with new materials of good quality and
standards. The Project shall be constructed in conformance in all material respects with the
Approved Plans and other requirements set forth in the Lease and this Work Letter.
7. Tenant shall cause Substantial Completion (as defined below) of the Hotel
Addition by the Hotel Addition Outside Completion Date and Substantial Completion of the
Additional Sheraton Building by the Additional Sheraton Building Outside Completion Date.
Subject to the notice and cure rights of Tenant under the Lease and the terms of Exhibit "D" to
the Lease, if Substantial Completion of the Hotel Addition does not occur by the Hotel Addition
Outside Completion Date or if Substantial Completion of the Additional Sheraton Building does
not occur by the Additional Sheraton Building Outside Completion Date, then Landlord may
exercise its rights and remedies under the Lease, including, without limitation, termination of the
Lease and Tenant's right to possession of the Premises; provided, however, subject to Section 3
of the Lease, so long as (i)Tenant has used and is continuing to use diligent efforts to achieve
Substantial Completion of the Hotel Addition and the Additional Sheraton Building, (ii) there is
no existing Event of Default under the Lease, (iii) the existing Sheraton Carlsbad Resort & Spa is
open and operating with at least two hundred fifty (250) hotel rooms less the number of hotel
rooms being renovated from time to time, and (iv) Landlord has not received a notice of default
(following any applicable cure periods) under any existing loan secured by a Leasehold
Mortgage, the only consequence of not having the Hotel Addition Substantially Completed by
the Hotel Addition Outside Completion Date or of not having the Additional Sheraton Building
Substantially Completed by the Additional Sheraton Building Outside Completion Date, shall be
the commencement of Rent upon the Hotel Addition Outside Completion Date (and Landlord
may draw from the Deposit for the payment of such Rent). The term "Substantial Completion"
means the point in time when a certificate of occupancy (or the functional equivalent) is issued
and a valid notice of completion is recorded. Without limiting the foregoing, Substantial
Completion of the Hotel Addition and Substantial Completion of the Additional Sheraton
Building shall not be deemed to have occurred unless and until with respect to Substantial
Completion of the Hotel Addition, the Hotel Addition is open for business to the general public
as a Westin branded hotel and, with respect to Substantial Completion of the Additional Sheraton
DOCS 121163-00000112703979.11
EXIDBIT "H"
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Building, the Additional Sheraton Building is open for business to the general public as a
Sheraton branded hotel. If construction of the Project is delayed due to force majeure as provided
in Section 21 of the Lease, Tenant will use commercially reasonable efforts to resume
construction as promptly as practicable following such delay.
8. Subject to the limitations set forth in Section 8 above, all remedies of Landlord
provided for herein are not exclusive; they are cumulative and in addition to any and all rights
and remedies provided in the Lease or allowed by law or in equity. The exercise of any right or
remedy by Landlord hereunder shall not in any way constitute a cure or waiver of default
hereunder or under the Lease or invalidate any act done pursuant to any notice of default or
prejudice Landlord in the exercise of any of its rights hereunder or under the Lease.
DOCS 121163-000001/2703979.11
EXillBIT "H"
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