Loading...
HomeMy WebLinkAbout12-02-2015 SLO Chinatown, LLC and Hotel SLO, LLC - Deposit-Reimbursement AgreementDEPOSIT /REIMBURSEMENT AGREEMENT This Deposit /Reimbursement Agreement ( "Agreement ") is made on this day of e -,qce _ 2015 by and between the City of San Luis Obispo, a municipal corporation and Charter City ( "City "), SLO Chinatown, LLC, a California limited liability company (the "Copelands ") and Hotel SLO, LLC, a California limited liability company ( "Hotel LLC). The Copelands and Hotel LLC will sometimes be collectively referred to herein as "Developer ". RECITALS WHEREAS, Copelands and the City have entered into that certain Agreement of Purchase and Sale — Palm Development Site, dated as of December 19, 2011 (the "Palm Development PSA "), for the acquisition of certain real property from the City defined as the Palm Development Property in the Palm Development PSA. WHEREAS, the Copelands propose to assign its rights under the Palm Development PSA to Hotel LLC, and to expedite the purchase of the Palm Development Property (the "Transaction "). WHEREAS, pursuant to the terms and conditions set forth herein, the Developer has agreed to reimburse the City for its costs and expenses of legal counsel and all other reasonable costs, including staff time of the City Attorney and other city staff, related to the City's review, consideration and possible approval of a proposed amendment to the Palm Development PSA and/or the closing of the Transaction, and/or any action or proceeding related thereto, including but not limited to any litigation arising from the City's refusal to provide copies of records to which the Developer asserts trade secret or other basis for non- disclosure(hereinafter the "Scope of Work "); and, AGREEMENT NOW, THEREFORE, in consideration of the following mutual promises and agreements, City and the Developer agree as follows: 1. IncoKporation of Recitals. The above recitals are true and correct and are incorporated herein by this reference. 2. City to Retain Colil3SCI. The City may, in its sole and absolute discretion, retain, either by temporary or permanent employee(s)( "Counsel Employees ") and/or by means of a contract ( "Counsel Contract "), the services of legal staff, an attorney or law firm (hereinafter collectively "Counsel ") in order to assist the City with the Scope of Work. The City reserves the right, in its sole and absolute discretion, to amend the Scope of Work as it deems necessary and appropriate in order for City to process the Developer's request and/or close the Transaction. The City shall consult with the Developer regarding the necessity for any such amendments but such amendments shall not require the Developer consent. 3. The Developer to _ C000perate. The Developer agrees that it will instruct its agents, employees, consultants, contractors and attorneys to reasonably cooperate with City and to provide all necessary documents or information reasonably requested of them by the City.. Palm Development Reimbursement Agreement 4. City's Selection of Counsel. City acknowledges that it has selected Anne Russell, Interim Assistant City Attorney, together with the City Attorney, J. Christine Dietrick, to act as the Counsel pursuant to the terms hereof. The Developer agrees that the City may, in its sole and absolute discretion, select another attorney or law firm to replace the Counsel identified above and may do so without consulting with the Developer or obtaining the Developer's prior approval. The Developer further acknowledges and agrees that the City may need to retain additional legal counsel that are not known at this time in order to complete the Scope of Work in a timely manner. In such event, the City shall notify the Developer of the need for any additional legal counsel. If the Developer disagrees with the City's need to retain additional legal counsel, then the Developer's sole and exclusive remedy will be to terminate this Agreement pursuant to Section 10. The Developer understands that such termination will relieve the City of further obligation to review, consider and process the requested amendment to the Palm Development PSA. Notwithstanding the foregoing, even if this Agreement is terminated, the parties acknowledge that the City and Copelands shall continue to be contractually obligated by the terms of the Palm Development PSA, and that the Palm Development PSA also provides for the Copelands to reimburse the City for the legal fees incurred in connection with closing the Transaction contemplated by the Palm Development PSA. 5. Developer_ Reimbursement of Counsel Costs and Expenses. City shall deduct its cost and expenses incurred by Counsel ( "Counsel Costs ") from the deposit described in Paragraph 6 below. Unless City requests prior replenishment of the deposit under Paragraph 6(b) below, upon receipt of an invoice for the costs and expenses incurred by Counsel ( "Counsel Costs ") subject to reimbursement hereunder, the Developer shall pay the City for such Counsel Costs at closing of the Transaction, or within fifteen (15) days of its receipt thereof, whichever is sooner. 6. Deposits to be made by the Developer. a. Initial Deposit. Developer shall provide the City with an initial deposit in the amount of Ten Thousand Dollars ($10,000) by check payable to the City of San Luis Obispo at the time of execution of the Agreement. The Initial Deposit, as well as any subsequent Replenishment Deposit(s) described in Section 6(b) below (collectively the "Deposit ") may be commingled with other funds of the City. b. Replenishment Deposit(s). Subject to the provisions of this Agreement, Developer hereby agrees that whenever the amount of the Deposit declines to $5,000 or less, the City may request an additional deposit necessary to return the Deposit to an amount reasonably necessary to cover all anticipated Counsel Costs as City may determine. The Developer shall deliver such deposit to City within fifteen (15) days following such written request. c. Suspension of Work. Any work by Counsel shall be suspended if the Deposit is not timely received or replenished, or any invoice not timely paid. d. Return of Deposit. Within fifteen (15) days following the termination of this Agreement or the closing of the Transaction, whichever is sooner, the City shall return any then -2- Palm Development Reimbursement Agreement unexpended portion of the Deposit to the Developer, without interest, less any amount owed to the City by the Developer, together with an accounting as to how the funds have been expended. 7. Agreement Mot Debt or Liability of f City. It is hereby acknowledged and agreed that this Agreement is not a debt or liability of City. City shall not in any event be liable hereunder other than to return the unexpended and uncommitted portions of the Deposits and to provide an accounting as provided in Section 6.e above. City shall not be obligated to advance any of its own funds with respect to the Counsel Costs. 8. Conflicts of Interest. a. Counsel Work for City. City has sole discretion to direct the work and evaluate the performance of the Counsel and its employees assigned to undertake the Scope of Work, and City retains the absolute right to terminate or replace at any time any such person or entity. Any documents prepared hereunder or any approvals shall reflect the independent judgment of the City. Accordingly, even though the funds provided hereunder shall be utilized to retain Counsel and for administrative costs, such Counsel shall work solely for the City and shall not take direction or guidance from the Developer. b. Selection and Payment by City. City has sole and absolute discretion to select which of its Counsel are assigned to undertake the Scope of Work. City has the sole and absolute discretion to determine the amount of compensation paid to Counsel assigned to undertake the Scope of Work. c. No Employment by the Developer. The Developer represents and warrants that for the 12 months preceding its request to the City to perform the Scope of Work, it has not entered into any arrangement to pay financial consideration to, and has not made any payment to, the Counsel. d. City to Retain Absolute Discretion Regarding Approvals. The Developer acknowledges and agrees that notwithstanding the Developer reimbursement obligations under this Agreement, the City remains free to exercise its independent judgment in the processing and approval of the requested amendment and further acknowledges and agrees that City is not obligated to approve any or all of the proposed amendments. The Developer warrants and represents that no City official, officer, Counsel, agent or attorney has represented, expressly or impliedly, that the City will approve any proposed amendment to the Palm Development PSA or waive any condition to closing under, or otherwise modify or amend, the Palm Development PSA. Notwithstanding anything in this Agreement to the contrary, the City retains all authority and discretion granted to it by law to approve, disapprove or modify any proposed amendment to the Palm Development PSA and to otherwise take any action to which it is legally entitled to take under the Palm Development PSA. 9. Term. The term of this Agreement shall commence retroactively on November 9, 2015 and, except as provided herein, shall terminate when all work by the Counsel has been completed to the City's reasonable satisfaction and the Developer has satisfied all of its -3- Palm Development Reimbursement Agreement obligations under this Agreement including, without limitation, the obligation to pay the City for Counsel Costs. The parties expect that such termination shall occur on or about the time the closing of the Transaction occurs. The Developer obligation to reimburse the City as provided in this Agreement shall survive the termination of this Agreement pursuant to this Section 9. 10. Ea_r_ly Termination. The City may, in its sole and absolute discretion, terminate this Agreement prior to the term set forth in Section 9 above, without cost or liability to the City, upon thirty (30) days prior written notice to the Developer. The Developer, upon thirty (3 0) days' prior written notice, may, in its sole and absolute discretion, terminate this Agreement prior to the end of the term set forth in Section 9 above, provided that the Developer has satisfied all of its obligations under this Agreement to date of such termination and that the Developer has given the City written notice withdrawing its request that the City consider any proposed amendment to the Palm Development PSA. Within two (2) business days following either the City's decision to terminate this Agreement or the City's receipt of written notice indicating the Developer decision to terminate this Agreement, the City shall notify the affected Counsel and instruct them to cease work under this Agreement. 11. Remedies Upon Default. An event of default shall be deemed to exist upon the occurrence of all of the following: a. Either the City or the Developer has, without legal justification or excuse, breached any one or more of its obligations under this Agreement; and b. The non - defaulting party has sent written notice to the party claimed to be in default, specifying the default and what actions the non - defaulting party asserts should be taken to remedy the default; and c. The party claimed to be in default has not, within ten (10) days following receipt of the written notice described above, either corrected the default or taken actions, reasonably satisfactory to the non - defaulting party, to remedy the default within a reasonable period of time, but in no event longer than thirty (30) days after receipt of the written notice described in (b) above. Following an event of default, the non - defaulting party may exercise any and all remedies available to it pursuant to this Agreement, or at law or in equity, including, without limitation, instituting an action for damages, injunctive relief, or specific performance. 12. Indemnification. In addition to the indemnification provided under the Palm Development PSA, and -to the fullest extent provided by law, the Developer shall indemnify, defend and hold City its agents, officials, officers, employees harmless from and against any and all claims, causes of action, damages, lawsuits or liability, which arise from or relate to City's retention of Counsel and City's performance under the Counsel Contract except that the Developer duty to indemnify and defend as provided herein shall not extend to any claims or liability arising from the proven gross negligence or willful misconduct of City. Without limitation, from and after November 9, 2015, , the Developer shall also indemnify and defend and hold harmless City, using counsel approved by City in its absolute discretion, -4- Palm Development Reimbursement Agreement from any and all third party challenges to the Palm Development PSA, any amendment thereto or any of the transactions contemplated thereunder or any challenge to any entitlement, approval or environmental impact report ( "EIR ") proposed, drafted, or certified in connection with any of the foregoing transactions, including any supplement or addendum thereto, or any response to and/or defense against a request by a third party under the California Public Records Act relating to any documents to which the Developer asserts a trade secret or other exemption to disclosure thereunder. The Developer's duty to indemnify and defend shall survive termination of this Agreement. 13. Non - Waiver of Rights or Remedies. The failure of a party to exercise any one or more of its rights or remedies under this Agreement shall not constitute a waiver of that party's right to enforce that right or seek that remedy in the future. No course of conduct or act of forbearance on any one or more occasions by any party to this Agreement shall preclude that party from asserting any right to remedy available to it in the future. No course of conduct or act of forbearance on any one or more occasions shall be deemed to be an implied modification of the terms of this Agreement. 14. Assignability_, This Agreement may not be assigned by the Developer. 15. No Oral Modifications. This Agreement represents the entire understanding of the City and the Developer and supersedes all other prior or contemporaneous written or oral agreements pertaining to the subject matter of this Agreement. This Agreement may be modified only by a writing signed by the authorized representatives of both the City and the Developer. 16. Binding Upon Successors. This Agreement and each of its terms shall be binding upon the City, the Developer and their respective officers, elected officials, Counsel, agents, contractors, and permitted successors and assigns. 17. Legal Clial lenges. Notwithstanding any assertion of trade secret or other possible basis for non - disclosure of any record by Developer, City retains its sole and absolute discretion to determine whether any record is exempt from disclosure under the California Public Records Act or any other applicable law. If City determines that a certain record(s) is /are not exempt, City shall notify Developer of its determination at least 2 business days prior to disclosure. Nothing herein shall be construed to require City to defend any third party claims and suits challenging any action taken by the City with regard to any review, consideration or approval of any proposed amendment to the Palm Development PSA or refusal to provide records to which the Developer asserts a trade secret or other exemption to disclosure The Developer may, however, in its sole and absolute discretion, appear as real party in interest in any such third party action or proceeding. If the City defends such action or proceeding, the Developer shall be responsible to reimburse the City for whatever legal fees and costs, in their entirety that may be incurred by the City in defense of such action or proceeding. The City and the Developer shall seek to jointly approve legal counsel, but the City shall have the absolute right to retain such counsel as it deems necessary and appropriate if such joint agreement cannot be reached. The Developer shall reimburse City in the event of an award of court costs or attorney fees is made against City in favor of any third party challenging the City's any review, consideration or approval of -5- Palm Development Reimbursement Agreement any proposed amendment to the Palm Development PSA or refusal to provide records to which the Developer asserts a trade secret or other exemption to disclosure . 18. Attorneys' Fees. In the event that any action or proceeding, including arbitration, is commenced by either the City or the Developer against the other to establish the validity of this Agreement or to enforce any one or more of its terms, the prevailing party in any such action or proceeding shall be entitled to recover from the other, in addition to all other legal and equitable remedies available to it, its actual attorneys' fees and costs of litigation, including, without limitation, filing fees, service fees, deposition costs, arbitration of costs and expert witness fees, including actual costs and attorneys' fees on appeal. 19. Jurisdiction and Venue. This Agreement is executed and is to be performed in the City of San Luis Obispo, and any action or proceeding brought relative to this Agreement shall be heard in the appropriate court in the County of San Luis Obispo, California. The City and the Developer hereby each consent to the personal jurisdiction of the court in any such action or proceeding. 20. Time is of the Essence. Except as otherwise expressly stated, time is of the essence in the performance of each and every action required pursuant to this Agreement. 21. Covenant of Further Assurances. The City and the Developer shall take all other actions and execute all other documents, which are reasonably necessary to effectuate this Agreement. 22. Inter[pretation. The City and the Developer agree that this Agreement is the product of mutual negotiations and is an arms - length transaction. Each party has negotiated this Agreement with the advice and assistance of legal counsel of its own choosing. It is further agreed that the terms of this Agreement shall be construed in accordance with the meaning of the language and shall not be construed for or against either party by reason of authorship and the rule that ambiguities in a document shall be construed against the drafter of the document shall have no application to this Agreement. In construing and interpreting this Agreement, the finder of fact shall give effect to the mutual intention of the City and the Developer, notwithstanding such ambiguity, and may refer to the facts and circumstances under which this Agreement is made and such other extraneous evidence as may assist the finder of fact in ascertaining the intent of the City and the Developer. 23. Severability. If any term or provision of this Agreement is found to be invalid or unenforceable, the City and the Developer both agree that they would have executed this Agreement notwithstanding the invalidity of such term or provision. The invalid term or provision may be severed from the Agreement and the remainder of the Agreement may be enforced in its entirety. 24. Headings. The headings of each section of this Agreement are for the purposes of convenience only and shall not be construed to either expand or limit the express terms and language of each section. M Palm Development Reimbursement Agreement 25. representations of Authority. Each party signing this Agreement on behalf of a party which is not a natural person hereby represents and warrants to the other party that all necessary legal prerequisites to that party's execution of this Agreement have been satisfied and that he or she has been authorized to sign this Agreement and bind the party on whose behalf he or she signs. 26. Notices. Notices required under this Agreement shall be sent to the following: If to the City: City of San Luis Obispo Attn: City Manager 990 Palm Street San Luis Obispo, CA 93401 -3249 With copies to City Attorney City of San Luis Obispo 990 Palm St. San Luis Obispo, CA 93401 -3249 If to the Developer: Hotel SLO, LLC 580 Second Street, Suite 260 Oakland, CA 94607 With copies to: Seiler Epstein Ziegler & Applegate, LLP Attn: Steven D. Seiler 601 Montgomery Street, Suite 2000 San Francisco, CA 94111 Piazza Hotel Management Company, LLC 25 Matheson Street Healdsburg, CA 95448 Thomas M. Copeland, Manager SLO Chinatown, LLC Post Office Box 12260 San Luis Obispo, California 93406 With Copies to: Suzanne Fryer Copelands' Properties 1026 Chorro Street, Suite 200 Post Office Box 12260 San Luis Obispo, California 93406 Notices given pursuant to this Agreement shall be deemed received as follows: -7- Palm Development Reimbursement Agreement (a) If sent by United States Mail — five (5) calendar days after deposit into the United States Mail, first class postage prepaid. (b) If by facsimile — upon transmission and actual receipt by the receiving party. (c) If by express courier service or hand deliver — on the date of receipt by the receiving party. The addresses to notices set forth in this Section 24 may be changed upon written notice of such change to either the City or the Developer, as appropriate. 27. Days. Unless otherwise specified to the contrary, "days" in this Agreement shall mean calendar, not business days. [Signatures on following page] -8- Palm Development Reimbursement Aareement IN WITNESS WHEREOF, the parties have executed this Agreement as of the first date set forth above. CITY OF SAN LIU OBISPO A Muni i al Corp r do By: Kate Lichtig Cit Manager V.- Stine Dietrick Attorney THE DEVELOPER SLO CHINATOWN, LLC, a California limited liability company Thomas M. CopelanZf Its: Manager APPROVED AS TO FORM FOR SLO CHINATOWN,LLC Hotel L , LLC a California limited liability company By: , a III LW=K S G'2LGIL Its: Manager APPROVED AS TO FORM FOR HOTEL SLO,LLC