SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (7872 Edinger)
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1 SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (7872 Edinger) This SECOND AMENDMENT TO PURCHASE AGREEMENT AND JOINT ESCROW INSTRUCTIONS ("Second Amendment") is dated as of, 2012, and is entered into by and between the CITY OF HUNTINGTON BEACH, a municipal corporation (the "Seller") and CAMPBELL LODGING, INC., a California corporation (the "Buyer"). Buyer and Seller may be individually referenced herein as the "Party" and collectively referenced herein as the "Parties." RECITALS A. Seller is the owner of an approximately 1.9 acre square foot site located at 7872 Edinger Avenue in the City of Huntington Beach, California as legally described in Attachment No. 1 attached hereto and incorporated herein by this reference ( the "Property"). B. Seller and Buyer entered into that certain Purchase Agreement and Joint Escrow Instructions dated January 27, 2012 as amended by that certain Amendment to Purchase Agreement and Joint Escrow Instructions (the "Amendment") dated January 31, 2012 (collectively, the "Purchase Agreement") relating to the sale by Seller to Buyer of the Property and Buyer's development thereon of a high-quality, first-class, four story, room Hyatt Place Hotel or other brand hotel pursuant to the terms and conditions contained in the Purchase Agreement (the "Project"). C. The estimated cost of developing and constructing the Project has increased from the date the Purchase Agreement was initially executed to the present time. In addition, the health of the hotel industry both overall and in the Huntington Beach market is in less than average condition with slow improvement. D. Nagasaki & Associates completed an appraisal of the Property dated January 9, 2012 (the "Appraisal") which provided that the fair market value of the Property ranges from $2,900,000 to $3,500,000. E. The Parties desire to (i) reduce the current Purchase Price set forth in the Purchase Agreement from $3,300,000 to $3,100,000 (within the fair market value of the Property pursuant to the Appraisal), and (ii) reduce the Buyer's deposit set forth in the Purchase Agreement from $500,000 to $110,000, to reflect the increase in Project development costs and to make the Project more economically feasible in light of the current down turn in the hotel industry. F. Buyer and Seller mutually desire to implement and modify the Purchase Agreement as provided in this Second Amendment, below, to reduce the purchase price, reduce the amount of the Buyer's deposit and take related actions described below. Page 1
2 NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby mutually acknowledged, the Parties agree as follows: 1. Recitals. The Recitals and attachments referenced above are hereby incorporated by reference into this Second Amendment and adopted by the parties to this Second Amendment as true and correct. 2. Defined Terms. Capitalized terms used in this Second Amendment shall have the meaning given them in the Purchase Agreement unless specifically provided otherwise herein. 3. Reduction in Purchase Price. Section 2.a. of the Purchase Agreement shall be deleted in its entirety and replaced with the following: "a. Purchase Price. The purchase price to be paid by Buyer to Seller for the Property shall be Three Million One Hundred Thousand Dollars no/cents ($3,100,000.00) (the "Purchase Price")." 4. Reduction in Buyer's Deposit. i. Section 3.a. of the Purchase Agreement (Buyer Deposit), as amended by the Amendment, is hereby deleted in its entirety and replaced with the following paragraph: "a. Buyer Deposit. Within the time periods set forth in the Schedule of Performance attached hereto as Exhibit D and incorporated herein by this reference, Buyer shall deposit or cause to be deposited with Seller, in cash or by a certified or bank cashier's check made payable to Seller or a confirmed wire transfer of funds, a deposit in the amount of One Hundred and Ten Thousand Dollars ($110,000.00) (the "Buyer Deposit"). The Parties hereby acknowledge and agree that a portion of the Buyer Deposit in the amount of One Hundred Thousand Dollars ($100,000) (the 1100,000 Non-Refundable Portion of Buyer Deposit") is hereby non-refundable and shall be retained by the Seller as the Seller's property so long as a "Project Denial" (defined below) does not occur. Provided Buyer is not in default of this Agreement, in the event the Planning Commission of the City of Huntington Beach (the "Planning Commission") does not approve all of the applications submitted by Buyer for permits and entitlements necessary for the development of the Hotel Project (the "Application(s) for Permits and Entitlements") Buyer shall be required to appeal such disapproval(s) to the City Council of the City of Huntington Beach (the "City Council Appeal"). In the event (A) the City Council of the City of Huntington Beach (the "City Council") disapproves any of the Applications(s) for Permits and Entitlements during the City Council Appeal prohibiting the development of the Hotel Project, or (B) the City Council disapproves an Application(s) for Permits and Entitlements which is only required to be reviewed by the City Council and not the Planning Commission prohibiting the development of the Hotel Project, and the following conditions/events occur, (1) Buyer does not elect to amend and re-submit such denied application(s), and (2) such City Council disapproval is not due to Buyer's failure to submit plans, specifications and drawings for the Hotel Project which do not satisfy applicable City building, zoning Page 2
3 and design codes and requirements, including, but not limited to the design requirements set forth in the City of Huntington Beach's Beach and Edinger Corridors Specific Plan ( collectively the "Project Denial"), then the $100,000 Non- Refundable Portion of Buyer Deposit shall be refunded to Buyer and this Agreement shall terminate. The Project Denial shall not constitute a default by Seller. The Buyer Deposit shall be retained by Seller and, upon the Close of Escrow, shall be credited towards Buyer's payment of the Purchase Price. Buyer acknowledges and agrees that Seller is under no obligation to place the Buyer Deposit in an interest bearing account and in the event interest is earned or accrued on such funds, such interest shall be retained by Seller as its sole and separate property. Buyer hereby waives and releases any interest, right or claim in and to any interest that may be earned or accrue on the funds constituting the Buyer Deposit." ii. Pursuant to Section 3.a. as it existed prior to this Second Amendment, Buyer has deposited with the Escrow Holder funds in the amount $500,000 as the "original" Buyer Deposit. As amended by this Second Amendment, Section 3.a. now provides that the Buyer Deposit shall be in the amount of $110,000. To adhere to Section 3.a, as amended pursuant to paragraph 4.1. above, upon Seller's approval and execution of this Second Amendment, Buyer shall have the right to withdraw, from the escrow account established with Escrow Holder for the sale of the Property, the total amount of $390,000, so long as a balance of $110,000 of the original funds deposited by Buyer remains in such escrow account pursuant to Section 3.a. of the Purchase Agreement. Seller shall not be responsible for any costs related to the aforementioned Buyer withdrawal. 5. Due Diligence Period. Buyer acknowledges and agrees that the Due Diligence Period set forth in Section 6. a. c. of the Purchase Agreement has hereby expired. 6. Amendment to Legal Description. Due to clerical errors in the legal description of the Property attached to the Purchase Agreement as Exhibit A, the legal description of the Property contained in Exhibit A is hereby deleted in its entirety and replaced with the Amended Legal Description attached hereto as Attachment No. 1 and incorporated herein by this reference. 7. Binding on Successors and Assigns. This Second Amendment and all of the terms and conditions herein shall be binding upon and inure to the benefit of the successors, assignees, personal representatives, heirs and legatees of the parties. 8. Purchase Agreement in Full Force and Effect. Except as otherwise expressly modified herein, the terms and conditions of the Purchase Agreement, including, but not limited to the Schedule of Performance (Exhibit D thereto and incorporated herein by this reference) and the Scope of Development (Exhibit F thereto and incorporated herein by this reference), shall remain unmodified and in full force and effect. 9. Further Assurances. The Parties agree to execute such other documents and to take such other action as may be reasonably necessary to further the purposes of this Second Amendment. The Mayor or designee is authorized to make such further non-substantive changes to the Page 3 KACG\HMEdinger Hotel Parcel\Second Amendment to Purchase and Sale Agreement (execution)(final).doc
4 documents and instruments attached to the Purchase Agreement and to this Second Amendment as may be necessary or appropriate to effectuate the Purchase Agreement, as amended by this Second Amendment. 10. Third Party Beneficiaries. The Parties to this Second Amendment acknowledge and agree that the provisions of this Second Amendment are for the sole benefit of Parties, and not for the benefit, directly or indirectly, of any other person or entity. 11. Effectiveness of this Second Amendment. This Second amendment shall not be effective unless and until it has been executed by the Parties. 12. Construction and Interpretation of Agreement. The language in all parts of this Second Amendment and the Purchase Agreement shall in all cases be construed simply, as a whole and in accordance with its fair meaning and not strictly for or against any party. The parties acknowledge and agree that this Agreement has been prepared jointly by the parties and has been the subject of arm's length and careful negotiation over a considerable period of time, that each party has been advised to independently review this Agreement with legal counsel and Buyer has knowingly and willingly waived the right to independently review this Agreement with legal counsel, and that each party has the requisite experience and sophistication to understand, interpret, and agree to the particular language of the provisions of this Agreement. Accordingly, in the event of an ambiguity in or dispute regarding the interpretation of this Agreement, this Agreement shall not be interpreted or construed against the party preparing it, and instead other rules of interpretation and construction shall be utilized. This Second Amendment shall be executed in three (3) duplicate originals, each of which is deemed to be an original. This Second Amendment, when combined with the Purchase Agreement, constitutes the entire understanding and agreement of the parties and correctly sets forth the rights, duties and obligations of each to the other as of its date. 13. Waivers; Amendments. All waivers of the provisions of this Second Amendment and all amendments hereto must be in writing and signed by the appropriate authorities of the Seller and Buyer. 14. Time of the Essence. Time is of the essence with respect to this Second Amendment. 15. Effective Date. This Second Amendment shall be dated and become effective on the date it is executed by the Seller. 16. Authority to Execute. Buyer hereby represents that the person(s) executing this Second Amendment on behalf of Buyer has full authority to do so and to bind Buyer to perform pursuant to the terms and conditions of this Second Amendment. REMAINDER OF PAGE INTENTIONALLY BLANK SIGNATURES ON FOLLOWING PAGE Page 4 KACG\HB\Edinger Hotel ParceRSecond Amendment to Purchase and Sale Agreement (execution)(final).doc
5 IN WITNESS WHEREOF, Buyer and Seller have signed this Second Amendment as of the dates set opposite their signatures. "BUYER" "SELLER" CAMPBELL LODGING, INC., a California corporation CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California By: 44/1/f Martin A. Cam btl Vice-President/ Chief Development Officer &2, '* Dated Mayor Dated City Clerk INITIATED AND APPROVED: Director of Economic Development REVIEWED AND APPROVED: City Manager APPROVED AS TO FORM: City Attorney KANE, BALLMER & BERKMAN City Special Counsel Jhaila R. Brown Page 5
6 IN WITNESS WHEREOF, Buyer and Seller have signed this Second Amendment as of the dates set opposite their signatures. "BUYER" "SELLER" CAMPBELL LODGING, INC., a California corporation CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California By: Martin A. Campbell Dated Mayor Dated Vice-President/ Chief Development Officer City Clerk NIT D A I APPROVED: Director of Economic Development REVIEWED AND APPROVED: City Manager APPROVED AS TO FORM: pcit Attorney KANE, BALLMER & BERKMAN City S ci Co sel,9 Jhai. Brown I. Page 5
7 ATTACHMENT NO. 1 AMENDED LEGAL DESCRIPTION Real Property in the City of Huntington Beach, Orange County, State of California, described as follows: PARCEL A: (APN: ) LOTS 19 AND 20 IN TRACT 417, AS SHOWN ON A MAP THEREOF RECORDED IN BOOK 16 PAGE 47, MISCELLANEOUS MAPS, RECORDS OF SAID ORANGE COUNTY. EXCEPTING THEREFROM THE NORTH 20 FEET THEREOF. EXCEPTING THEREFROM ALL WATER AND/OR WATER RIGHTS APPURTENANT TO AND/OR CONNECTED WITH AND/OR UNDER SAID LAND, AS SET FORTH IN AN INSTRUMENT TO BOULEVARD GARDENS WATER COMPANY RECORDED JUNE 2, 1926 IN BOOK 652, PAGE 253, DEEDS. ALSO EXCEPTING ALL OIL, HYDROCARBON SUBSTANCES AND MINERALS OF EVERY KIND AND CHARACTER LYING MORE THAN 500 FEET BELOW THE SURFACE OF SAID LAND, TOGETHER WITH THE RIGHT TO DRILL INTO, THROUGH, AND TO USE AND OCCUPY ALL PARTS OF SAID LAND LYING MORE THAN 500 FEET BELOW THE SURFACE THEREOF FOR ANY AND ALL PURPOSES INCIDENTAL TO THE EXPLORATION FOR AND THEREOF FOR ANY AND ALL PURPOSES INCIDENTAL TO THE EXPLORATION FOR AND PRODUCTION OF OIL, GAS, HYDROCARBON SUBSTANCES OR MINERALS FROM SAID LANDS BUT WITHOUT, HOWEVER, THE RIGHT TO USE EITHER THE SURFACE OF SAID LAND OR ANY PORTION OF SAID LAND WITHIN 500 FEET OF THE SURFACE FOR ANY PURPOSE OR PURPOSES WHATSOEVER AS RESERVED IN THE DEED RECORDED OCTOBER 24, 1988 AS INSTRUMENT NO , OF OFFICIAL RECORDS. PARCEL B: (APN: ) LOTS 21,22 AND 23 OF TRACT NO. 417, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 16, PAGE 47 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPT ALL OIL, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES WITHOUT RIGHT OF SURFACE ENTRY THERETO ABOVE A DEPTH OF 500 FEET FROM THE SURFACE THEREOF, AS RESERVED IN THE DEED FROM BEULAH H. FINLEY, RECORDED DECEMBER 14, 1960 IN BOOK 5548, PAGE 385, OFFICIAL RECORDS. PARCEL C: (APNS: , 10, 11 AND 12) LOTS 24, 25, 26, 27 AND 28 OF TRACT NO. 417, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 16, PAGE 47 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPT THEREFROM ALL WATER AND WATER RIGHTS AS CONVEYED TO BOULEVARD GARDENS WATER COMPANY, A CORPORATION, BY DEED RECORDED FEBRUARY 11, 1925 IN BOOK 561, PAGE 287, OF DEEDS.
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