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HomeMy WebLinkAboutDoc 671 - Amend Pronghorn Agrmt Deschutes County Board of Commissioners 1300 NW Wall St., Suite 200, Bend, OR 97701-1960 (541) 388-6570 - Fax (541) 385-3202 - www.deschutes.org AGENDA REQUEST & STAFF REPORT For Board Business Meeting of December 17, 2012 _____________________________ Use “tab” to move between fields, and use as much space as necessary within each field. Do not leave any fields incomplete. Agenda requests & backup must be submitted to the Board Secretary no later than noon of the Wednesday prior to the meeting to be included on the agenda. DATE: December 17, 2012 TO: Deschutes County Board of Commissioners FROM: Mark Pilliod, Legal Counsel, 388-6625 TITLE OF AGENDA ITEM: Consideration of Signature of Document 2012-671, a 2012 Amendment to an Improvement Agreement with Pronghorn Destination Resort relating to Overnight Lodging. Public hearing? No. BACKGROUND AND POLICY IMPLICATIONS: The Pronghorn Destination Resort is obligated to complete overnight lodging to satisfy statutory and contractual obligations. The obligation to complete overnight lodging was contained in an Improvement Agreement, originally executed in 2002 and later amended in 2008. The financial assurance that was originally placed on deposit with the County has remained, together with accrued earnings, in County's possession. On April 25, 2012, the Board declared the original developer and its immediate successor in default under the Improvement Agreement for their failure to complete required overnight lodging. The person who had originally contributed towards the developer's financial assurance for completion of the overnight lodging units filed suit against the County and Pronghorn Intangibles, LLC., the current owner, in an effort to recover those funds. The parties to the litigation have negotiated a settlement of the lawsuit against the county and includes an Amendment to the Improvement Agreement, which will enable Pronghorn Intangibles, LLC. to proceed toward completion of the required overnight lodging. FISCAL IMPLICATIONS: None. RECOMMENDATION & ACTION REQUESTED: The Board should authorize the Chair's signature on the Improvement Agreement and Legal Counsel's signature on related documents. ATTENDANCE: Mark Pilliod DISTRIBUTION OF DOCUMENTS: Mark Pilliod, Legal Counsel Page 1 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 For Recording Stamp Only After Recording Return to: Deschutes County Community Development 117 NW Lafayette Bend, OR 97701 2012 AMENDMENT TO IMPROVEMENT AGREEMENT Deschutes County Document No. 2012-671 (Overnight Lodging) This Amendment to Improvement Agreement (“Agreement”), relates to the construction and installation of Required Improvements (as defined herein) to be constructed in the Pronghorn Destination Resort, hereafter referred to as “Resort,” as required in the conditions of approval identified in: Findings and Decisions for Deschutes County File Nos. M-02-1, Final Master Plan for a destination resort (the “Master Plan”); SP-02-49, Site Plan for visitor-oriented lodging, eating and meeting facilities; SP-08-2, Site Plan for hotel, extended by E-10-15; and SP-08-4, Site Plan for hotel, extended by E-10-14; by and between DESCHUTES COUNTY, OREGON, a political subdivision of the State of Oregon, herein after referred to as "County;” and PRONGHORN INTANGIBLES LLC, a Hawaii limited liability company (“PI” or “Owner”), as owner of Resort’s Hotel Site A, and Hotel Site B, (collectively “Future Development Sites”, defined herein) and signify agreement to this Agreement by signing below. This Agreement is effective upon signature of all parties. RECITALS WHEREAS, Owner has acquired title to the Future Development Sites; and WHEREAS, Owner’s predecessor in title and County entered into an Improvement Agreement (Overnight Lodging) recorded in the Official Records of Deschutes County at 2002 - 68693 as amended and restated pursuant to that certain 2008 Amendment to Improvement Agreement (Overnight Lodging) recorded at 2008-22062 (collectively referred to as the “Original Improvement Agreement”). REVIEWED ______________ LEGAL COUNSEL Page 2 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 WHEREAS, Owner intends to comply with County conditions of development approval, including but not limited to the obligation to construct overnight lodging units on Future Development Sites; and WHEREAS, pursuant to the Original Improvement Agreement, Prior Owners, in whole or in part, deposited funds to be held in a trust account (the “Trust Account”) with the County in the amount of Seven Million Four Hundred Thousand Dollars ($7,400,000), as financial assurance to guarantee that the obligation to build the overnight lodging units would be fulfilled on the designated sites in compliance with DCC Section 18.124.050; and WHEREAS, the current balance of the Trust Account funds (including accrued interest) is approximately $9.3 million; and WHEREAS, DCC Section 18.113.110, related code provisions, and prior agreements between County and Prior Owners provide that County may utilize the financial assurance provided to pursue completion of the Required Improvements (as defined herein); and WHEREAS, the deadline under the Original Improvement Agreement to complete construction of the overnight lodging units on Hotel Site A has expired, and Owner desires to enter into this Agreement with County such that the obligations running with the Future Development Sites are not in default, and Owner desires to bring the Resort into full compliance with all land use approvals and legal requirements; and WHEREAS, County agrees to release all of the Trust Account funds toward construction on the Phase 1 Site, defined herein and pursuant to the terms of this Agreement and Owner will pay for the balance of the costs, associated with completion of construction on the Future Development Sites; and WHEREAS, Owner commits to providing financial assurance for timely completion of the Required Improvements in the form of conveyance to the County of a First Trust Deed over the land constituting the first of the two Future Development Sites (the “Phase 1 Site”) and all fixtures and improvements constructed thereon, which First Trust Deed shall name County as beneficiary and shall be delivered to the County, free and clear of encumbrances created or suffered by Owner to guarantee completion of all Required Improvements (as defined herein); and WHEREAS, the Phase I Site, upon completion of construction of the overnight units thereon, shall contain overnight units with a fair market value of at least 60% of the estimated combined total value of the Future Development Sites when construction of all necessary improvements on those sites is completed, and at least sixty percent (60%) of the overnight units required of Owner under the Required Ratio (as defined herein), and WHEREAS, it is the intention of the parties that if Owner does not perform as agreed in this Agreement, County, as beneficiary under the Trust Deed, shall be immediately entitled to exercise any and all of remedies under Oregon law including, without limitation, foreclosure of the Trust Deed with the power of sale, free from the claim or lien of any person or entity; and WHEREAS, Deschutes County Code (“DCC”) 18.113.060(D)(2) and the Master Plan currently contain requirements that are more stringent than Oregon Revised Statutes, requiring that the Owner construct overnight units in numbers calculated by a ratio of at least two (2) permanent dwellings per each one (1) overnight lodging unit; and the Parties have contemplated amending DCC to allow a ratio of not less than two and one-half (2 ½) permanent Page 3 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 dwellings per each one (1) overnight lodging unit and the County may or may not hereafter approve such amendment, the result of which will be referenced herein as the “Required Ratio” as applicable; and WHEREAS, the Required Improvements under this Agreement do not constitute a Public Improvement as the term is defined in ORS 279A.010(1)(cc); and NOW, THEREFORE, AGREEMENT IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES above mentioned, for and in consideration of the mutual promises hereinafter stated, as follows: 1. Recitals. The Recitals to this Agreement set forth above are hereby incorporated herein as if fully set out, shall constitute contractual provisions and are not mere recitals. 2. Real Property Description. The real property subject to this Agreement, is described on attached Exhibit A, also known as Tax Lots 161316C000300 and 161316D000500. 3. Exhibits. The exhibits set forth below and attached to the Agreement are hereby incorporated herein by reference: 3.1. Exhibit A – Legal Description of Future Development Sites; 3.2. Exhibit B –Trust Deed. 4. Identification of Required Improvements. 4.1. Owner shall install and complete, or cause to be installed and completed the Required Improvements, as set forth in SP-08-2 and SP-08-4 to the extent that the same remain to be completed. 4.2. Provided that the Required Improvements satisfy the definition of an “overnight lodging unit” as defined in the County code, Owner shall have the ability to design the type of product (e.g., conventional multi-story hotel, lodge, villa, etc.) to be constructed on the Future Development Sites and submit applications to either amend the County site plan approvals listed in Section 4.1. or new site plan applications accordingly. 5. Construction of Required Improvements; Status Reports. 5.1 The number of Required Improvements that Owner shall construct is 142 units if the Required Ratio remains at 2:1 and 104 units if Owner receives County land use approval for a Required Ratio of 2.5:1. 5.2 The Required Improvements shall be constructed in accordance with applicable building and specialty codes and regulations, and the design and construction plans and specifications approved by the County. Page 4 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 5.3. Owner shall engage consultants and contractors who shall cause Phase 1 Site (which, upon completion of construction of the overnight lodging units thereon, shall contain not less than 60% of the total number of units comprising the Required Improvements and shall have an estimated market value of not less than 60% of the total combined value of the Future Development Sites after construction of all Required Improvements on such sites), to be designed, constructed, inspected and receive occupancy approval from the County and/or the State of Oregon not later than June 30, 2017, (“Phase 1 Completion Date”), unless extended by mutual agreement of the Parties. 5.4. Timeline for Construction of Required Improvements Construction Phase Deadline Phase 1 Conceptual Plans December 31, 2013 Phase 1 Construction Drawings December 31, 2014 Phase 1 Commencement June 30, 2015 Phase 2 Conceptual Plans June 30, 2015 Phase 2 Construction Drawings June 30, 2016 Phase 1 Completion June 30, 2017 Phase 2 Commencement June 30, 2017 Phase 2 Completion Dec. 31, 2018 As the Timeline depicted above demonstrates (“Timeline”), Owner shall cause Phase 2 to be designed, constructed, inspected and receive occupancy approval from the County and/or the State of Oregon not later than December 31, 2018 (“Phase 2 Completion Date”), unless extended by mutual agreement of the Parties. 5.5. Owner shall promptly and without delay and at no cost to the County repair all facilities and all real property wherever located, damaged during any construction-related activities. 5.6. As used herein, the term “Applicable Completion Date” shall mean and refer to the Phase 1 Completion Date when the context indicates that construction of Phase 1 is at issue and it shall mean and refer to the Phase 2 Completion Date when the context indicates that construction of Phase 2 is at issue. 5.7. Commencing in June, 2013, Owner shall provide County with monthly updates regarding its progress in completing the Required Improvements. 5.7.1. Such updates shall be submitted in writing and shall be submitted to the Deschutes County Community Development Department (“CDD”) or such other contact as County designates in writing, and may be presented, to the Board of County Commissioners (“Board”) by a representative of Owner at a regularly scheduled Board Business Meeting or Work Session. 5.7.2 In advance of such meeting or work session Owner shall permit CDD and CDD’s consultant (at County’s cost) to enter the Property for purposes of verifying information contained in each update. Page 5 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 5.7.3. Each update shall, at a minimum, include specific information regarding the following: 5.7.3.1. The percentage of the Required Improvements completed to date; 5.7.3.2. Any changes in the anticipated cost and an updated timeline to complete the Required Improvements; 5.7.3.3. Details and explanation of any changes in the construction timeline from the date of this Agreement and/or the date of the last update provided to the Board; and 5.7.3.4. Any other information County may reasonably request. 5.8. Parties acknowledge that the Timeline depicted in section 5.4 above assumes that third parties will not interfere in Owner’s performance. 5.8.1. In the event Owner is delayed at any time in the progress of constructing the Required Improvements by the action of any fire, adverse weather conditions, unavoidable casualties, acts of God, any third party unrelated to Owner, or any other causes beyond Owner’s control, then Owner may request extension of performance of specific tasks and for specific periods of time that directly relate to the nature and impact of the specific interference. 5.8.1. County shall consider such requests in good faith and if it approves, the parties shall memorialize the modification in writing. 6. Warranty of Improvements. 6.1. Owner and County hereby agree that the Phase 1 portion of the Required Improvements shall remain free from defects in materials or workmanship and that Phase 1 continues to meet County and/or State of Oregon standards for twelve (12) months following completion of construction of Phase 1 ("Phase 1 Warranty Period"). 6.2. Owner hereby warrants that the Phase 2 portion of the Required Improvements shall remain free from defects in materials or workmanship and that Hotel B continues to meet County and/or State of Oregon standards for twelve (12) months following completion of construction of Phase 2 (“Phase 2 Warranty Period”). 6.3. As used herein, the term “Applicable Warranty Period” shall mean and refer to the Phase 1 Warranty Period when the context indicates that Phase 1 is at issue and it shall mean and refer to the Phase 2 Warranty Period when the context indicates that Phase 2 is at issue. Page 6 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 6.4 Owner shall provide County with a warranty bond as to Phase 1 and Phase 2 improvements upon completion of construction of each phase, in a form and amount reasonably acceptable to County. 7. License to Enter and Remain on Property. 7.1. Owner hereby grants County and County's employees, engineers, consultants, agents, contractors, subcontractors and suppliers license to come onto and remain on such portions of the Future Development Sites as necessary to make inspections of the Required Improvements. 7.2. In addition to any other remedies contemplated herein, if County determines that any portion of the Required Improvements has not been completed by the Applicable Completion Date, County or its employees, engineers, consultants, agents, contractors, subcontractors and suppliers may enter onto and remain on the applicable portions of the Future Development Sites and may cause the applicable portion of the Required Improvements to be installed and completed. 7.3. Any funds held by the County in Trust may be applied toward completion costs. 8. Ingress and Egress. Prior to or contemporaneous with recording any instrument conveying any platted lot located on the Future Development Sites, Owner shall provide each purchaser with legal rights of ingress and egress to the platted lot. 9. No County Guarantee. County does not guarantee that any of the Required Improvements referred to in this Agreement will be constructed, maintained or operated. 10. License to Use Permits, Specifications and Plans. 10.1. If County determines that any portion of the Required Improvements has not been satisfactorily completed as specified by the Applicable Completion Date, Owner shall, upon request of the County, license or assign to County all applicable contracts, permits, plans, specifications, shop drawings, instruments, and approvals, and other documents necessary or useful in the completion of or related in any manner to the applicable portion of the Required Improvements (the “Documents”). 10.2. Owner shall be responsible for providing within any contracts for supply or labor and materials used in connection with constructing the Required Improvements that such contract rights are assignable by Owner, but Owner is not responsible for providing terms to assure compliance with public contracting rules. 10.3 Upon County’s request pursuant to Section 10.1, Owner shall cause delivery of physical possession of such Documents to the County. 10.4 Owner’s obligations shall extend only to those Documents that relate to the portion of the Required Improvements that have not been satisfactorily completed as specified by the Applicable Completion Date. Page 7 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 10.5 County may assign the license referred to in this section for any purpose related to completion of the Required Improvements without further approval from Owner. 11. No Third Party Beneficiaries. 11.1. The Parties named herein are the only parties to this Agreement and are the only parties entitled to enforce its terms, except as rights and responsibilities run with the land to successors in title or legal responsibility. 11.2. Nothing in this Agreement gives or provides any benefit or right, whether directly, indirectly, or otherwise, to third persons unless such third persons are individually identified by name in this Agreement and expressly described as intended beneficiaries of this Agreement. 12. Restoration of Monuments. Owner shall restore any monument erected or used for the purpose of designating a survey marker or boundary of any town, tract, plat or parcel of land which monument is broken, damaged, removed or destroyed, during the course of work provided for or anticipated by this Agreement, whether intentional or otherwise, by Owners or Owner's agents, employees or independent contractors. 13. Costs of Inspection. Owner shall pay to County the usual and customary costs incurred by County in the inspection of the completed Required Improvements plus any fees, such as plan check fees and structural, electrical, plumbing and other specialty codes inspection fees normally associated with the review and inspection of any improvements on the real property. 14. Security for Required Improvements. 14.1. As security for Owner’s obligations to complete the Required Improvements, upon execution of this Agreement, Owner shall execute a First Trust Deed, in the form attached as Exhibit B, on the Phase 1 Site (whichever of the two hotel sites, previously referenced as A or B, is developed first, to include at least 60% of the Required Improvements), which shall immediately be recorded in the official records of Deschutes County. 14.2. The First Trust Deed shall name County as beneficiary, and shall convey the Phase I Site and all fixtures and improvements constructed thereon, and all rents accruing therefrom, to the trustee of County’s choice in trust, free of any liens or encumbrances created or suffered by Owner, with power of foreclosure, sale and any other remedies permitted by applicable law. 14.3. Owner estimates that the value of the Phase 1 Site, together with the completed improvements and fixtures, will exceed the current value of the Trust Account (i.e., $9,300,000). 14.4. The estimated value of the Phase 1, together with completed improvements shall be verified by a third party independent appraisal (at Owner’s cost) at the time of Phase 1 completion, and if the value does not equal at least 120% of the estimated value of the Phase 2 improvements, Owner agrees to post additional security for the difference between the value of the Phase 1 real property, Page 8 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 improvements, and fixtures, and the 120% of the estimated value of the Phase 2 improvements, in the form of a bond, irrevocable letter of credit or other financial assurance acceptable to County until such time as all Required Improvements are complete. 15. Owner’s Obligation for Costs. 15.1. Parties expressly acknowledge, understand, and agree that this Agreement shall not relieve parties from the obligation to complete and fully pay for the Required Improvements and other costs and fees set forth in this Agreement and in the Deschutes County Code. 15.2. Should Owner fail to perform responsibilities under this Agreement, Owner shall compensate County for all costs, related to Owner’s failure to perform its obligation to complete and warrant the Required Improvements and pay costs and fees including, without limitation, the costs of pursuing any remedy under this Agreement or the First Trust Deed. 16. Release of Security or Obligation. After the Required Improvements have been inspected and approved by the County Community Development Department, County shall release the respective security within fifteen (15) days of Owner’s written request, provided Owner has procured the warranty bond required pursuant to Section 6 of this Agreement. . 17. Trust Account Releases for Phase 1 Construction 17.1. The Trust Account fund amounts to approximately $9.3 million and will continue to accrue interest until such time as all of the funds in the Trust Account have been expended in accordance with this Agreement. 17.2. Owner shall submit conceptual plans and construction drawings for each phase in accordance with the timeline set forth in Section 5, above. 17.3. Construction drawings shall include a construction budget, including a Guaranteed Maximum Price “GMP” which shall be approved in advance by Parties in writing for the total project budget. 17.4. GMP phases shall be divided into commonly used phases of construction. 17.5. The phases of construction shall be divided pursuant to the Sample Draw Form attached as Exhibit C to this Agreement. (This form is provided as a general example with values provided for illustrative purposes only.) 17.6. Separate budget amounts shall be specified and agreed upon by the Parties in writing prior to commencement of each phase of work. 17.7 After Owner completes design and construction documents and enters into a construction contract, the value of the contract, less the amount of funds then held in the Trust Account by County, shall be Owner’s Initial Contribution toward construction of Phase 1. Page 9 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 17.8. After construction commences and Owner has paid Contractor Owner’s Initial Contribution, then and thereafter, Owner will submit draw requests to County for payment of the construction costs from Trust Account. Provided however, nothing contained herein shall be construed as obligating the County for any costs, other than the funds contained in the Trust Account. 17.9 If Owner agrees to increase the GMP, then Owner shall increase by a like amount Owner’s Initial Contribution, such that the Trust Account funds are never applied toward construction costs until after Owner’s Initial Contribution. 17.10. Owner shall submit a draw requests, from time to time, but in no event more than once during any calendar month, to the County. 17.11. The draw requests shall provide a detailed explanation of the work for which the funds are being requested. 17.12. At no time shall County remit funds for work not yet completed. 17.13 Owner shall provide to County all invoices from contractors, sub-contractors, and suppliers with each draw request to allow verification of costs and work performed. 17.14 Owner shall provide to County all lien releases, whether conditional or unconditional, to verify payment status of invoices received. 17.15 The project architect shall independently review all draw requests and shall physically inspect work completed to verify work is completed prior as set forth in the draw request. 17.16. Architect’s certification of same shall be provided to County by Owner with each draw request. 17.17. Within fifteen (15) days after receipt, the County shall examine each draw request to insure compliance with the requirements set forth herein. 17.18. Provided that the requirements set forth herein have been satisfied and Owner is not in default under this Agreement, County shall remit Trust Account funds in agreed/requested amounts directly to contractor (or as specifically directed by Owner), less 5% retainage to be held by County. 17.20. Upon County issuance of a final certificate of occupancy and Owner submission to County of all certificates of payment and lien releases, County shall release retainage to Owner. 17.21 Owner acknowledges that there will be significant non-construction costs involved in the completion of the Required Improvement including but not limited to land use planning, design and engineering, inspections, permits, fees and costs, customarily referenced as “soft costs”, and these will be paid by Owner without reimbursement from the Trust Account or the County. Page 10 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 17.22. Such soft costs shall not be considered part of Owner’s Initial Contribution. 18. Substandard Improvements. 18.1. Should any portion of the Required Improvements prove to be substandard, meaning not in compliance with applicable codes or design plans or otherwise or defective, within the twelve (12) month Applicable W arranty Period in Section 6 of this Agreement, County shall notify Owner of the warranty obligation in writing of such substandard or defective Required Improvements. 18.2. Owner shall then have sixty (60) days to complete repair or replacement of the applicable portion of the Required Improvements. 18.3. In the event that such repair or replacement cannot reasonably be completed within sixty days, then the same shall be extended by such period of time as is reasonably necessary so long as Owner promptly commences and thereafter diligently prosecutes such repair or replacement. 18.4. Should Owner fail to complete repair or replacement of the applicable portion of the Required Improvements within the required time period, County may remedy the defects and recover payment for same from Owner. 19. Successors in Interest. 19.1. The original of this Agreement shall be recorded with the Deschutes County Clerk and shall be a condition and covenant that shall run with the Future Development Sites, binding heirs, successors, and assigns. 19.2. It is the intent of the parties that the provisions of this Agreement shall be binding upon the parties to this Agreement, and, their respective successors, heirs, executors, administrators, and assigns, and any other party deriving any right, title or interest in or to the Future Development Sites, including any mortgagee or other secured party in actual possession of said Future Development Sites by foreclosure or otherwise or any person taking title from such security holder. 19.3. Upon completion of all of the Required Improvements, and the expiration of all Warranty Periods, County shall release the Future Development Sites from the development conditions and covenants subsisting under this Agreement. 20. Binding Authorization. By signature on this Agreement, each signatory, signing in a representative, capacity certifies that the signer is authorized to sign the Agreement on behalf of and bind the signer's principal. 21. Expiration. 21.1 Unless otherwise extended, this Agreement shall expire twelve (12) months after the completion of all Required Improvements or December 31, 2019, whichever is earlier, or by County’s express written release of Owner from this Agreement. 21.2. Notwithstanding the foregoing, this Agreement shall survive until the conclusion of any claim or dispute arising from or under this Agreement. Page 11 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 21.3 Upon expiration, the parties agree to execute a document in recordable form, formally evidencing such expiration. 22. Survival. Parties’ rights under this Agreement, including County's right to pay the full costs and expenses of completing the Required Improvements and repairs or replacements required herein along with any licenses granted in this Agreement and any costs of enforcement of this Agreement, shall survive the expiration of this Agreement to the extent the Owner’s obligations hereunder have not been satisfied in full before such expiration. 23. No Agency. 23.1. It is agreed by and between the Parties that Owner is expressly not carrying out a function on behalf of County, and County does not have the right of direction or control of the manner in which Owner complete performance under this Agreement nor does County have a right to exercise any control over the activities of the Owner beyond those allowed under building and land use codes. 23.2. Neither Owner nor its members is an officer, employee or agent of County as those terms are used in ORS 30.265. 24. No Joint Venture or Partnership. County is not, by virtue of this Agreement, a partner or joint venturer with Owner in connection with the Future Development Sites, and shall have no obligation with respect to Owner debts or other liabilities of each and every nature. 25. Liens. 25.1 Owner shall pay as due all claims for work done on and for services rendered or material furnished to the Future Development Sites and shall keep the Future Development Sites free from liens. 25.2. If Owner fails to pay any such claims or to discharge any lien, County may do so and collect the cost from Owner. 25.3. County’s payment of claims and discharge of liens shall not constitute a waiver of any right or remedy that County may have on account of Owner's failure to complete the Required Improvements or failure to observe the terms of this Agreement. 26. Indemnification. Owner shall be responsible for any and all injury to any and all persons or property caused directly or indirectly by reason of any and all activities of Owner under this Agreement and on the Future Development Sites; and further agrees to defend, indemnify and save harmless County, its officers, agents and employees from and against all claims, suits, actions, damages, costs, losses and expenses in any manner, and by whomever brought resulting from, arising out of, or connected with any such injury. 27. Attorney Fees and Costs. In the event an action or suit or proceeding, including appeal therefrom, is brought for failure to complete the Required Improvements or to observe Page 12 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 any of the terms of this Agreement, parties shall be entitled to recover, in addition to other sums or performances due under this Agreement, reasonable attorney's fees and costs as the court may adjudge in said action, suit, proceeding or appeal. 28. Waiver. 28.1. Waiver of the strict performance of any provision of this Agreement shall not constitute the waiver of any other provision or of the Agreement. 28.2. No waiver may be enforced against the County unless such waiver is in writing and signed by the County. 29. Compliance with provisions, requirements of Federal and State laws, statutes, rules, regulations, executive orders and policies. Debt Limitation. 29.1. This Agreement is expressly subject to the debt limitation of Oregon counties set forth in Article XI, Section 10, of the Oregon Constitution. 29.2. Any provisions herein, which would conflict with the law, are deemed inoperative to that extent. 29.3. Additionally, Parties shall comply with any requirements, conditions or limitations arising under the any Federal or State law, statute, rule, regulation, executive order and policy applicable to the Required Improvements. 29.4. If this Agreement is in any manner construed to constitute the lending of the County's credit or constitute a debt of County in violation of Article XI, Section 10, of the Oregon Constitution, this Agreement shall be void. The parties agree and covenant not to assert otherwise, that this Agreement does not constitute the lending of the County's credit nor constitute a debt of County in violation of Article XI, Section 10, of the Oregon Constitution 30. No Inducement. No representations, statements, warranties have induced the making and execution of this Agreement, or Agreements other than those herein expressed. 31. Governing Law. 31.1. This Agreement shall be governed by and construed in accordance with the laws of the State of Oregon without regard to principles of conflicts of law. 31.2. Any claim, action, suit or proceeding (collectively, “Claim”) between County and Owner that arises from or relates to this Agreement shall be brought and conducted solely and exclusively within the Circuit Court of Deschutes County for the State of Oregon; provided, however, if a Claim shall be brought in a federal forum, then it shall be brought and conducted solely and exclusively within the United States District Court for the District of Oregon in Eugene, Oregon. 31.3. PARTIES, BY SIGNING BELOW, HEREBY CONSENT TO THE IN PERSONAM JURISDICTION OF SAID COURTS. The parties agree that the UN Convention on International Sales of Goods shall not apply. Page 13 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 32. Severability. If any term or provision of this Agreement is declared by a court of competent jurisdiction to be void, invalid or unenforceable, the validity of the remaining terms and provisions shall not be affected, and the rights and obligations of the parties shall be construed and enforced as if this Agreement did not contain the particular term or provision held void, invalid unenforceable. 33. Counterparts. 33.1. This Agreement may be executed in several counterparts, all of which when taken together shall constitute one Agreement binding on all parties, notwithstanding that all parties are not signatories to the same counterpart. 33.2. Each copy of this Agreement so executed shall constitute on original. 33.3. If this Agreement is signed in counterpart, each counterpart shall be recorded as provided herein for the recording of this Agreement and each counterpart shall be noted on the recorded plat map. 34. Notice. 34.1. Expect as otherwise expressly provided in this Agreement, any communications between the Parties hereto or notices to be given hereunder shall be given in writing to Owners or County at the address or number set forth below or to such other addresses or numbers as either party may hereafter indicate in writing. Delivery may be by personal delivery, facsimile, or mailing the same, postage prepaid. 34.2. Communication or notice by personal delivery shall be deemed delivered when actually given to the designated person or representative. 34.3. Any communication or notice sent by facsimile shall be deemed delivered when the transmitting machine generates receipt of the transmission. 34.4. To be effective against County, such facsimile transmission shall be confirmed by telephone notice to County's Director of Administrative Services. 34.5. Any communication or notice mailed shall be deemed delivered five (5) days after mailing. Any notice under this Agreement shall be mailed by first class postage or delivered as follows: To Owner: Pronghorn Intangibles LLC c/o The Resort Group LLC 1100 Alakea Street, 25th Floor Honolulu, Hawaii 96813 Fax No. ____________________ To County: Deschutes County Administrator Tom Anderson, Interim Deschutes County Administrator Deschutes County Administration 1300 NW Wall St., Ste. 200 Bend, OR 97701 Fax No. 541-388-4752 Page 14 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 35. Default. If Owner defaults under any obligation under this Agreement, County shall be entitled to pursue any and all available legal remedies including, without limitation, injunctive relief, specific performance, damages, and/or any remedies under the First Trust Deed. 36. Time is of the Essence. Time is of the essence of each and every provision of this Agreement. 37. Captions. 37.1. The captions contained in this Agreement were inserted for the convenience of reference only. 37.2. Captions do not, in any manner, define, limit, or describe the provisions of this Agreement or the intentions of the parties. 38. Merger Clause. 38.1. This Agreement and the attached exhibits constitute the entire agreement between the parties with respect to the subject matter hereof and supersedes any and all prior or contemporaneous negotiations and/or agreements among the parties, whether written or oral, concerning the subject matter of this Agreement which are not fully expressed herein. 38.2. All understandings and agreements between the parties and representations by either party concerning this Agreement are contained in this Agreement. 38.3. This Agreement shall bind all parties and its terms may not be waived, altered, modified, supplemented, or amended in any manner except by written instrument signed by all parties. 38.4. Except as otherwise expressly provided herein, any written waiver, consent, modification or change shall be effective only when in writing and signed by the parties in the specific instance and for the specific purpose given. /// Page 15 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 39. Effect of Agreement. This Agreement shall amend and has restated in their entirety the terms and requirements of the Original Improvement Agreement with respect to overnight lodging, and, accordingly, upon full execution of this Agreement, the terms of the Original Improvement Agreement that related to overnight lodging shall be deemed to have been superseded hereby. COUNTY: Dated this ____ of __________, 2012 BOARD OF COUNTY COMMISSIONERS ______________________________________ ANTHONY DEBONE, CHAIR ______________________________________ TAMMY BANEY, COMMISSIONER ATTEST: ______________________________________ Recording Secretary ______________________________________ ALAN UNGER, COMMISSIONER STATE OF OREGON ) ) ss. County of Deschutes ) Before me, a Notary Public, personally appeared ANTHONY DEBONE, TAMMY BANEY and ALAN UNGER, the above-named Board of County Commissioners of Deschutes County, Oregon and acknowledged the foregoing instrument on behalf of Deschutes County, Oregon. DATED this ___ day of ___________, 2012. _______________________________________ Notary Public for Oregon My Commission Expires: ____________________ ADDITIONAL SIGNATURES TO FOLLOW ON NEXT PAGE Page 16 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 Pronghorn Intangibles LLC, a Hawaii limited liability company By: __________________________________ Randy Koss, in his capacity as ______________________________________ For Pronghorn Intangibles LLC STATE OF OREGON County of Deschutes ) ) ) ss Before me, a Notary Public, personally appeared Randy Koss and acknowledged the foregoing instrument on behalf of Pronghorn Intangibles LLC as its ____________________. DATED this _____ day of _______________, 2012. _______________________________________ Notary Public for Oregon My Commission Expires: ____________________ Page 1 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 For Recording Stamp Only After Recording Return to: Deschutes County Community Development 117 NW Lafayette Bend, OR 97701 2012 AMENDMENT TO IMPROVEMENT AGREEMENT Deschutes County Document No. 2012-671 (Overnight Lodging) This Amendment to Improvement Agreement (“Agreement”), relates to the construction and installation of Required Improvements (as defined herein) to be constructed in the Pronghorn Destination Resort, hereafter referred to as “Resort,” as required in the conditions of approval identified in: Findings and Decisions for Deschutes County File Nos. M-02-1, Final Master Plan for a destination resort (the “Master Plan”); SP-02-49, Site Plan for visitor-oriented lodging, eating and meeting facilities; SP-08-2, Site Plan for hotel, extended by E-10-15; and SP-08-4, Site Plan for hotel, extended by E-10-14; by and between DESCHUTES COUNTY, OREGON, a political subdivision of the State of Oregon, herein after referred to as "County;” and PRONGHORN INTANGIBLES LLC, a Hawaii limited liability company (“PI” or “Owner”), as owner of Resort’s Hotel Site A, and Hotel Site B, (collectively “Future Development Sites”, defined herein) and signify agreement to this Agreement by signing below. This Agreement is effective upon signature of all parties. RECITALS WHEREAS, Owner has acquired title to the Future Development Sites; and WHEREAS, Owner’s predecessor in title and County entered into an Improvement Agreement (Overnight Lodging) recorded in the Official Records of Deschutes County at 2002 - 68693 as amended and restated pursuant to that certain 2008 Amendment to Improvement Agreement (Overnight Lodging) recorded at 2008-22062 (collectively referred to as the “Original Improvement Agreement”). REVIEWED ______________ LEGAL COUNSEL Page 2 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 WHEREAS, Owner intends to comply with County conditions of development approval, including but not limited to the obligation to construct overnight lodging units on Future Development Sites; and WHEREAS, pursuant to the Original Improvement Agreement, Prior Owners, in whole or in part, deposited funds to be held in a trust account (the “Trust Account”) with the County in the amount of Seven Million Four Hundred Thousand Dollars ($7,400,000), as financial assurance to guarantee that the obligation to build the overnight lodging units would be fulfilled on the designated sites in compliance with DCC Section 18.124.050; and WHEREAS, the current balance of the Trust Account funds (including accrued interest) is approximately $9.3 million; and WHEREAS, DCC Section 18.113.110, related code provisions, and prior agreements between County and Prior Owners provide that County may utilize the financial assurance provided to pursue completion of the Required Improvements (as defined herein); and WHEREAS, the deadline under the Original Improvement Agreement to complete construction of the overnight lodging units on Hotel Site A has expired, and Owner desires to enter into this Agreement with County such that the obligations running with the Future Development Sites are not in default, and Owner desires to bring the Resort into full compliance with all land use approvals and legal requirements; and WHEREAS, County agrees to release all of the Trust Account funds toward construction on the Phase 1 Site, defined herein and pursuant to the terms of this Agreement and Owner will pay for the balance of the costs, associated with completion of construction on the Future Development Sites; and WHEREAS, Owner commits to providing financial assurance for timely completion of the Required Improvements in the form of conveyance to the County of a First Trust Deed over the land constituting the first of the two Future Development Sites (the “Phase 1 Site”) and all fixtures and improvements constructed thereon, which First Trust Deed shall name County as beneficiary and shall be delivered to the County, free and clear of encumbrances created or suffered by Owner to guarantee completion of all Required Improvements (as defined herein); and WHEREAS, the Phase I Site, upon completion of construction of the overnight units thereon, shall contain overnight units with a fair market value of at least 60% of the estimated combined total value of the Future Development Sites when construction of all necessary improvements on those sites is completed, and at least sixty percent (60%) of the overnight units required of Owner under the Required Ratio (as defined herein), and WHEREAS, it is the intention of the parties that if Owner does not perform as agreed in this Agreement, County, as beneficiary under the Trust Deed, shall be immediately entitled to exercise any and all of remedies under Oregon law including, without limitation, foreclosure of the Trust Deed with the power of sale, free from the claim or lien of any person or entity; and WHEREAS, Deschutes County Code (“DCC”) 18.113.060(D)(2) and the Master Plan currently contain requirements that are more stringent than Oregon Revised Statutes, requiring that the Owner construct overnight units in numbers calculated by a ratio of at least two (2) permanent dwellings per each one (1) overnight lodging unit; and the Parties have contemplated amending DCC to allow a ratio of not less than two and one-half (2 ½) permanent Page 3 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 dwellings per each one (1) overnight lodging unit and the County may or may not hereafter approve such amendment, the result of which will be referenced herein as the “Required Ratio” as applicable; and WHEREAS, the Required Improvements under this Agreement do not constitute a Public Improvement as the term is defined in ORS 279A.010(1)(cc); and NOW, THEREFORE, AGREEMENT IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES above mentioned, for and in consideration of the mutual promises hereinafter stated, as follows: 1. Recitals. The Recitals to this Agreement set forth above are hereby incorporated herein as if fully set out, shall constitute contractual provisions and are not mere recitals. 2. Real Property Description. The real property subject to this Agreement, is described on attached Exhibit A, also known as Tax Lots 161316C000300 and 161316D000500. 3. Exhibits. The exhibits set forth below and attached to the Agreement are hereby incorporated herein by reference: 3.1. Exhibit A – Legal Description of Future Development Sites; 3.2. Exhibit B –Trust Deed. 4. Identification of Required Improvements. 4.1. Owner shall install and complete, or cause to be installed and completed the Required Improvements, as set forth in SP-08-2 and SP-08-4 to the extent that the same remain to be completed. 4.2. Provided that the Required Improvements satisfy the definition of an “overnight lodging unit” as defined in the County code, Owner shall have the ability to design the type of product (e.g., conventional multi-story hotel, lodge, villa, etc.) to be constructed on the Future Development Sites and submit applications to either amend the County site plan approvals listed in Section 4.1. or new site plan applications accordingly. 5. Construction of Required Improvements; Status Reports. 5.1 The number of Required Improvements that Owner shall construct is 142 units if the Required Ratio remains at 2:1 and 104 units if Owner receives County land use approval for a Required Ratio of 2.5:1. 5.2 The Required Improvements shall be constructed in accordance with applicable building and specialty codes and regulations, and the design and construction plans and specifications approved by the County. Page 4 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 5.3. Owner shall engage consultants and contractors who shall cause Phase 1 Site (which, upon completion of construction of the overnight lodging units thereon, shall contain not less than 60% of the total number of units comprising the Required Improvements and shall have an estimated market value of not less than 60% of the total combined value of the Future Development Sites after construction of all Required Improvements on such sites), to be designed, constructed, inspected and receive occupancy approval from the County and/or the State of Oregon not later than June 30, 2017, (“Phase 1 Completion Date”), unless extended by mutual agreement of the Parties. 5.4. Timeline for Construction of Required Improvements Construction Phase Deadline Phase 1 Conceptual Plans December 31, 2013 Phase 1 Construction Drawings December 31, 2014 Phase 1 Commencement June 30, 2015 Phase 2 Conceptual Plans June 30, 2015 Phase 2 Construction Drawings June 30, 2016 Phase 1 Completion June 30, 2017 Phase 2 Commencement June 30, 2017 Phase 2 Completion Dec. 31, 2018 As the Timeline depicted above demonstrates (“Timeline”), Owner shall cause Phase 2 to be designed, constructed, inspected and receive occupancy approval from the County and/or the State of Oregon not later than December 31, 2018 (“Phase 2 Completion Date”), unless extended by mutual agreement of the Parties. 5.5. Owner shall promptly and without delay and at no cost to the County repair all facilities and all real property wherever located, damaged during any construction-related activities. 5.6. As used herein, the term “Applicable Completion Date” shall mean and refer to the Phase 1 Completion Date when the context indicates that construction of Phase 1 is at issue and it shall mean and refer to the Phase 2 Completion Date when the context indicates that construction of Phase 2 is at issue. 5.7. Commencing in June, 2013, Owner shall provide County with monthly updates regarding its progress in completing the Required Improvements. 5.7.1. Such updates shall be submitted in writing and shall be submitted to the Deschutes County Community Development Department (“CDD”) or such other contact as County designates in writing, and may be presented, to the Board of County Commissioners (“Board”) by a representative of Owner at a regularly scheduled Board Business Meeting or Work Session. 5.7.2 In advance of such meeting or work session Owner shall permit CDD and CDD’s consultant (at County’s cost) to enter the Property for purposes of verifying information contained in each update. Page 5 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 5.7.3. Each update shall, at a minimum, include specific information regarding the following: 5.7.3.1. The percentage of the Required Improvements completed to date; 5.7.3.2. Any changes in the anticipated cost and an updated timeline to complete the Required Improvements; 5.7.3.3. Details and explanation of any changes in the construction timeline from the date of this Agreement and/or the date of the last update provided to the Board; and 5.7.3.4. Any other information County may reasonably request. 5.8. Parties acknowledge that the Timeline depicted in section 5.4 above assumes that third parties will not interfere in Owner’s performance. 5.8.1. In the event Owner is delayed at any time in the progress of constructing the Required Improvements by the action of any fire, adverse weather conditions, unavoidable casualties, acts of God, any third party unrelated to Owner, or any other causes beyond Owner’s control, then Owner may request extension of performance of specific tasks and for specific periods of time that directly relate to the nature and impact of the specific interference. 5.8.1. County shall consider such requests in good faith and if it approves, the parties shall memorialize the modification in writing. 6. Warranty of Improvements. 6.1. Owner and County hereby agree that the Phase 1 portion of the Required Improvements shall remain free from defects in materials or workmanship and that Phase 1 continues to meet County and/or State of Oregon standards for twelve (12) months following completion of construction of Phase 1 ("Phase 1 Warranty Period"). 6.2. Owner hereby warrants that the Phase 2 portion of the Required Improvements shall remain free from defects in materials or workmanship and that Hotel B continues to meet County and/or State of Oregon standards for twelve (12) months following completion of construction of Phase 2 (“Phase 2 Warranty Period”). 6.3. As used herein, the term “Applicable Warranty Period” shall mean and refer to the Phase 1 Warranty Period when the context indicates that Phase 1 is at issue and it shall mean and refer to the Phase 2 Warranty Period when the context indicates that Phase 2 is at issue. Page 6 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 6.4 Owner shall provide County with a warranty bond as to Phase 1 and Phase 2 improvements upon completion of construction of each phase, in a form and amount reasonably acceptable to County. 7. License to Enter and Remain on Property. 7.1. Owner hereby grants County and County's employees, engineers, consultants, agents, contractors, subcontractors and suppliers license to come onto and remain on such portions of the Future Development Sites as necessary to make inspections of the Required Improvements. 7.2. In addition to any other remedies contemplated herein, if County determines that any portion of the Required Improvements has not been completed by the Applicable Completion Date, County or its employees, engineers, consultants, agents, contractors, subcontractors and suppliers may enter onto and remain on the applicable portions of the Future Development Sites and may cause the applicable portion of the Required Improvements to be installed and completed. 7.3. Any funds held by the County in Trust may be applied toward completion costs. 8. Ingress and Egress. Prior to or contemporaneous with recording any instrument conveying any platted lot located on the Future Development Sites, Owner shall provide each purchaser with legal rights of ingress and egress to the platted lot. 9. No County Guarantee. County does not guarantee that any of the Required Improvements referred to in this Agreement will be constructed, maintained or operated. 10. License to Use Permits, Specifications and Plans. 10.1. If County determines that any portion of the Required Improvements has not been satisfactorily completed as specified by the Applicable Completion Date, Owner shall, upon request of the County, license or assign to County all applicable contracts, permits, plans, specifications, shop drawings, instruments, and approvals, and other documents necessary or useful in the completion of or related in any manner to the applicable portion of the Required Improvements (the “Documents”). 10.2. Owner shall be responsible for providing within any contracts for supply or labor and materials used in connection with constructing the Required Improvements that such contract rights are assignable by Owner, but Owner is not responsible for providing terms to assure compliance with public contracting rules. 10.3 Upon County’s request pursuant to Section 10.1, Owner shall cause delivery of physical possession of such Documents to the County. 10.4 Owner’s obligations shall extend only to those Documents that relate to the portion of the Required Improvements that have not been satisfactorily completed as specified by the Applicable Completion Date. Page 7 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 10.5 County may assign the license referred to in this section for any purpose related to completion of the Required Improvements without further approval from Owner. 11. No Third Party Beneficiaries. 11.1. The Parties named herein are the only parties to this Agreement and are the only parties entitled to enforce its terms, except as rights and responsibilities run with the land to successors in title or legal responsibility. 11.2. Nothing in this Agreement gives or provides any benefit or right, whether directly, indirectly, or otherwise, to third persons unless such third persons are individually identified by name in this Agreement and expressly described as intended beneficiaries of this Agreement. 12. Restoration of Monuments. Owner shall restore any monument erected or used for the purpose of designating a survey marker or boundary of any town, tract, plat or parcel of land which monument is broken, damaged, removed or destroyed, during the course of work provided for or anticipated by this Agreement, whether intentional or otherwise, by Owners or Owner's agents, employees or independent contractors. 13. Costs of Inspection. Owner shall pay to County the usual and customary costs incurred by County in the inspection of the completed Required Improvements plus any fees, such as plan check fees and structural, electrical, plumbing and other specialty codes inspection fees normally associated with the review and inspection of any improvements on the real property. 14. Security for Required Improvements. 14.1. As security for Owner’s obligations to complete the Required Improvements, upon execution of this Agreement, Owner shall execute a First Trust Deed, in the form attached as Exhibit B, on the Phase 1 Site (whichever of the two hotel sites, previously referenced as A or B, is developed first, to include at least 60% of the Required Improvements), which shall immediately be recorded in the official records of Deschutes County. 14.2. The First Trust Deed shall name County as beneficiary, and shall convey the Phase I Site and all fixtures and improvements constructed thereon, and all rents accruing therefrom, to the trustee of County’s choice in trust, free of any liens or encumbrances created or suffered by Owner, with power of foreclosure, sale and any other remedies permitted by applicable law. 14.3. Owner estimates that the value of the Phase 1 Site, together with the completed improvements and fixtures, will exceed the current value of the Trust Account (i.e., $9,300,000). 14.4. The estimated value of the Phase 1, together with completed improvements shall be verified by a third party independent appraisal (at Owner’s cost) at the time of Phase 1 completion, and if the value does not equal at least 120% of the estimated value of the Phase 2 improvements, Owner agrees to post additional security for the difference between the value of the Phase 1 real property, Page 8 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 improvements, and fixtures, and the 120% of the estimated value of the Phase 2 improvements, in the form of a bond, irrevocable letter of credit or other financial assurance acceptable to County until such time as all Required Improvements are complete. 15. Owner’s Obligation for Costs. 15.1. Parties expressly acknowledge, understand, and agree that this Agreement shall not relieve parties from the obligation to complete and fully pay for the Required Improvements and other costs and fees set forth in this Agreement and in the Deschutes County Code. 15.2. Should Owner fail to perform responsibilities under this Agreement, Owner shall compensate County for all costs, related to Owner’s failure to perform its obligation to complete and warrant the Required Improvements and pay costs and fees including, without limitation, the costs of pursuing any remedy under this Agreement or the First Trust Deed. 16. Release of Security or Obligation. After the Required Improvements have been inspected and approved by the County Community Development Department, County shall release the respective security within fifteen (15) days of Owner’s written request, provided Owner has procured the warranty bond required pursuant to Section 6 of this Agreement. . 17. Trust Account Releases for Phase 1 Construction 17.1. The Trust Account fund amounts to approximately $9.3 million and will continue to accrue interest until such time as all of the funds in the Trust Account have been expended in accordance with this Agreement. 17.2. Owner shall submit conceptual plans and construction drawings for each phase in accordance with the timeline set forth in Section 5, above. 17.3. Construction drawings shall include a construction budget, including a Guaranteed Maximum Price “GMP” which shall be approved in advance by Parties in writing for the total project budget. 17.4. GMP phases shall be divided into commonly used phases of construction. 17.5. The phases of construction shall be divided pursuant to the Sample Draw Form attached as Exhibit C to this Agreement. (This form is provided as a general example with values provided for illustrative purposes only.) 17.6. Separate budget amounts shall be specified and agreed upon by the Parties in writing prior to commencement of each phase of work. 17.7 After Owner completes design and construction documents and enters into a construction contract, the value of the contract, less the amount of funds then held in the Trust Account by County, shall be Owner’s Initial Contribution toward construction of Phase 1. Page 9 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 17.8. After construction commences and Owner has paid Contractor Owner’s Initial Contribution, then and thereafter, Owner will submit draw requests to County for payment of the construction costs from Trust Account. Provided however, nothing contained herein shall be construed as obligating the County for any costs, other than the funds contained in the Trust Account. 17.9 If Owner agrees to increase the GMP, then Owner shall increase by a like amount Owner’s Initial Contribution, such that the Trust Account funds are never applied toward construction costs until after Owner’s Initial Contribution. 17.10. Owner shall submit a draw requests, from time to time, but in no event more than once during any calendar month, to the County. 17.11. The draw requests shall provide a detailed explanation of the work for which the funds are being requested. 17.12. At no time shall County remit funds for work not yet completed. 17.13 Owner shall provide to County all invoices from contractors, sub-contractors, and suppliers with each draw request to allow verification of costs and work performed. 17.14 Owner shall provide to County all lien releases, whether conditional or unconditional, to verify payment status of invoices received. 17.15 The project architect shall independently review all draw requests and shall physically inspect work completed to verify work is completed prior as set forth in the draw request. 17.16. Architect’s certification of same shall be provided to County by Owner with each draw request. 17.17. Within fifteen (15) days after receipt, the County shall examine each draw request to insure compliance with the requirements set forth herein. 17.18. Provided that the requirements set forth herein have been satisfied and Owner is not in default under this Agreement, County shall remit Trust Account funds in agreed/requested amounts directly to contractor (or as specifically directed by Owner), less 5% retainage to be held by County. 17.20. Upon County issuance of a final certificate of occupancy and Owner submission to County of all certificates of payment and lien releases, County shall release retainage to Owner. 17.21 Owner acknowledges that there will be significant non-construction costs involved in the completion of the Required Improvement including but not limited to land use planning, design and engineering, inspections, permits, fees and costs, customarily referenced as “soft costs”, and these will be paid by Owner without reimbursement from the Trust Account or the County. Page 10 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 17.22. Such soft costs shall not be considered part of Owner’s Initial Contribution. 18. Substandard Improvements. 18.1. Should any portion of the Required Improvements prove to be substandard, meaning not in compliance with applicable codes or design plans or otherwise or defective, within the twelve (12) month Applicable W arranty Period in Section 6 of this Agreement, County shall notify Owner of the warranty obligation in writing of such substandard or defective Required Improvements. 18.2. Owner shall then have sixty (60) days to complete repair or replacement of the applicable portion of the Required Improvements. 18.3. In the event that such repair or replacement cannot reasonably be completed within sixty days, then the same shall be extended by such period of time as is reasonably necessary so long as Owner promptly commences and thereafter diligently prosecutes such repair or replacement. 18.4. Should Owner fail to complete repair or replacement of the applicable portion of the Required Improvements within the required time period, County may remedy the defects and recover payment for same from Owner. 19. Successors in Interest. 19.1. The original of this Agreement shall be recorded with the Deschutes County Clerk and shall be a condition and covenant that shall run with the Future Development Sites, binding heirs, successors, and assigns. 19.2. It is the intent of the parties that the provisions of this Agreement shall be binding upon the parties to this Agreement, and, their respective successors, heirs, executors, administrators, and assigns, and any other party deriving any right, title or interest in or to the Future Development Sites, including any mortgagee or other secured party in actual possession of said Future Development Sites by foreclosure or otherwise or any person taking title from such security holder. 19.3. Upon completion of all of the Required Improvements, and the expiration of all Warranty Periods, County shall release the Future Development Sites from the development conditions and covenants subsisting under this Agreement. 20. Binding Authorization. By signature on this Agreement, each signatory, signing in a representative, capacity certifies that the signer is authorized to sign the Agreement on behalf of and bind the signer's principal. 21. Expiration. 21.1 Unless otherwise extended, this Agreement shall expire twelve (12) months after the completion of all Required Improvements or December 31, 2019, whichever is earlier, or by County’s express written release of Owner from this Agreement. 21.2. Notwithstanding the foregoing, this Agreement shall survive until the conclusion of any claim or dispute arising from or under this Agreement. Page 11 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 21.3 Upon expiration, the parties agree to execute a document in recordable form, formally evidencing such expiration. 22. Survival. Parties’ rights under this Agreement, including County's right to pay the full costs and expenses of completing the Required Improvements and repairs or replacements required herein along with any licenses granted in this Agreement and any costs of enforcement of this Agreement, shall survive the expiration of this Agreement to the extent the Owner’s obligations hereunder have not been satisfied in full before such expiration. 23. No Agency. 23.1. It is agreed by and between the Parties that Owner is expressly not carrying out a function on behalf of County, and County does not have the right of direction or control of the manner in which Owner complete performance under this Agreement nor does County have a right to exercise any control over the activities of the Owner beyond those allowed under building and land use codes. 23.2. Neither Owner nor its members is an officer, employee or agent of County as those terms are used in ORS 30.265. 24. No Joint Venture or Partnership. County is not, by virtue of this Agreement, a partner or joint venturer with Owner in connection with the Future Development Sites, and shall have no obligation with respect to Owner debts or other liabilities of each and every nature. 25. Liens. 25.1 Owner shall pay as due all claims for work done on and for services rendered or material furnished to the Future Development Sites and shall keep the Future Development Sites free from liens. 25.2. If Owner fails to pay any such claims or to discharge any lien, County may do so and collect the cost from Owner. 25.3. County’s payment of claims and discharge of liens shall not constitute a waiver of any right or remedy that County may have on account of Owner's failure to complete the Required Improvements or failure to observe the terms of this Agreement. 26. Indemnification. Owner shall be responsible for any and all injury to any and all persons or property caused directly or indirectly by reason of any and all activities of Owner under this Agreement and on the Future Development Sites; and further agrees to defend, indemnify and save harmless County, its officers, agents and employees from and against all claims, suits, actions, damages, costs, losses and expenses in any manner, and by whomever brought resulting from, arising out of, or connected with any such injury. 27. Attorney Fees and Costs. In the event an action or suit or proceeding, including appeal therefrom, is brought for failure to complete the Required Improvements or to observe Page 12 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 any of the terms of this Agreement, parties shall be entitled to recover, in addition to other sums or performances due under this Agreement, reasonable attorney's fees and costs as the court may adjudge in said action, suit, proceeding or appeal. 28. Waiver. 28.1. Waiver of the strict performance of any provision of this Agreement shall not constitute the waiver of any other provision or of the Agreement. 28.2. No waiver may be enforced against the County unless such waiver is in writing and signed by the County. 29. Compliance with provisions, requirements of Federal and State laws, statutes, rules, regulations, executive orders and policies. Debt Limitation. 29.1. This Agreement is expressly subject to the debt limitation of Oregon counties set forth in Article XI, Section 10, of the Oregon Constitution. 29.2. Any provisions herein, which would conflict with the law, are deemed inoperative to that extent. 29.3. Additionally, Parties shall comply with any requirements, conditions or limitations arising under the any Federal or State law, statute, rule, regulation, executive order and policy applicable to the Required Improvements. 29.4. If this Agreement is in any manner construed to constitute the lending of the County's credit or constitute a debt of County in violation of Article XI, Section 10, of the Oregon Constitution, this Agreement shall be void. The parties agree and covenant not to assert otherwise, that this Agreement does not constitute the lending of the County's credit nor constitute a debt of County in violation of Article XI, Section 10, of the Oregon Constitution 30. No Inducement. No representations, statements, warranties have induced the making and execution of this Agreement, or Agreements other than those herein expressed. 31. Governing Law. 31.1. This Agreement shall be governed by and construed in accordance with the laws of the State of Oregon without regard to principles of conflicts of law. 31.2. Any claim, action, suit or proceeding (collectively, “Claim”) between County and Owner that arises from or relates to this Agreement shall be brought and conducted solely and exclusively within the Circuit Court of Deschutes County for the State of Oregon; provided, however, if a Claim shall be brought in a federal forum, then it shall be brought and conducted solely and exclusively within the United States District Court for the District of Oregon in Eugene, Oregon. 31.3. PARTIES, BY SIGNING BELOW, HEREBY CONSENT TO THE IN PERSONAM JURISDICTION OF SAID COURTS. The parties agree that the UN Convention on International Sales of Goods shall not apply. Page 13 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 32. Severability. If any term or provision of this Agreement is declared by a court of competent jurisdiction to be void, invalid or unenforceable, the validity of the remaining terms and provisions shall not be affected, and the rights and obligations of the parties shall be construed and enforced as if this Agreement did not contain the particular term or provision held void, invalid unenforceable. 33. Counterparts. 33.1. This Agreement may be executed in several counterparts, all of which when taken together shall constitute one Agreement binding on all parties, notwithstanding that all parties are not signatories to the same counterpart. 33.2. Each copy of this Agreement so executed shall constitute on original. 33.3. If this Agreement is signed in counterpart, each counterpart shall be recorded as provided herein for the recording of this Agreement and each counterpart shall be noted on the recorded plat map. 34. Notice. 34.1. Expect as otherwise expressly provided in this Agreement, any communications between the Parties hereto or notices to be given hereunder shall be given in writing to Owners or County at the address or number set forth below or to such other addresses or numbers as either party may hereafter indicate in writing. Delivery may be by personal delivery, facsimile, or mailing the same, postage prepaid. 34.2. Communication or notice by personal delivery shall be deemed delivered when actually given to the designated person or representative. 34.3. Any communication or notice sent by facsimile shall be deemed delivered when the transmitting machine generates receipt of the transmission. 34.4. To be effective against County, such facsimile transmission shall be confirmed by telephone notice to County's Director of Administrative Services. 34.5. Any communication or notice mailed shall be deemed delivered five (5) days after mailing. Any notice under this Agreement shall be mailed by first class postage or delivered as follows: To Owner: Pronghorn Intangibles LLC c/o The Resort Group LLC 1100 Alakea Street, 25th Floor Honolulu, Hawaii 96813 Fax No. ____________________ To County: Deschutes County Administrator Tom Anderson, Interim Deschutes County Administrator Deschutes County Administration 1300 NW Wall St., Ste. 200 Bend, OR 97701 Fax No. 541-388-4752 Page 14 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 35. Default. 35.1 If Owner defaults under any obligation under this Agreement, County shall be entitled to pursue any and all available legal remedies including, without limitation, injunctive relief, specific performance, damages, and/or any remedies under the First Trust Deed. 35.2 Should the County, upon default of Owner, choose to exercise its rights under the First Trust Deed, the unsatisfied obligation owed to County and secured by the First Trust Deed shall be equal to 120% of the reasonable cost of completing the Required Improvements. 35.3 Until such time as an actual GMP is prepared for construction of the Required Improvements upon the Phase 2 site, the parties agree that, for purposes of calculating the dollar amount of Owner’s obligations under this Agreement, the cost of constructing the Required Improvements on the Phase 2 site is, and will in the future be, $10 million, which amount is a reasonable estimate of the costs of constructing such improvements. 36. Time is of the Essence. Time is of the essence of each and every provision of this Agreement. 37. Captions. 37.1. The captions contained in this Agreement were inserted for the convenience of reference only. 37.2. Captions do not, in any manner, define, limit, or describe the provisions of this Agreement or the intentions of the parties. 38. Merger Clause. 38.1. This Agreement and the attached exhibits constitute the entire agreement between the parties with respect to the subject matter hereof and supersedes any and all prior or contemporaneous negotiations and/or agreements among the parties, whether written or oral, concerning the subject matter of this Agreement which are not fully expressed herein. 38.2. All understandings and agreements between the parties and representations by either party concerning this Agreement are contained in this Agreement. 38.3. This Agreement shall bind all parties and its terms may not be waived, altered, modified, supplemented, or amended in any manner except by written instrument signed by all parties. 38.4. Except as otherwise expressly provided herein, any written waiver, consent, modification or change shall be effective only when in writing and signed by the parties in the specific instance and for the specific purpose given. /// Page 15 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 39. Effect of Agreement. This Agreement shall amend and has restated in their entirety the terms and requirements of the Original Improvement Agreement with respect to overnight lodging, and, accordingly, upon full execution of this Agreement, the terms of the Original Improvement Agreement that related to overnight lodging shall be deemed to have been superseded hereby. COUNTY: Dated this ____ of __________, 2012 BOARD OF COUNTY COMMISSIONERS ______________________________________ ANTHONY DEBONE, CHAIR ______________________________________ TAMMY BANEY, COMMISSIONER ATTEST: ______________________________________ Recording Secretary ______________________________________ ALAN UNGER, COMMISSIONER STATE OF OREGON ) ) ss. County of Deschutes ) Before me, a Notary Public, personally appeared ANTHONY DEBONE, TAMMY BANEY and ALAN UNGER, the above-named Board of County Commissioners of Deschutes County, Oregon and acknowledged the foregoing instrument on behalf of Deschutes County, Oregon. DATED this ___ day of ___________, 2012. _______________________________________ Notary Public for Oregon My Commission Expires: ____________________ ADDITIONAL SIGNATURES TO FOLLOW ON NEXT PAGE Page 16 of 16 – AMENDMENT TO IMPROVEMENT AGREEMENT – DC Contract No. 2012-671 Pronghorn Intangibles LLC, a Hawaii limited liability company By: __________________________________ Randy Koss, in his capacity as ______________________________________ For Pronghorn Intangibles LLC STATE OF OREGON County of Deschutes ) ) ) ss Before me, a Notary Public, personally appeared Randy Koss and acknowledged the foregoing instrument on behalf of Pronghorn Intangibles LLC as its ____________________. DATED this _____ day of _______________, 2012. _______________________________________ Notary Public for Oregon My Commission Expires: ____________________