EXHIBIT 10.7
AGREEMENT
This Agreement (hereinafter referred to as "Agreement") is made as of the
1st day of January, 1994, by and among MARRIOTT DESERT SPRINGS LIMITED
PARTNERSHIP, a Delaware limited partnership (hereinafter referred to as
"Owner"), DESERT SPRINGS HOTEL SERVICES, a venture controlled by Marriott
International, Inc. (hereinafter referred to as "Operator"), and MARRIOTT
OWNERSHIP RESORTS, INC., a Delaware corporation (hereinafter referred to as
"Developer").
RECITALS
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A. The parties hereto previously entered into that certain Recreational
License dated as of November 3, 1989 (the "Recreational License") and recorded
on March 23, 1990 as Instrument No. 106099 in the Office of the County Recorder
of Riverside County, California (the "Recorder's Office"), and on even date
therewith, the Developer assigned its rights and certain of its responsibilities
under the Recreational License to DESERT SPRINGS VILLAS TIMESHARE ASSOCIATION, a
California non-profit mutual benefit corporation (the "Association"), and the
parties (including the Association) subsequently entered into that certain First
Amendment to Recreational License dated February 12, 1991 (the "First
Amendment") and recorded on April 26, 1991 as Instrument No. 137896 in the
Recorder's Office, all of which relates to that certain timeshare project known
as Desert Springs Villas ("DSV I").
B. The parties hereto desire to amend certain provisions of the
Recreational License and First Amendment and propose entering into that certain
Amended and Restated Recreational License dated of even date herewith and
attached hereto as Exhibit A and have agreed to certain additional matters set
forth herein as an inducement to certain of the other parties agreeing to enter
into the Amended and Restated Recreational License.
C. The parties hereto are simultaneously entering into that certain
Recreational License dated of even date herewith and attached hereto as Exhibit
B, which relates to that certain timeshare project to be developed adjacent to
DSV I and to either be made a part of DSV I or developed as a separate timeshare
project to be known as Desert Springs Villas II or such other name chosen by the
Developer ("DSV II").
NOW, THEREFORE, in consideration of the mutual premises contained herein
and other good
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and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. RECITALS. The aforedescribed recitals are true and correct and
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incorporated herein by reference as if fully set forth.
2. AGREEMENTS FOR USE OF RESORT FACILITIES. Exhibits A and B attached
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hereto are incorporated herein by reference as if fully set forth, and they
fully describe the rights and responsibilities of the parties hereto relative to
the use of certain facilities of Marriott's Desert Springs Resort and Spa (the
"Resort") described therein.
3. ADDITIONAL RIGHTS AND RESPONSIBILITIES. The parties hereto agree to
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certain additional rights and responsibilities as follows:
(a) Upgrade to Resort Swimming Pool and Spa Facilities. Developer
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agrees to pay $1.3 Million to the Owner to be used by it to upgrade the Resort
swimming pool and spa facilities substantially in accordance with the conceptual
drawings previously reviewed and agreed upon by the parties hereto and pursuant
to a construction schedule and payment schedule mutually agreed to by Owner and
Developer. Owner and Developer further agree to each paying one-half (1/2) of
the design costs for the upgraded pool charged by Marriott's Architecture and
Construction Division, which costs shall not exceed $30,000.
(b) Limitations on Rentals; Payment of Gross Rental Proceeds.
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Developer agrees not to separately rent out the second bedroom or guest suite
portion of a unit at DSV I or DSV II respectively, as applicable, (the "lock-out
unit"), except for use by it in the promotion of the sale of time-share
interests, for its own account during the period of construction and sell-out of
DSV I or DSV II respectively, as applicable. In addition to the foregoing
limitation as it applies to DSV II units, for units at DSV II," Developer
further agrees to require a minimum of a two night stay (except in its promotion
of the sale of its time-share interests) on all rentals of units at DSV II
rented by or through the Developer or its wholly owned subsidiary and management
company, Marriott Resorts Hospitality Corporation, or either of their successors
and/or assigns or affiliates.
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Developer agrees to pay to Owner 2.5% of the gross rental proceeds
realized by Developer on the rental of any of the condominium units at DSV I or
DSV II rented by it or its affiliates commencing upon the first to occur of
either (i) completion of construction of 100 condominium units at DSV II as
described in the attached Exhibit B hereto or (ii) January 1, 1996. Said
payments of a portion of the gross rental proceeds shall continue through the
initial term and any renewal term of the licenses described in the attached
Exhibits A and B hereto. Payments shall be due within 20 days of the end of each
accounting quarter of Developer. Upon not less than seventy-two (72) hours prior
written notice, Developer agrees to allow the Owner and/or Operator or either of
their respective agents to audit the Developer's books and records during
Developer's normal business hours to verify proper payment to Owner of the
aforedescribed payment of 2.5% of the gross rental proceeds.
(c) Construction of Additional Tennis Courts. At the option of Owner
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and with agreement of the Developer, which agreement shall not be unreasonably
withheld, that the existing tennis courts to be used by hotel guests and
authorized users pursuant to Exhibits A and B hereto are insufficient to
reasonably accommodate the then-existing demand, the Developer agrees to fund
the construction of up to three (3) additional standard tennis courts, and with
the plans for such courts and any alterations thereto to receive the prior
approval of the Owner, which approval shall not be unreasonably withheld.
(d) Golf Course Alterations. The Owner and Operator agree to allow the
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Developer to make the following alterations, at the Developer's sole cost and
expense and with the Owner's and Operator's prior approval, which approval shall
not be unreasonably withheld, to the Resort golf courses and related facilities:
(i) To alter Hole Nos. 10, 14 and 15 of the Valley Golf Course in
order to shorten Hole No. 10 by approximately 20 yards to move the green closer
to the tee box and add a water feature in front of the green, to shorten Hole
No. 14 by approximately 40 yards to relocate the tee boxes to allow for a
connector road, to relocate the Hole No. 15 tee boxes closer to the green to
allow for additional parking; and, if required as a result of the foregoing
alterations, to relocate the existing men's and women's restrooms;
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(ii) To alter and enhance the entrance to DSV I, to improve the
golf course crossing near the entrance, and to modify Hole Nos. 6 and 7 of the
Palm Golf Course, as necessary, to accomplish the foregoing; and
(iii) To make whatever reasonable additional alterations may be
required to maintain the "playability" and "interest" of the golf course in the
opinion of the golf course architect, Ted Robinson.
(e) Construction of DSV II Swimming Pool Facility. Developer agrees to
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construct a swimming pool facility as part of DSV II that will be attractive
enough to deter users of the DSV II units and facilities from using the Resort
swimming pool facility and to encourage them to utilize their on-site DSV II
swimming pool facility, and in connection with such construction, Developer
agrees to spend at least $1.3 million to accomplish the foregoing.
(f) Pre-Condition to Developer's Responsibilities. Notwithstanding
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anything to the contrary set forth herein, unless otherwise agreed to by the
Developer, the Developer shall not be obligated to perform its responsibilities
described in this Paragraph 3 until the earlier to occur of (i) issuance of a
final public report by the California Department of Real Estate ("DRE") for DSV
II or (ii) December 31, 1994, and prior to such date, the Developer may
terminate this Agreement and the Recreational License relative to DSV II should
it decide not to proceed with the development of DSV II.
4. ASSIGNMENT. This Agreement may not be assigned by any of the parties
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hereto without the prior written consent of the other parties, which consent
shall not be unreasonably withheld.
5. NOTICES. Any notices required hereunder shall be as set forth in the
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attached Exhibit A hereto.
6. WRITTEN AGREEMENT AS ENTIRE UNDERSTANDING OF THE PARTIES. This
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Agreement embodies the entire understanding of the parties hereto. There are no
other agreements or understandings, written or oral, in effect between the
parties related to the subject matter hereof. This Agreement may only be
modified by a written instrument signed by each of the respective parties
hereto.
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7. BINDING EFFECT. This Agreement is binding upon the successors and
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assigns of the parties hereto.
8. GOVERNING LAW. The provisions of this Agreement shall be governed by
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California law.
IN WITNESS WHEREOF, the parties hereto have set their respective hands and
seals on the dates hereinbelow listed.
OWNER:
MARRIOTT DESERT SPRINGS
LIMITED PARTNERSHIP
BY: Marriott Desert Springs Corporation,
a Delaware corporation,
General Partner
ATTEST: /s/Christopher G. Townsend BY: /s/Robert E Parsons, Jr,
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Christopher G. Townsend, Robert E Parsons, Jr,
Secretary President
(Corporate Seal) DATE:
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OPERATOR:
DESERT SPRINGS HOTEL SERVICES
BY: Marriott International, Inc.,
a Delaware Corporation, Joint Venturer
ATTEST: /s/Joan Rector McGlockton BY: /s/William R. Tiefel
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Joan Rector McGlockton, William R. Tiefel,
Secretary Vice President
(Corporate Seal) DATE:
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DEVELOPER:
MARRIOTT OWNERSHIP RESORTS, INC.
a Delaware corporation
ATTEST: /s/Joseph F. Scalo BY: /s/Robert A. Miller
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Joseph F. Scalo, Robert A. Miller,
Assistant Secretary Executive Vice President
(Corporate Seal) DATE: January 1, 1994
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