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24890-1 Tri Party Agreements - Perimeter Wall 98Il -e zs I C)ORIGINAL 1. +� TRIPARTY AGREEMENT RE PERIMETER WALL, LANDSCAPING AND BUILDING PERMITS This Agreement is made as of this 24th day of November, 1998 ("Agreement") by and among KSL Recreation Corporation and KSL Land Corporation, Delaware corporations (collectively and/or individually, "KSL"), Capital Pacific Holdings, LLC, a Delaware limited liability company (successor in interest to Capital Pacific Holdings, Inc., a Delaware corporation [formerly known as J.M. Peters Company, Inc.]) ("CPH"), American Motorists Insurance Company ("AMIC") and the City of La Quinta (the "City"), with reference to the matters described below. RECITALS: A. In or around September, 1989, KSL's predecessor -in -interest, Landmark Land Company of California, Inc. ("Landmark"), and J.M. Peters Company, Inc., a Nevada corporation, predecessor -in -interest to CPH.("Peters"), entered into a Real Estate Purchase Agreement (as amended, the "Purchase Agreement") wherein Peters purchased a portion of approximately two hundred twenty-three (223) acres of certain real property located in Riverside County, California for the purpose of subdividing the land and erecting residential units. CPH is the successor -in -interest to Peters and has assumed the obligations of Peters. B. On April 30, 1990, Landmark, Peters and the City entered into that certain Subdivision Improvement Agreement (the "Subdivision Improvement Agreement") which governs, among other things, the construction and installation of certain improvements pursuant to the final subdivision map of Tract No. 24890-1 in the City. Pursuant to the Subdivision Improvement Agreement, certain obligations were to be performed, including the construction of the perimeter wall and lot landscaping as more particularly set forth in the Subdivision Improvement Agreement. Pursuant to the Subdivision Improvement Agreement, performance and payment bonds were to be furnished to the City "to assure the faithful performance of the Subdivision Improvement Agreement and to "assure the payment of the cost of labor and materials supplied to construct the required improvements," respectively. C. In or around July 1993, Landmark and Peters entered into that certain Option Agreement (the "Option Agreement") and Landmark granted to Peters an option to purchase certain real property. D. On June 27, 1997, the City filed. an action entitled City of La Ouinta v. J.M. Peters Company, Inc., et al., Case No. 002597 (the "City Lawsuit"), in the Superior Court of the State of California for the County of Riverside, alleging breach of the Subdivision Improvement Agreement and seeking specific performance, declaratory relief and recovery under a performance bond related to construction of the perimeter wall and perimeter landscaping � improvements (the Perimeter Improvements"). For purposes of this Agreement, the parties agree that the term "Perimeter Improvements" excludes any drainage improvements related to the fzv (cj�p L,;�-c) ti R1/triparty.fnl.doc/PEB/K4985-012/11-24-98/jb 1\ & L accordance with the terms and conditions set forth below, and to provide for the settlement and dismissal with prejudice by the City of the City Lawsuit, while KSL and CPH reserve all rights, remedies, claims, defenses and arguments they may have with respect to one another, and now enter into this Agreement to memorialize their agreement with respect to the City Lawsuit. NOW, THEREFORE, pursuant to the mutual desires set forth above and in consideration of the mutual covenants and conditions set forth below and without any admission of any kind, or the waiver of any rights, remedies, claims, defenses and arguments except as otherwise expressly set forth herein, the parties hereto enter into the following agreement: AGREEMENT: 1. Perimeter Improvements and Street Improvements. (a) Acknowledging that the City will not issue any additional building permits to KSL or CPH without completion of the Perimeter Improvements, and desiring to mitigate their potential damages, and subject to the payment to KSL of the CPH Payment (as defined below), KSL will build or complete, or cause to be built or completed, the Perimeter Improvements (including, but not limited to, wall construction, sidewalk construction and installation of landscape irrigation and fulllandscaping) located along Avenue 52 and Jefferson Street ("KSL Perimeter Improvements") as described in the Subdivision Improvement Agreement and which remain incomplete, as more specifically depicted on Exhibit "A" attached hereto and by this reference made a part hereof, but shall have no further obligations to the City with respect thereto. In consideration of the foregoing, CPH agrees to pay to KSL the sum of Ninety Five Thousand Dollars ($95,000.00) simultaneously with its execution of this Agreement (the "CPH Payment"). The CPH Payment shall be applied solely to the construction of the KSL Perimeter Improvements. (b) Acknowledging that the City will not issue any additional building permits to KSL or CPH without completion of the Perimeter Improvements, and desiring to mitigate their potential damages, CPH will build or complete, or cause to be built or completed, the Perimeter Improvements (including, but not limited to, wall construction, sidewalk construction and installation of landscape irrigation and full landscaping) located along Calle Rondo, Calle Tampico and Park Avenue ("CPH Perimeter Improvements) as described in the Subdivision Improvement Agreement and which remain incomplete, as more specifically depicted on Exhibit "A" attached hereto and by this reference made a part hereof, but shall have no further obligations, other than the CPH Payment or as otherwise set forth herein, to the City with respect thereto. (c)- The portions of the Perimeter Improvements identified in Subsections 1(a) and 1(b) shall be built substantially in accordance with the conditions placed on the construction of the wall and associated landscaping in the original approvals, as those conditions may have been amended from time to time, and, subject to obtaining agreements in writing from the applicable homeowners association(s) to accept conveyance of, and maintain, -3- triparty.fnl.doc/PEB/K4985-012/11-24-98/jb shall refer to the cash posted by CPH and all references in the Agreement to reductions to the CPHLOC shall be deemed to refer to returns of the proportionate amount of the posted cash to CPH. (e) The CPH LOC can be drawn upon only in the event of a CPH Default as defined and described in Section 4 below. (f) Upon completion of 50% of the CPH Perimeter Improvements, the CPH LOC shall be reduced to the amount of One Hundred Forty Five Thousand Seven Hundred Twenty -Two Dollars ($145,722.00); thereafter, the CPH LOC shall be further reduced in accordance with and to the extent of- the amount of work_ done, but to not less than Forty Three Thousand Seven Hundred and Seventeen Dollars ($43,717.00) so long as bonds are posted for the sum representing the difference between $145,722.00 and the amount to which the CPH LOC is reduced. That $145,722.00 of security (in a combination of the CPH LOC and/or bonds, in CPH's sole discretion) shall be maintained for a period of 90 days after recordation of a notice of completion for the CPH Perimeter Improvements and the City's acceptance of the CPH Perimeter Improvements (which the City shall be reasonably obligated to accept). For a period of one year after recordation of said notice of completion, a letter of credit (either a new instrument or a modification of the CPH LOC) or bond in favor .of the City, in the amount of Forty -Three Thousand Seven Hundred Dollars ($43,717.00) shall be posted and maintained for the guarantee and warranty of the CPH Perimeter Improvements against any defective work or labor done or defective materials furnished, and any security being held in excess of that $43,717.00 may be released (assuming no liens or similar claims have been filed). The Perimeter Improvement bonds posted as of the date .of this Agreement shall be, and are hereby, exonerated, and the parties shall take such actions as are necessary and appropriate to cause and complete said exoneration in accordance with Section 3(b) below. (g) Approvals of the construction of the portions of the wall and. associated landscaping described in Subsections 1(a) and 1(b) shall be obtained in accordance with the typical approval process for such walls within the City and such other approvals as may be required for such construction. Once the security, as described in Subsections 2(a) and 2(b) has been posted with the City, KSL and CPH shall commence and reasonably pursue to completion the obtaining of their respective approvals necessary for construction of their respective Perimeter Improvements described in Subsections 1(a) and 1(b) in accordance with the Timeline. Any delay in obtaining the necessary approvals beyond that scheduled in Exhibit "B" hereto which is not solely the fault of KSL shall serve to extend the Timeline with respect to the KSL Perimeter Improvements by the amount of such delay. Any delay in obtaining the necessary approvals beyond that scheduled in Exhibit "B" hereto which is not solely the fault of CPH shall serve to extend the Timeline with respect to the CPH Perimeter Improvements by the amount of such delay. Additionally; if KSL's construction of the KSL Perimeter Improvements is delayed in any form or fashion, other than through the fault of KSL, whether such delay be caused by any other person or entity, by labor disputes, fire, delay in deliveries, unavoidable casualties, failure to obtain Association Approval or other causes beyond KSL's control, or by any other causes which may justify a delay, then the Timeline within which the construction is to be completed shall be extended for the time of such delay. Additionally, if CPH's construction of -5- triparty.fnl.doc/PEB/K4985-012/ 12-01-98/jb 3. Other CPH Obligations. (a) CPH shall be responsible for the construction, development, maintenance, upkeep and other aspects, in accordance with good and safe health, safety and property management practices, of the storm and other drainage components and systems in, at and about Calle Rondo (until such components and systems have been accepted by the City and the appropriate homeowners' association and transferred to one or the other), and shall take all necessary and appropriate actions to satisfy such responsibilities, without encroaching upon, or allowing the encroachment of water or other matters, persons or things upon, or creating or allowing any other negative incremental impact upon; the Citrus golf course. This obligation shall continue on and survive even after completion of construction and turnover of the Perimeter Improvements and the release/exoneration of the security as set forth herein until acceptance by the City and the appropriate homeowners' association as provided above and the assumption of all ongoing responsibilities associated therewith by one or the other. The City expressly acknowledges and agrees that the costs associated with the above improvements shall in no case exceed $20,000.. (b) After, but only after, CPH has made the CPH Payment and has posted the CPH LOC, and all the parties hereto have executed this Agreement, the City shall release and exonerate, and/or cause the release and exoneration of, AMIC Performance and Payment Bond No. 3 SM 757 806 00. 4. Event of Default. (a) An event of Default by KSL, as that term is used herein, shall mean and refer only to the following: the failure of KSL, after notice and an opportunity to cure as described in' Subsection 4(c): to. comply with its obligations under Subsection I (a) to proceed reasonably and in good faith: to obtain the approvals necessary for the construction of the KSL Perimeter Improvements as described in Subsection 1(a) and to construct the KSL Perimeter Improvements in accordance with the provisions of Section 1 hereof. (b) An event of Default by CPH, as that term is used herein, shall mean and refer only to the following: the failure of CPH to make the CPH Payment to KSL pursuant to the provisions of Subsection 1(a) hereof; and/or the failure of CPH, after notice and an opportunity to cure as described in Subsection 4(c): to comply with its obligations under Subsection I N to proceed reasonably and in good faith: to obtain the approvals necessary for. the construction of the Perimeter Improvements as described in Subsection 1(b) and to construct the CPH Perimeter Improvements in accordance with the provisions of Section 1 hereof; and/or the failure of CPH to post the CPH LOC and/or the other security described herein; and/or the failure of CPH, after notice and an opportunity to cure as described in Subsection 4(c), to comply with the provisions of Section 3 hereof. (c) If the City believes that either KSL'or CPH is in Default (the "Defaulting Party"), then the City must first, in order to have the Defaulting Party found in default or otherwise in breach of this Agreement, notify the Defaulting Party in writing (via fax and certified first-class mail) and in detail of the claimed Default, specifying the action that the .-7- triparty.fnl.doc/pEB/K4985-012/1 l-24-98/jb parties and alter egos, if any, hereby jointly, severally, fully, irrevocably and unconditionally release and forever discharge the City, and each and all of its respective past, present and future successors, successors -in -interest, predecessors, assigns, assignees, city councils and city council members, officers, employees, agents, representatives and counsel, if any, from any and all rights, claims, demands, liability, actions, causes of action, whether in law or in equity, damages (liquidated or unliquidated), liabilities (contingent or noncontingent), obligations, indebtedness, costs and expenses including attorneys' fees, losses or compensation of every kind and nature whatsoever, whether known or unknown, whether past, present or future whether based upon contract, tort, statute, or other legal or equitable theory of recovery, all claims related to the _ construction/completion of the Perimeter Improvements and the Street Improvements and/or related to the posting of security for same (except for those obligations imposed by and set forth in this Agreement) which either or both KSL and/or CPH has or may have against the City. (c) The City hereby agrees to, and shall, dismiss with prejudice the complaint in the City Lawsuit against KSL, CPH, AMIC and all other defendants therein. The City hereby fully and finally releases KSL, CPH, the KSL/CPH Affiliated Entities, and AMIC from all Claims arising from or relating to (i) the City Lawsuit and the transactions, events and facts underlying the City Lawsuit (including, without limitation, claims actually asserted or which could have been asserted in the City Lawsuit), and (ii) all obligations under the Subdivision Improvement Agreement, and (iii) otherwise with respect to the, Perimeter Improvements and/or the securities/bonding therefor except as explicitly reserved in this Agreement. (d) The claims released in this paragraph 5 are hereafter collectively referred to as the "Released Claims." (e) The City warrants and represents to KSL, CPH and AMIC that it (i) is the sole. and lawful owner of all rights, title and interest in and to the Released Claims as to which it is giving releases; (ii) has not assigned, transferred or conveyed or purported to assign, transfer or convey to anyone any Claims concerning the subject of the Released Claims; and (iii) is unaware of any other pending or contemplated legal actions or proceedings by any party to this Agreement against any other party to this Agreement other than released herein, except as between KSL and CPH as set forth in the City Lawsuit and/or the KSL/CPH Lawsuit. (f) KSL, CPH and AMIC warrant and represent to the City that it (i) each is the sole and lawful owner of all rights, title and interest in and to the respective Released Claims as to which it is giving releases; (ii) has not assigned, transferred or conveyed or purported to assign, transfer or convey to anyone any Claims concerning the subject of the Released Claims; and (iii) is unaware of any other pending or contemplated legal actions or proceedings by any party to this Agreement against any other party to this Agreement, other than released herein, except as between KSL and CPH as set forth in the City Lawsuit and/or the KSL/CPH Lawsuit. (g) Each party to this Agreement understands and acknowledges. that after execution of this Agreement, it may incur or suffer loss, damage or injury which is in some -9- triparty.fnl.doc/PEB/K4985-012/11-24-98/jb 11. Attorneys' Fees. All parties to this Agreement shall pay their own attorneys' fees relative to the preparation and/or review of this Agreement and the transactions contemplated hereby; however, the issue of attorneys' fees, as between KSL and CPH with regard to the City Lawsuit and the KSL/CPH Lawsuit shall be governed by. Section 15 and, as set forth therein, Section 6 hereof. In the event of any legal proceeding relating to this Agreement, the non -prevailing party in any proceeding to enforce or construe any of the provisions or rights under or pursuant to this Agreement, shall be fully responsible for and shall pay the prevailing parties' reasonable attorneys' fees, costs, and expenses. 12. Goveminp, Law. This Agreement is made and entered into in the State of California and shall in all respects be interpreted and enforced and governed by and under the laws of the State of California. 13. Construction. Each party and counsel for each party has participated in the drafting of this Agreement and, accordingly, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. With the exception of the permit release provisions, in the event that one or more of the provisions or portions thereof to this Agreement is determined to be illegal or unenforceable, the remainder of this Agreement shall not be affected thereby and each remaining provision or portion thereof shall remain and continue to be valid and effective and shall be enforceable to the fullest extent permitted by law. 14. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original,'and all of which when taken together shall constitute the Agreement. 15. Litigation Expenses. The City, on the one hand as the first party, and CPH and KSL, on the other hand as the second party, agree that each of those two parties as defined in this Section shall bear its own costs and attorneys' fees incurred. However, as between CPH and KSL, with respect to the City Lawsuit and the KSL/CPH Lawsuit, the provisions of Section 6 hereof shall control and apply including any attorneys' fees provisions between CPH and KSL and/or any other right to attorneys' fees. The City, CPH, KSL and AMIC agree that, with respect to any claims by or against AMIC, each party shall bear its own costs and attorneys fees incurred in connection with the City Lawsuit, the KSL/CPH Lawsuit and the dispute concerning the subject of this Agreement, including the construction of the Perimeter Improvements, and the posting of security with respect thereto. 16. Entire Agreement. This Agreement contains all of the agreements of the parties hereto with respect to the matters contained herein and no prior or contemporaneous agreement or understanding, oral or written, pertaining to any such matters shall be effective for any purpose. -11- triparty.fnl.doc/PEB/K4985-012/11-24-98/jb L Q C a e r C J I t Project Wall EXHIBIT "B" Timeline for Construction of The Citrus @ La Quinta Resort & Club Perimeter Improvements Location Jefferson Street Landscaping Jefferson Street Avenue 52, east and west of gate Calle Rondo Calle Tampico Park Avenue Entity to Construct Timing KSL Complete construction within 12 months from the date of execution of Tri-Party Agreement KSL ° Same timing as Jefferson Street Wall KSL ° Same timing as Jefferson Street Wall CPH ° Same timing as Jefferson Street Wall CPH ° Same timing as Jefferson Street Wall CPH ° Same timing as Jefferson Street Wall AGREEMENT RE PERIMETER WALL, LANDSCAPING AND BUILDING PERMITS This Agreement Re Perimeter Wall, Landscaping and Building Permits (the "Agreement") is entered into as of this .Pw2-1dday of October, 1997 (the "Effective Date") by and between KSL Recreation Corporation and KSL Land Corporation (collectively and/or individually, "KSL") and the City of La Quinta (the "City") with reference to the matters described below. RECITALS A. in or around September, 1989, KSL's predecessor -in -interest, Landmark Land Company of California, Inc. ("Landmark"), and J.M. Peters Company, Inc. ("Peters") entered into a Real Estate Purchase Agreement ("Purchase Agreement") wherein Peters purchased a portion of approximately two hundred twenty-three (223) acres of certain real property located in Riverside County, California for the purpose of subdividing the land and erecting residential units. Capital Pacific Holdings, Inc. ("CPH") is the successor -in -interest to, and/or a name change from, Peters, and is otherwise responsible for the obligations of Peters as set forth herein. B. In or around April, 1990, Landmark, Peters, and the City entered into a Subdivision Improvement Agreement which dealt with the construction and installation of certain improvements on Tract No. 24890-1 in the City. Pursuant to the Subdivision Improvement Agreement, certain obligations were to be performed, including the construction of the perimeter wall and lot landscaping on Tract No. 24890-1. As part of those obligations, pursuant to the improvements set forth under the Subdivision Improvement Agreement, bonds were to be furnished to the City "to assure the faithful performance " of the Subdivision Improvement Agreement as well as "to assure the payment of the cost of labor and materials supplied to construct the required improvements." C. To date, neither construction of the perimeter wall nor installation of lot landscaping has been completed. KSL contends the wall construction, the installation of the lot landscaping and the posting of securities/bonds are solely the obligations of Peters/CPH. D. The City has refused to issue to KSL certain building permits from the City to allow KSL (or its assigns, assignees, successors, etc.) to begin or complete construction of the homes on the property owned by KSL within the City (the "KSL Property") until such time as the obligations under the Subdivision Improvement Agreement with respect to the perimeter wall and lot landscaping are adhered to by either KSL or Peters/CPH. KSL and/or its assigns, assignees, successors, etc. are therefore unable to construct homes on the KSL Property within the Citrus Subdivision and KSL claims it is in imminent danger of losing sales of tracts to merchant builders. E. The parties to this Agreement have concluded that it is in the best interests of the parties to allow for the prompt commencement of certain improvements (as described LA971700.100fMW/K4985-008/10-15-97/mv1 below) in accordance with the terms and conditions set forth below, and now enter into this Agreement to memorialize their agreement with respect to those issues. AGREEMENT NOW, THEREFORE, pursuant to the mutual desires set forth hereinabove and in consideration of mutual covenants and conditions set forth herein below and without any admission of any kind, or the waiver of any rights, claims or defenses except as otherwise set forth herein, the parties hereto enter into the following agreement: 1. Wall Construction. (a) Acknowledging that the City will not issue building permits to KSL without completion of the perimeter wall and associated lot landscaping, and desiring to mitigate its potential damages, KSL will build or complete, or cause to be built or completed, in a manner that protects and preserves the City's ability to proceed against the security posted with respect to the construction and completion of the perimeter wall and lot landscaping, (i) the portion of the perimeter wall commonly referred to as "that portion of the perimeter wall which extends from Ave. 52 to the commercial development," and more specifically depicted as the purple area in Exhibit "A" attached hereto and (ii) the portion of the perimeter wall commonly referred to as "that portion of the Jefferson Street wall north of the commercial development," and more specifically depicted as the blue area in Exhibit "A" attached hereto. (b) The portions of the perimeter wall identified in subparagraph 1(a) shall be built substantially in accordance with the conditions placed on the construction of the wall in the original approvals, as those conditions may have been amended from time to time, and according to the timeline set forth in Exhibit "B" attached hereto. 2. Letter of Credit As Security For The Wall Construction. (a) To secure completion of the portions of the perimeter wall as described in subparagraph 1(a), KSL shall obtain a letter of credit, to the benefit of the City, in the amount of Two Hundred Fifty Eight Thousand Nine Hundred and Thirty Dollars ($258,930.00), the issuer of which shall be FirstBank N.A.. (b) The letter of credit can be drawn upon only in the event of a Default as described in paragraph 4 below. (c) As and when appropriate or- necessary, the amount of the letter of credit shall be reduced by a percentage determined by the ratio of linear feet of the wall actually built pursuant to subparagraph 1(a) to the total linear feet of the wall to be built pursuant to subparagraph 1(a). (d) Approvals of the construction of the portions of the wall described in subparagraph 1(a) shall be obtained in accordance with the typical approval process for such -2- LA971700.100/TEW/K4985-008/10-15-97/mvl walls within the City and such other approvals as may be required for such construction. Once the security, as described in subparagraph 2(a) has been posted with the City, KSL shall commence and reasonably pursue to completion the obtaining of the approvals necessary for construction of the portions of the wall described in subparagraph 1(a). Any delay in obtaining the necessary approvals beyond that scheduled in Exhibit "B" hereto which is not solely the fault of KSL shall serve to extend the timeline by the amount of such delay. Additionally, if KSL's construction of the wall is delayed in any form or fashion, other than through the fault of KSL, whether such delay be caused by any other person or entity, by labor disputes, fire, delay and deliveries, unavoidable casualties or other causes beyond KSL's control, or by any other causes which may justify a delay, then the timeline within which the construction is to be completed shall be extended for the time of such delay. Notwithstanding anything to the contrary herein, if the perimeter wall and the associated lot landscaping are not completed within thirty (30) months of the effective date of this Agreement, then the City shall be entitled to draw down the remaining letters of credit for the purpose of completing the perimeter wall and the associated lot landscaping as described in the Subdivision Improvement Agreement for Tract 24890-1. (e) Immediately upon KSL's posting of the security described in subparagraphs 2(a) and 3(a), and immediately upon KSL's request therefor, the City will release one hundred fifty (150) building permits with respect to property within the City, as designated by KSL, immediately upon request from KSL. The City agrees that the issuance of the one hundred fifty (150) building permits will in no way be contingent on KSL's obligations with respect to the perimeter wall or lot landscaping other than the posting of the letter of credit security as described herein. (f) The City agrees that none of KSL's other permits, developments, approvals, certificates of occupancy, entitlements, maps, etc. will be tied to, conditioned on, or otherwise related to, in any way, any action by KSL with respect to the Subdivision Improvement Agreement for Tract No. 24890-1, other than the posting of the letter of credit security described herein. (g) The City intends to prosecute and enforce all obligations by all obligated/responsible persons under the Subdivision Improvement Agreement for Tract No. 24890-1 to construct and complete the perimeter wall and to install the associated lot landscaping under the Subdivision Improvement Agreement; all obligations by all obligated/responsible persons to post security to secure the completion of the perimeter wall and installation of the lot landscaping under the Subdivision Improvement Agreement; and the obligations of the bonding company American Motorists Insurance Company ("AMIC"), with respect thereto. However, the City has the discretion as to whether or not to continue or settle the litigation filed with respect thereto. In the event that the City obtains a settlement or judgment with respect to those obligations, or any monies relating thereto, then any funds received shall first be expended as may be necessary to complete the construction of the perimeter wall and to install the associated lot. landscaping, and thereafter shall be used to reimburse KSL for its expenditures in connection with the completion of the perimeter wall, in connection with the posting of security, and otherwise in connection with this Agreement. KSL acknowledges that it is possible that the City might not recover any or all of the monies spent by KSL with respect to the wall construction, the installation of the lot landscaping, or the letter of credit posted with respect to either or both. -3- LA971700.100/TEW/K4985-008/ 10-16-97/mvl KSL acknowledges that this Agreement does not require the City to reimburse KSL for those monies unless the City itself is paid, or entitled to be paid, those monies; provided, however, that the City will be required to pay those monies to KSL if the City recovers such monies pursuant to any litigation, judgment or settlement, or otherwise. (h) The City has the discretion to determine whether or not to pursue the litigation. In the event the City determines not to pursue the litigation against Peters/CPH or AMIC, then the City agrees to, and shall, dismiss with prejudice the litigation against KSL, and agrees to, and shall, fully and completely release KSL with respect to the obligations under the Subdivision Improvement Agreement, including a Civil Code section 1542 release, and shall immediately release to KSL the remaining building permits for the residential lots within the Citrus Subdivision (Tract Nos. 24889, 24890-1, 24890-2, 24890-3, 24890-4, 24890-5, 24890-6, 24890-7) 24890-8, 24890-9). In the event the City determines not to pursue the litigation against Peters/CPH or AMIC, then the City agrees that it shall not impose or reimpose any obligations on KSL with respect to the construction and completion of the perimeter wall and associated lot landscaping as a condition of any other permits, approvals, certificates of occupancy, entitlements, maps, or other development, in the future or otherwise. The City agrees that prior to such time as either (1) full construction of the perimeter wall and full installation of the associated lot landscaping have been completed in accordance with the requirements of the Subdivision Improvement Agreement for Tract 24890-1 and the City's applicable standards, or (2) a settlement is reached which results in the City's dismissal of KSL from the action, the release of KSL from liability in accordance with this subparagraph and the immediate release to KSL of all remaining building permits for the residential lots within the Citrus Subdivision (Tract Nos. 248891 24890-1, 24890-2) 24890-3, 24890-4, 24890-5, 24890-6, 24890-7, 24890-8, 24890-9), the City shall, to the extent permitted by law, withhold and not grant any building permits or other permits for development to Peters/CPH or its assigns, assignees, successors -in -interest or anyone else who takes any development rights to any property now owned or hereafter acquired by Peters/CPH unless (1) as a condition of permit issuance, Peters /CPH is required by the City to complete subdivision improvements and furnish letters of credit therefor in the same manner and in the same proportionate amount as the obligations imposed on KSL pursuant to this Agreement, and (2) to the extent such improvements to be completed by Peters/CPH are duplicative of the improvements required to be completed by KSL under this Agreement, the amounts) of the letter(s) of credit furnished by KSL shall be reduced by the value of such duplicative improvements. 3. Letter Of Credit As Security For Installation Of The Lot Landscaping. (a) To secure completion of the lot landscaping required by the Subdivision Improvement Agreement for Tract No. 24890-1, KSL shall obtain a letter of credit, to the benefit of the City, in the amount of Two Hundred Thirty Nine Thousand and Forty Dollars ($239,040), the issuer of which shall be FirstBank N.A.. This letter of credit shall be in addition to that described in subparagraph 1(a). Except as KSL may be required to do so pursuant to the litigation brought by the City, KSL shall not be required to do any of the lot landscaping work. (b) The letter of credit can only be drawn upon in the event of a Default as described in subparagraph 4 below. -4- LA971700. I OOn EW/K4985-008/ 10-15-97/mvl (c) As and when appropriate or necessary, the amount of the letter of credit shall be reduced by a percentage determined by the ratio of the square footage of the landscaping actually installed pursuant to subparagraph 2(a) to the total square footage of the landscaping to be installed pursuant to subparagraph 2(a). (d) Immediately upon KSL's posting of the security described in subparagraphs 2(a) and 3(a), and immediately upon KSL's request therefor, the City will release the one hundred fifty (150) building permits as referenced in subparagraph 2(e) above, immediately upon request from KSL. The City agrees that the issuance of the one hundred fifty (150) building permits will in no way be contingent on KSL's obligations with respect to the perimeter wall or lot landscaping other than the posting of the letter of credit security as described herein. (e) The City agrees that none of KSL's other permits, developments, approvals, certificates of occupancy, entitlements, maps, etc. will be tied to, conditioned on, or otherwise related to, in any way, any action by KSL with respect to the Subdivision Improvement Agreement for Tract No. 24890-1, other than the posting of the letter of credit security described herein. (f) The City intends to prosecute and enforce all obligations by all obligated/responsible persons under the Subdivision Improvement Agreement for Tract No. 24890-1 to construct and complete the perimeter wall and to install the associated lot landscaping under the Subdivision Improvement Agreement; all obligations by all responsible/obligated persons to post security to secure the completion of the perimeter wall and installation of the lot landscaping under the Subdivision Improvement Agreement; and the obligations of the bonding company American Motorists Insurance Company ("AMIC"), with respect thereto. However, the City has the discretion as to whether or not to continue or settle the litigation filed with respect thereto. In the event that the City obtains a settlement or judgment with respect to those obligations, or any monies relating thereto, then any funds received shall first be expended as may be necessary to complete the construction of the perimeter wall and to install the associated lot landscaping and thereafter shall be used to reimburse KSL for its expenditures in connection with the completion of the perimeter wall, in connection with the posting of security, and otherwise in connection with this Agreement. KSL acknowledges that it is possible that the City might not recover any or all of the monies spent by KSL with respect to the wall construction, the installation of the lot landscaping, or the letter of credit posted with respect to either or both. KSL acknowledges that this Agreement does not require the City to reimburse KSL for those monies unless the City itself is paid, or entitled to be paid, those monies; provided, however, that the City will be required to pay those monies to KSL if the City recovers such monies pursuant to any litigation, judgment or settlement, or otherwise. (g) The City has the discretion to determine whether or not to pursue the litigation. In the event the City determines not to pursue the litigation against Peters/CPH or AMIC, then the City agrees to, and shall, dismiss with prejudice the litigation against KSL, and agrees to, and shall, fully and completely release KSL with respect to the obligations under the Subdivision Improvement Agreement, including a Civil Code section 1542 release, and shall immediately release to KSL the remaining building permits for the residential lots within the -5- LA971700. I OOtMW/K4985-008/10-15-97/mvl Citrus Subdivision (Tract Nos. 24889, 24890-1, 24890-2, 24890-3, 24890-4, 24890-5, 24890-6, 24890-71, 24890-8, 24890-9). In the event the City determines not to pursue the litigation against Peters/CPH or AMIC, then, the City agrees that it shall not impose or reimpose any obligations on KSL with respect to the construction and completion of the perimeter wall and associated lot landscaping as a condition of any other permits, approvals, certificates of occupancy, entitlements, maps or other development, in the future or otherwise. The City agrees that prior to such time as either (1) full construction of the perimeter wall and full installation of the associated lot landscaping have been completed in accordance with the requirements of the Subdivision Improvement Agreement for Tract 24890-1 and the City's applicable standards, or (2) a settlement is reached which results in the City's dismissal of KSL from the action, the release of KSL from liability in accordance with this subparagraph and the immediate release to KSL of all remaining building permits for the residential lots within the Citrus Subdivision (Tract Nos. 248893P 24890-13, 24890-2, 24890-31, 24890-4), 24890-53, 24890-611 24890-75, 24890-8, 24890-9), the City shall, to the extent permitted by law, withhold and not grant any building permits or other permits for development to Peters/CPH or its assigns, assignees, successors -in -interest or anyone else who takes any development rights to any property now owned or hereafter acquired by Peters/CPH unless (1) as a condition of permit issuance, Peters /CPH is required by the City to complete subdivision improvements and furnish letters of credit therefor in the same manner and in the same proportionate amount as the obligations imposed on KSL pursuant to this Agreement, and (2) to the extent such improvements to be completed by Peters/CPH are duplicative of the improvements required to be completed by KSL under this Agreement, the amount(s) of the letter(s) of credit furnished by KSL shall be reduced by the value of such duplicative improvements. 4. Event Of Default. (a) An event of Default by KSL, as that term is used herein, shall mean and refer only to the following: the failure of KSL, after notice and an opportunity to cure as described in subparagraph 4(b), to comply with its obligations under this Agreement to proceed reasonably and in good faith: to obtain the approvals necessary for the construction of the portions of the perimeter wall described in subparagraph 1(a); and to construct the portions of the perimeter wall in accordance with paragraph 1. (b) If the City believes that KSL is in Default, then the City must first, in order to have KSL found in default or otherwise in breach of this Agreement, notify KSL in writing (via fax and certified first class mail) and in detail of the claimed Default, specifying the action that the City claims is necessary to cure the claimed Default. KSL shall be required to commence, reasonably and in good faith, the actions necessary to cure the Default within thirty (3 0) days after its receipt of the City's notice. In the event that KSL cannot, despite its reasonable and good faith efforts, commence the actions necessary to cure the Default within such thirty (30) day period, then KSL shall be allowed such additional time as is necessary or reasonable to commence such actions. -6- LA971700.100/TEW/K4985-008/10-15-97/mv1 (c) In the event of a Default under the Agreement which is not cured in accordance with this Agreement, the City's sole and exclusive remedy under the Agreement shall be to draw down on the letter(s) of credit to which the Default relates. (d) In the event that the litigation styled City of La Quinta v. J.M. Peters, Inc., et al., Case No. 0025971, as consolidated with Case No. 002642 is not resolved within thirty (30) months of the effective date of this Agreement, then the City shall be entitled to draw down on the remaining letters of credit, but only to the extent of completing the wall construction described in subparagraph 1(a), and installing the lot landscaping described in the Subdivision Improvement Agreement for Tract No. 24890-1. 5. Authority To Execute Agreement. Each person signing this Agreement warrants and represents that he or she has full authority to execute the same on whose behalf he or she so signs, and that he or she is acting within the scope of such authority. 6. Advice Of Counsel. Each parry hereto has received the advice of legal counsel prior to signing the Agreement, and signs the Agreement voluntarily and with full knowledge of the consequences thereof. 7. Reasonable Cooperation. KSL agrees to cooperate with the City in a reasonable manner in connection with any and all efforts by the City to enforce Peters'/CPI's obligations to complete construction of the perimeter wall and installation of the lot landscaping; to obtain payments under the bonds issued by AMIC and to enforce Peters'/CPI's obligations to post the required bonds for the perimeter wall and lot landscaping; and to obtain payments under the bonds issued by AMIC. 8. Successors And Assigns. This Agreement shall be binding upon and inure, jointly and severally, to the benefit of KSL and each of its assigns, assignees, successors and successors -in -interest, etc.. Nothing in this Agreement, express or implied, is intended to confer upon any person other than the parties hereto or their respective assigns, assignees, successors, successors in interest, etc., any rights or benefits under or by reason of this Agreement. 9. Waiver, Modification And Amendment. No provision herein may be waived unless in writing and signed by the party or parties whose rights are thereby waived. Waiver of any one provision herein shall not be deemed to be a waiver of any other provision herein. This Agreement may be modified or amended only by written agreement executed by all the parties hereto. 10. Attorne, sy Fees. The non -prevailing party in any proceeding to enforce or construe any of the provisions or rights under or pursuant to this Agreement, shall be fully responsible for and shall pay the prevailing party's reasonable attorneys' fees, costs, and expenses. 11. Governing Law. This Agreement is made and entered into in the State of California and shall in all respects be interpreted and enforced and governed by and under the laws of the State of California. -7- LA971700. I OOfEW/K4985-008/10-15-97/mv1 12. Construction. Each party and counsel for each party has participated in the drafting of this Agreement and, accordingly, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. With the exception of the release provisions, in the event that one or more of the provisions or portions thereof to this Agreement is determined to be illegal or unenforceable, the remainder of this Agreement shall not be affected thereby and each remaining provision or portion thereof shall remain and continue to be valid and effective and shall be enforceable to the fullest extent permitted by law. 13. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which when taken together shall constitute the Agreement. 14. Litigation Expenses. Each party hereto shall bear- its own costs and attorneys' fees incurred in connection with the dispute, to the date hereof, concerning the subject of this Agreement, including the construction of the perimeter wall, the installation of the lot landscaping, and the posting of security with respect thereto. { 15. Title And Captions. Sections, titles and captions contained in this Agreement are inserted only as a matter of convenience and for reference and shall in no way be construed to define, limit or extend the scope of this Agreement or the intent of any of its provisions. DATED: October ��1997 DATED: October ?- , 1997 -8- LA971700.100/TEW/K4985-008/10-15-97/mvl The C L Quinta By: Its: KS Rec ;ti"on Corporation Its: U Timetable for Construction of Walls at 52nd Avenue and Jefferson Street • KSL to submit plans to City within 60 days of date of execution of Agreement. • KSL to oommence construction within 60 days of receiving all necessary City and third party approvals. • KSL to complete construction within 120 days of commencement of constriction. TTTITTT"n'rM nT)iI a I I — Zrawm AGREEMENT RE PERIMETER WALL, LANDSCAPING AND BUILDING PERMITS This Agreement Re Perimeter Wall, Landscaping and Building Permits (this "Agreement") is entered into as of this 27th day of July, 1998 (the "Effective Date"), by and between Capital Pacific Holdings, LLC, a Delaware limited liability company (successor in interest to Capital Pacific Holdings, Inc., a Delaware corporation [formerly known as J.M. Peters Company, Inc.]) ("CPH LLC") and the City of La Quinta (the "City") with reference to the matters described below. RECITALS A. On September 7, 1989, J.M. Peters Company, Inc., a Nevada corporation ("JMP") (predecessor in interest to CPH LLC) and Landmark Land Company of California, Inc. ("Landmark") (predecessor in interest to KSL Recreation Corporation and KSL Land Corporation [collectively and/or individually, "KSL"]) entered into that certain Real Estate Purchase Agreement (as amended, the "Purchase Agreement") pursuant to which JMP purchased a portion of approximately two hundred twenty-three (223) acres of certain real property located in Riverside County, California, for the purpose of subdividing and constructing residential units. CPH LLC is the successor in interest to JMP and has assumed the obligations of JMP. B. On April 30, 1990, Landmark, JMP, and the City entered into that certain Subdivision Improvement Agreement (the "Subdivision Improvement Agreement") which governs, among other things, the construction and installation of certain improvements as a condition precedent to the approval of the final subdivision map of Tract No. 24890-1 in the City. Pursuant to the Subdivision Improvement Agreement, certain obligations were to be performed, including, without limitation, the construction of the perimeter wall and associated lot landscaping as more particularly set forth in the Subdivision Improvement Agreement. Pursuant to the Subdivision Improvement Agreement, performance and payment bonds were to be furnished to the City "to assure the faithful performance" of the Subdivision Improvement Agreement and to "assure the payment of the cost of labor and materials supplied to construct the required improvements," respectively. C. In or around July, 1993, Landmark and JMP entered into that certain Option Agreement (the "Option Agreement") pursuant to which certain rights and obligations under the Purchase Agreement were terminated and Landmark granted to JMP an option to purchase the portion of the real property not acquired by JMP under the Purchase Agreement. The Option Agreement governs the rights and obligations of JMP and Landmark with respect to the substitution of bonds posted by JMP to secure the performance under the Subdivision Improvement Agreement and other Subdivision Improvement Agreements entered into by and between JMP and the City. D. On June 27, 1997, the City filed an action entitled City of La Quinta, v. J.M. Peters Company , Inc., et al., Case No. 002597, in the Superior Court of the State of California for the County of Riverside, alleging breach of the Subdivision Improvement Agreement and seeking specific performance, declaratory relief and recovery under a performance bond related to construction of the perimeter improvements (the "City Action"). E. To date, JMP has expended over one-half of the total estimated cost of all perimeter improvements. However, neither construction of the perimeter wall nor installation of the associated landscaping improvements has been completed. KSL contends that the wall construction, the installation H IDONSMORDFILFJDOGLAQUNAG3. DOC of the lot landscaping and the posting of securities/bonds are solely the obligations of JMP/CPH LLC while CPH LLC contends that the completion of such improvements and the substitution of the bonds securing such improvements are solely the obligations of KSL. F. The City has refused to issue to CPH LLC certain building permits to allow CPH LLC (its successors and assigns) to begin or complete construction of homes on property owned by CPH LLC within the City (the "CPH LLC Property") until such time as the obligations under the Subdivision Improvement Agreement with respect to the perimeter wall and associated landscaping are satisfied by either KSL or CPH LLC. Consequently, CPH LLC is unable to construct homes on the CPH LLC Property within the Citrus Course development and has lost sales to competing merchant builders in the area. G. On or about October 22, 1997, KSL and the City entered into that certain Agreement Re Perimeter Wall, Landscaping and Building Permits (the "KSL/City Agreement") pursuant to which KSL agreed to post security for completion of a portion of the perimeter wall and lot landscaping and to construct a portion of the perimeter wall in consideration of the issuance of building permits by the City. H. The parties to this Agreement have concluded that it is in the best interests of the parties to enter into this Agreement to memorialize their agreement with respect to the issuance of building permits and the payment of consideration for the completion of the perimeter wall and associated landscaping. AGREEMENT NOW, THEREFORE, in consideration of the foregoing recitals, the promises and mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and without any admission of any kind, or the waiver of any rights, claims or defenses except as otherwise expressly set forth herein, the parties hereto hereby agree as follows: 1. Payment of Consideration. (a) Acknowledging that the City will not issue building permits to CPH LLC without completion of the perimeter wall and associated landscaping, and desiring to mitigate its potential damages, CPH LLC shall pay to the City One Hundred Nine Thousand Five Hundred Sixty Dollars ($109,560.00) (the "Cash Consideration") in cash. The City shall apply the Cash Consideration -solely towards CPH LLC's portion of any obligation to complete the perimeter wall and/or associated landscaping under the Subdivision Improvement Agreement. CPH LLC understands and acknowledges that such amount may be paid by City to KSL to reimburse KSL for costs associated with the construction of the perimeter wall and installation of associated landscaping performed by KSL pursuant to the KSL/City Agreement. (b) Upon the payment of the Cash Consideration, the City shall issue to CPH LLC (or its successors or assigns) thirty-three (33) building permits in the aggregate with respect to the CPH LLC Property at any time and from time to time immediately upon the request by CPH LLC (or its successors or assigns), and the City shall not withhold the issuance of building permits to any purchasers of custom lots on the CPH LLC Property. The right of CPH LLC with respect to the issuance of such building permits is irrevocable and shall in no way be contingent upon CPH LLC's obligations with respect to the perimeter wall and associated landscaping other than the payment of the Cash Consideration as provided herein. HIDONS/W ORDFILFJDOGLAQUNAG3. DOC (c) Any other permits, development rights, approvals, certificates of occupancy, maps, or similar entitlements shall not be conditioned upon or otherwise related to in any way or manner any action by CPH LLC with respect to the Subdivision Improvement Agreement other than the payment of the Cash Consideration as provided herein. 44te City shall Re-t-iffifl-poss an-!,, ebiigatiom on E+Ii-&6G with 2. Completion of Subdivision Improvements Related to Tract No. 24890-2. Within one (1) year after the Effective Date, CPH LLC shall (i) complete all obligations related to the CPH LLC Property under that certain Subdivision Improvement Agreement dated April 17, 1990 (the "Tract 24890-2 SIA"), by and between J.M. Peters Company, Inc. (predecessor in interest to CPH LLC) and the City which governs, among other things, the construction and installation of certain improvements as a condition precedent to the approval of the final subdivision map of Tract No. 24890-2, and (ii) cause the security for all remaining obligations under the Tract 24890-2 SIA to be substituted by the owner of property other than the CPH LLC Property which is subject to the Tract 24890-2 SIA. Concurrently with the substitution of such security, such owner shall be substituted in place of CPH LLC under the Tract 24890-2 SIA and shall assume all remaining obligations of CPH LLC to be performed thereunder. 3. Authority To Execute Agreement. Each person signing this Agreement warrants and represents that he or she has full authority to execute the same on whose behalf he or she so signs, and that he or she is acting within the scope of such authority. 4. Advice Of Counsel. Each party hereto has received the advice of legal counsel prior to signing the Agreement, and signs the Agreement voluntarily and with full knowledge of the consequences thereof. 5. Successors and Assigns. This Agreement shall be binding upon and inure, jointly and severally, to the benefit of CPH LLC and its successors and assigns. Nothing in this Agreement, express or implied, is intended to confer upon any person other than the parties hereto or their respective successors and assigns any rights or benefits under or by reason of this Agreement. 6. Waiver Modification and Amendment. No provision herein may be waived unless in ^ writing and signed by the party or parties whose rights are thereby waived. Waiver of any one provision herein shall not be deemed to be a waiver of any other provision herein. This Agreement may be modified or amended only by written agreement executed by all the parties hereto. 7. Attorneys' Fees. The non -prevailing party in any proceeding to enforce or construe any of the provisions or rights under or pursuant to this Agreement shall be fully responsible for and shall pay the prevailing party's reasonable attorneys' fees, costs and expenses 8. Governing Law. This Agreement is made and entered into in the State of California and shall in all respects be interpreted and enforced and governed by and under the laws of the State of California. 9. Construction. Each party and counsel for each party has participated in the drafting of this Agreement and, accordingly, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. In the H:/DONS/WORDFILFJDOC/LAQUNAG3. DOC event that one or more of the provisions (or portions thereof) to this Agreement is determined to be illegal or unenforceable, the remainder of this Agreement shall not be affected thereby and each remaining provision or portion thereof shall remain and continue to be valid and effective and shall be enforceable to the fullest extent permitted by law. 10. Litigation Expenses. Each party hereto shall bear its own costs and attorneys' fees incurred in connection with the dispute, to the date hereof, concerning the subject of this Agreement, including the construction of the perimeter wall, the installation of the lot landscaping, and the posting of security with respect thereto. 11. Titles and Captions. Sections, titles and captions contained in this Agreement are inserted only as a matter of convenience and for reference and shall in no way be construed to define, limit or extend the scope of this Agreement or the intent of any of its provisions. 12. No Release of KSL. The parties understand and acknowledge that nothing in this Agreement constitutes or shall be deemed to constitute a waiver or release of any rights by CPH LLC as to KSL. CPH LLC expressly reserves all rights, claims and defenses which it has or may have against KSL concerning the subject matter of this Agreement. DATED: July a? 1998 DATED: July X7, 1998 THE CITY O�UINTA_ By: CAPITAL PACIFIC HOLDINGS, LLC, a Delaware limited liability company By: CAPITAL PACIFIC HOLDINGS, INC., a Delaware co ration, Managing Member B�` — Y Its: ME H:/DONS/W ORDFILFJDOC/LAQUNAG3.DOC 74595 PGA Blvd. NO.: 8388938 La Quinta, CA 92253 ................................................................................................................................ . TELffPk1 1VE .. IDENrIFICATIDN`N0. (760)... 7.7.7._ 701:2...................................................... ..... CUSTpMER .�CIIRQTi4N:kTE ...... .. .. .._ _. _.. KSL Land Corporation This Letter of Credit shall expire upon the earlier of: Lender hereby establishes at the request and for the account of Customer, an Irrevocable Letterof Credit in favor of Beneficiaryfor a sum of One Hundred Ninety One Thousand Six Hundred Fifty Eight and no/100 Dollars ($ 191, 658.00 ). These funds shall be made available to Beneficiary upon Lender's receipt from Beneficiary of sight drafts drawn on Lender at Lender's address indicated above (or such other address that Lender may provide Beneficiary in writing) during regular business hours and accompanied by the signed written statements or documents indicated below. WARNINGTO BENEFICIARY: PLEASE EXAMINE THIS LETTEROF CREDITAT ONCE. IF YOU FEEL UNABLE TO MEET ANY OF ITS REQUIREM ENTS,EITHERSING LYORTOG ETHER,YOU SHOULD CONTACT THE CUSTOMER IMMEDIATELYTO SEE IF THE LETTER OF CREDITCAN BE AMENDED. OTHERWISE,YOU WILL RISK LOSING PAYMENT UNDER THIS LETTEROF CREDIT FOR FAILURETO COMPLY STRICTLY WITH ITS TERMS AS WRITTEN. 1. DRAFT TERMS AND CONDITIONS Lender shall honor drafts submitted by Beneficiary under the following terms and conditions: Drafts drawn against this Irrevocable Letter of Credit will be honored when referenced to specific performance or non-performance regarding the property described as Tract 24890-1 (Citrus Course) and when referencing the Triparty Agreement Re Perimeter Wall, Landscaping and Building Permits dated November 24, 1998. This Letter of Credit is automatically renewable. FirstBank reserves the right to cancel this Letter of Credit with 60 days written notice prior to the expiration of any extended term. Written notice will be given to KSL Land Corporation and the Beneficiary. Upon Lender's honor of such drafts, Lender shall be fully discharged of its obligations under this Letter of Credit and shall not be obligated to make any further payments under this Letter of Credit once the full amount of credit available under this Letter of Credit has been drawn. If a non -conforming demand is made, Lender shall notify Beneficiary of its dishonor on or before the time specified in Paragraph 5 below. Beneficiary shall have no recourse against Lenderfor any amount paid under this Letterof Credit once Lender has honored any draft or other document which complies strictly with this Letter of Credit, and which on its face appears otherwise in order but which is signed, issued, or presented by a party or under the name of a party purporting to act for Beneficiary, purporting to claim through Beneficiary, or posing as Beneficiary without Beneficiary's authorization. By paying an amount demanded in accordance with this Letter of Credit, Lender makes no representation as to the correctness of the amount demanded and Lender shall not be liable to Beneficiary, or any other person, for any amount paid or disbursed for any reason whatsoever, including, without limitation, any nonapplication or misapplication by Beneficiaryof the proceeds of such payment. By presenting upon Lender or a confirming bank, Beneficiary certifies that Beneficiaryhas not and will not present upon the other, unless and until Beneficiary meets with dishonor. Beneficiary promises to return to Lender any funds received by Beneficiary in excess of the Letter of Credit's maximum drawing amount. 2. USE RESTRICTIONS All drafts must be marked "DRAWN UNDER FirstBank IRREVOCABLE LETTER OF CREDIT 01"8938 May 17, 2001 ," and the amount of each draft shall be marked on the draft. Only Beneficiary or Beneficiary's Transferee (if this Letter of Credit is transferable) may complete a draft and accompanying statements or documents required by ihis Letter of Credit and make a draw under this Letter of Credit. This original Letter of Credit must accompany any draft drawn hereunder. Partial draws ® are permitted ❑ are not permitted under this Letter of Credit. Lender's honor of a partial draw shall correspondingly reduce the amount of credit available under this Letterof Credit. Following a partial draw, Lender shall return this original Letter of Credit to Beneficiary with the partial draw noted hereon; in the alternative, and in its sole discretion, Lender may issue a substitute Letter of Credit to Beneficiary in the amount shown above, less any partial draw(s). 3. PERMITTED TRANSFEREES ❑ If checked, this Letterof Credit may be transferredby Beneficiaryupon prior written notice to Lender of the transfer. The Transferee shall be deemed the new Beneficiary of this Letter of Credit and the documents of the Transferee, including drafts required under this Letterof Credit, will be processed by Lender (or any intermediary) without the original Beneficiary's intervention and without any further obligation of Lender to the original Beneficiary. ❑x If checked, the right to draw under this Letter of Credit shall be nontransferable, except for: A. A transfer (in its entirety, but not in part) by direct operation of law to the original Beneficiary's administrator, executor, bankruptcy trustee, receiver, liquidator, successor, or other representative at law; and B. The first immediate transfer (in its entirety, but not in part) by such legal representativeto a third party after express approval of a governmental body (judicial, administrative, or executive). MAST602 © FormAtion Technologies, Inc. (9/3/96) (800) 937-3799 4. TRANSFEREE'S REQUIRED DOCUMENTS When the presenter is a permitted Transferee under paragraph 3 above, the documents required for a draw shall include: A. All documents required elsewhere in this Letterof Credit, except that such documents maybe in the name of and executed by either the original Beneficiary or the presenter permitted by paragraph 3; and B. When the presenter is a permitted Transfereeunder paragraph 3.A. or a third party under paragraph 3.B., a certified copy of the one or more documents which show the presenter's authority to claim through or to act with authority for the original Beneficiary. 5. TIMING OF DISHONOR Lender may rely upon any reason for dishonor which it communicates to Beneficiaryor the presenterwithin three (3) Banking Days after Lender has received the last document forming Beneficiary's presentment (the "Three-DayPeriod"). Lender shall be entitled to rely upon such reason without regard to either (i) the timing of any presentment made before the Expiration Date, or (ii) the timing inside the Three-DayPeriod of any preliminary communication(s) from Lender concerning the dishonor decision or any reason for dishonor. For any reason for dishonor given during the Three -Day Period, Lender shall be conclusively deemed to have met the "reasonable time", "without delay", and other timing requirements as the Uniform Customs and Practice for Documentary Credits, 1993 Revision, ICC Publication No 500, as most recently published by the International Chamber of Commerce (the "UCP") may impose. The Expiration Date shall not be extended to accommodate a presentment made less than three (3) Banking Days before the Expiration Date, and Beneficiary shall not be entitled to submit a draw request or provide Lender with any documents in support of a draw afterthe Expiration Date. Lender shall not be required to communicate a dishonor decision or its reasons within a time less than the Three -Day Period. "Banking Day" means any day, except Saturday, on which commercial banks located in California are open. 6. COMPLIANCE BURDEN Lender is not responsible for any impossibility or other difficulty in achieving strict compliance with the requirements of this Letter of Credit precisely as written. Beneficiary understands and acknowledges: (i) that unless and until the present wording of this Letter of Credit is amended with Lender's prior written consent, the burden of complying strictly with such wording remains solely upon Beneficiary; and (ii) that Lender is relying upon the lack of such amendment as constituting Beneficiary's initial and continued approval of such wording. 7. NON-SEVERABILITY If any aspect of this Letterof Credit is ever declared unenforceable for any reason by any court or governmental body having jurisdiction, Lender's entire engagement under this Letterof Credit shall be deemed null and void ab initio, and both Lender and Beneficiary shall be restored to the position each would have occupied with all rights available as though this Letter of Credit had never occurred. This non-severability provision shall override all other provisions in this Letter of Credit, no matter where such provision appears within this Letter of Credit. 8. CHOICE OF LAW/JURISDICTION This Letter of Credit is subject to the UCP. This Letter of Credit shall be governed by and construed in accordance with the laws of the State of California , United States of America, except to the extent such laws are inconsistent with the UCP. Lender and Beneficiary consent to the jurisdiction and venue of any court selected by Lender in its discretion located in the State of California in the event of any legal proceeding under this Letterof Credit. 9. EXPIRATION Lender hereby agrees with Beneficiary that drafts drawn under and in compliance with the terms of this Letter of Credit will be duly honored if presented to the Lender on or before the Expiration Date. Dated: May 17, 2001 Z DS • ank Dawn arr _�= Vice President ENDORSEMENT OF DRAFTS DRAWN: Amount Amount Date Negotiated By In Words In Figures MAST602B © FormAtion Technologies, Inc. (9/3196) (800) 937-3799 SUBDIVISION IMPROVEMENT BOND LABOR AND MATERIAL (CALIFORNIA) �i Ke rerimeier vvaii in One (1) Original Bond 817663S Premium included in performance bond WHEREAS, The City Council of the City of La Quinta, State of California, and KSL Land Corporation, (hereinafter designated as "Principal"), have entered into an agreement whereby Principal agrees to install and complete certain designated public improvements, which said agreement, dated , and identified as project Tract 24889, is hereby referred to and made a part hereof; and Whereas, Under the terms of said agreement, principal is required before entering upon the performance of the work, to file a good and sufficient payment bond with the City of La Quinta to secure the claims to which reference is made in Title 15 (commencing with Section 3082) of Part 4 of Division 3 of the Civil Code of the State of California. Now, therefore, said principal and the undersigned as corporate surety, are held firmly bound unto the City of La Quinta and all contractors, subcontractors, materialmen and other persons employed in the performance of the aforesaid agreement and referred to in the aforesaid Code of Civil Procedure in the sum of Four Hundred Forty Seven Thousand Two Hundred Dollars and No/100 ($447.200.00), for materials furnished or labor thereon of any kind, or for amounts due under the Unemployment Insurance Act with respect to such work or labor, that said surety will pay, the same in an amount not exceeding the amount hereinabove set forth, and also in case suit is brought upon this bond, will pay in addition to the face amount thereof, costs and reasonable expenses and fees, including reasonable attorney's fees, incurred by city in successfully enforcing such obligation, to be awarded and fixed by the court, and to be taxed as costs and to be included in the judgment therein rendered. It is hereby expressly stipulated and agreed that this bond shall inure to the benefit of any and all persons, companies and corporations entitled to file claims under Title 15 (commencing with Section 3082) of Part 4 of Division 3 of the Civil Code, so as to give a right of action to them or their assigns in any suit brought upon this bond. Should the condition of this bond be fully performed, then this obligation shall become null and void, otherwise it shall be and remain in full force and effect. The surety hereby stipulates and agrees that no change, extension of time, alteration or addition to the terms of said agreement or the specifications accompanying the same shall in any manner affect its obligations on this bond, and it does hereby waive notice of any such change, extension, alteration or addition. In witness whereof, this instrument has been duly executed by the principal and surety above named, on May 11, 2001 KSL Land Corporation DEVELOPERS SURETY AND INDEMNITY CO Prin ipa SBr AA lane Kelsen, Attorney -in -Fact 17780 Fitch Irvine, CA 92714 Agent's Address: HRH Insurance Services of Coachella Valley 77564 County Club Drive Suite 401 Palm Desert, California 92211-0449 XB61VISION IMPROVEMENT BOND FAITHFUL PERFORMANCE (CALIFORNIA) Agreement Ke renmeter vvaii Executed in One (1) Original Bond 817663S Initial Premium $ 4,472.00 for two years subject to renewal WHEREAS, The City Council of the City of La Quinta, State of California, and KSL Land Corporation, (hereinafter designated as "Principal") have entered into an agreement whereby Principal agrees to install and complete certain designated public improvements, which said agreement, dated , and identified as project Tract 24889, is hereby referred to and made a part hereof; and Whereas, Said principal is required under the terms of said agreement to furnish a bond for the faithful performance of said agreement. Now, therefore, we, the principal and DEVELOPERS SURETY AND INDEMNITY COMPANY 17780 Fitch, Irvine, CA 92714, as surety, are held firmly bound unto the City of La Quinta hereinafter called ("Obligee"), in the penal sum of Four Hundred Forty Seven Thousand Two Hundred Dollars and No/100 ($447,200.00) lawful money of the United States, for the payment of which sum well and truly to be made, we bind ourselves, our heirs, successors, executors and administrators, jointly and severally, firmly by these presents. The condition of this obligation is such that if the above bounded principal, his or its heirs, executors, administrators, successors or assigns, shall in all things stand to and abide by, and well and truly keep and perform the covenants, conditions and provisions in the said agreement and any alteration thereof made as therein provided, on his or their part, to be kept and performed at the time and in the manner therein specified, and in all respects according to their true intent and meaning, and shall indemnify and save harmless City of La Quinta, its officers, agents and employees, as therein stipulated, then this obligation shall become null and void; otherwise it shall be and remain in full force and effect. As part of the obligation secured hereby and in addition to the face amount specified therefore, there shall be included costs and reasonable expenses and fees including reasonable attorney's fees, incurred by city in successfully enforcing such obligation, all to be taxed as costs and included in any judgment rendered. The surety hereby stipulates and agrees that no change, extension of time, alteration or addition to the terms of the agreement or to the work to be performed thereunder or the specifications accompanying the same shall in anywise affect its obligations on this bond, and it does hereby waive notice of any such change, extension of time, alteration or addition to the terms of the agreement or to the work or to the specifications. In witness whereof, this instrument has been duly executed by the principal and surety above named, on May 11, 2001 KSL Land Corporation incipal DEVELOPERS SURETY AND INDEMNITY CO Suret ---, D ne M. Nielsen, Attorney -in -Fact 17780 Fitch Irvine, CA 92714 Agent's Address: HRH Insurance Services of Coachella Valley 77564 County Club Drive Suite 401 Palm Desert, California 92211-0449 OUTSTANDING BOND REPORT Name: KSL LAND DEVELOPMENT Tract No. 24890 Date of Contract: (3 CONTRACTS DIFFERENT DATES) Required Bond Amounts: $779,747 - PERIMETER WALL Dates of Bond Reductions: Performance reduced by staff on 6/5/2001 to $191,658 Outstanding Bonds: Amount: $779,747 $447,200 $447,200 $191,658 Bond No. Date Cancelled/Released: 7916744 Replaced on 6/5/2001 817663S same 8388938