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2003 01 07 RDAIV Redevelopment Agency Agendas are available on the City's Web Page @ www.la-quinta.org Redevelopment Agency Agenda CITY COUNCIL CHAMBER 78-495 Calle Tampico La Quinta, California 92253 Regular Meeting Tuesday January 7 2003 - 2:00 P.M. Beginning Res. No. RA 2003-001 CALL TO ORDER Roll Call: Board Members: Adolph, Osborne, Perkins, Sniff, Chairperson Henderson PUBLIC COMMENT At this time, members of the public may address the Redevelopment Agency on any matter not listed on the agenda. Please complete a "request to speak" form and limit your comments to three minutes. Please watch the timing device on the podium. CLOSED SESSION - None NOTE: Time permitting, the Redevelopment Agency Board may conduct Closed Session discussions during the dinner recess. In addition, when the Agency is considering acquisition of property, persons identified as negotiating parties are not invited into the Closed Session Meeting. RECONVENE AT 3:00 PM PUBLIC COMMENT At this time members of the public may address the Agency Board on items that appear within the Consent Calendar or matters that are not listed on the agenda. Please complete a "request to speak" form and limit your comments to three minutes. When you are called to speak, please come forward and state your name for the record. Please watch the timing device on the podium. For all Agency Business Session matters or Public Hearings on the agenda, a completed "request to speak" form should be filed with the City Clerk prior to the Agency beginning consideration of that item. 001 Redevelopment Agency Agenda January 7, 2003 V. CONFIRMATION OF AGENDA VI. APPROVAL OF MINUTES APPROVAL OF MINUTES OF DECEMBER 17, 2002. VII. CONSENT CALENDAR Note: Consent Calendar items are considered to be routine in nature and will be approved by one motion. 1 . APPROVAL OF DEMAND REGISTER FOR JANUARY 7, 2003. 2. ACCEPTANCE OF PROJECT NO. 2001-02 WASHINGTON STREET PAVEMENT IMPROVEMENTS. Vill. BUSINESS SESSION 1 . CONSIDERATION OF AGENCY REORGANIZATION, SELECTION OF CHAIRPERSON AND VICE -CHAIRPERSON FOR THE YEAR 2003. A. MINUTE ORDER ACTION 2. CONSIDERATION OF A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE LA QUINTA REDEVELOPMENT AGENCY AND BISON HOTEL GROUP, LLC FOR THE PURCHASE AND SALE OF 9.21 ACRES OF PROPERTY TO FACILITATE THE DEVELOPMENT OF AN EMBASSY SUITES HOTEL IN THE VILLAGE OF LA QUINTA. A. RESOLUTION ACTION. IX. STUDY SESSION X. CHAIR AND BOARD MEMBERS' ITEMS XI. PUBLIC HEARINGS 1 . JOINT PUBLIC HEARING FOR CONSIDERATION OF: 1) AN AGREEMENT FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS BY AND BETWEEN THE LA QUINTA REDEVELOPMENT AGENCY AND SANTA ROSA PLAZA, LLC PURSUANT TO WHICH THE AGENCY WOULD PURCHASE FROM SANTA ROSA PLAZA LLC 6.81 ACRES OF PROPERTY (THE HOTEL PARCEL); 2) AN AGREEMENT FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS BY AND BETWEEN THE AGENCY AND SANTA ROSA LLC PURSUANT TO WHICH THE AGENCY WOULD PURCHASE FROM SANTA ROSA PLAZA, LLC 2.4 ACRES OF PROPERTY ("COMMERCIAL PARCELS"); AND 3) A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE AGENCY AND BISON HOTEL GROUP, LLC (THE "DEVELOPER") PURSUANT TO WHICH THE AGENCY WOULD SELL THE HOTEL PARCEL AND THE COMMERCIAL PARCELS TO THE DEVELOPER TO FACILITATE THE DEVELOPMENT OF AN EMBASSY SUITES HOTEL IN THE VILLAGE OF LA QUINTA. A. RESOLUTION ACTION(S) ` 0, Redevelopment Agency Agenda January 7, 2003 2. JOINT PUBLIC HEARING TO CERTIFY A MITIGATED NEGATIVE DECLARATION OF ENVIRONMENTAL IMPACT FOR ENVIRONMENTAL ASSESSMENT 2002-466 REGARDING THE APPROVAL AND CONSTRUCTION OF 149 SENIOR AFFORDABLE DETACHED HOUSES AND 36 SINGLE FAMILY MARKET RATE DWELLING UNITS ON APPROXIMATELY 32 ACRES LOCATED AT THE NORTHEAST CORNER OF AVENUE 48 AND ADAMS STREET. A. RESOLUTION ACTION(S). 3. JOINT PUBLIC HEARING FOR CONSIDERATION OF AN AFFORDABLE HOUSING AGREEMENT BY AND BETWEEN THE LA QUINTA REDEVELOPMENT AGENCY AND SANTA ROSA DEVELOPMENT, INC., A CALIFORNIA CORPORATION, FOR THE SALE AND DEVELOPMENT OF 20.04 ACRES OF AGENCY PROPERTY LOCATED NORTHEAST OF THE INTERSECTION OF AVENUE 48 AND ADAMS STREET IN LA QUINTA REDEVELOPMENT PROJECT AREA NO. 2. A. RESOLUTION ACTION(S) 4. JOINT PUBLIC HEARING FOR CONSIDERATION OF AN AGREEMENT FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS BY AND BETWEEN THE LA QUINTA REDEVELOPMENT AGENCY AND SANTA ROSA DEVELOPMENT, LLC. A CALIFORNIA CORPORATION, FOR THE SALE OF 11.9 ACRES OF AGENCY PROPERTY LOCATED NORTHEAST OF THE INTERSECTION OF AVENUE 48 AND ADAMS STREET IN THE LA QUINTA REDEVELOPMENT PROJECT AREA NO. 2. A. RESOLUTION ACTION(S) XII. ADJOURNMENT - Adjourn to a regularly scheduled Meeting of the Redevelopment Agency to be held on January 21, 2003, commencing with closed session at 2:00 p.m. and open session at the conclusion of the 3:00 p.m. City Council business session in the City Council Chambers, 78-495 Calle Tampico, La Quinta, CA 92253. 003 Redevelopment Agency Agenda January 7, 2003 DECLARATION OF POSTING I, June S. Greek, Secretary of the La Quinta Redevelopment Agency, do hereby declare that the foregoing agenda for the La Quinta Redevelopment Agency meeting of Tuesday, January 7, 2003, was posted on the outside entry to the Council Chambers, 78-495 Calle Tampico and on the bulletin board at the La Quinta Chamber of Commerce, 78-371 Highway 1 1 1, and at Stater Bros., 78-630 Highway 1 1 1, on Friday, January 3, 2003. DATED: January 3, 2003 JUNE S. GR EK, Agency Secreta City of La Quinta, California PUBLIC NOTICES The La Quinta City Council Chamber is handicapped accessible. If special equipment is needed for the hearing impaired, please call the City Clerk's Office at 777-7025, 24-hours in advance of the meeting and accommodations will be made Redevelopment Agency Agenda January 7, 2003 Titit 4 4a Q" COUNCIL/RDA MEETING DATE: JANUARY 7, 2003 ITEM TITLE: Demand Register Dated January 7, 2003 AGENDA CATEGORY: BUSINESS SESSION CONSENT CALENDAR STUDY SESSION PUBLIC HEARING RECOMMENDATION: It is recommended the Redevelopment Agency Board: Receive and File the Demand Register Dated January 7, 2003 of which $161,852.90 represents Redevelopment Agency Expenditures. PLEASE SEE CONSENT CALENDAR ITEM NUMBER 1 ON CITY COUNCIL AGENDA 005 COUNCIL/RDA MEETING DATE: January 7, 2003 ITEM TITLE: Acceptance of Washington Street Pavement Rehabilitation Improvements, Project No. 2001-02 RECOMMENDATION: AGENDA CATEGORY: BUSINESS SESSION: CONSENT CALENDAR: STUDY SESSION: PUBLIC HEARING: Accept Project No. 2001-02, Washington Street Pavement Rehabilitation Improvements as 100% complete, authorize the City Clerk to file a Notice of Completion with the Office of the County Recorder, authorize the release of retention in the amount of $42,125.42 thirty-five days following the recording of the Notice of Completion, approve Contract Change Order No. 3 for Early Completion Incentive Bonus in the amount of $10, 000.00 as specified in the project specifications, and approve a final quantity adjustment Contract Change Order No. 4 in the amount of $132,527.25 for additional quantities installed. FISCAL IMPLICATIONS: The following represents the project's approved funding and funding sources: General Fund: $32,666.00 Gas Tax: $72,265.82 Infrastructure Funds: $561,068.18 RDA Project Area No. 1 Funds: $1,200,000.00 Total Funding Available: $1,866,000.00 Less Prior Expenditures: ($979,449.05) Amount Available: $886,550.95 The following is an accounting of the project's construction expenditures: Original Contract Amount $689,684.00 Approved Contract Change Orders No. 1-2 $20,297.00 Early Completion Incentive Bonus Change Order No. 3 $10,000.00 Quantity Adjustment Change Order No. 4 $132,527.25 11 TAPW DEPT\COUNCIL\2003\030107 rd a b. wpd Total Construction Costs - Matich Corporation $852,508.25 Amount Paid to Date ($800,382.84) Remaining 5% Retention $42,125.42 Early Completion Incentive Bonus CCO No. 3 $10,000.00 Remaining Fiscal Commitment $52,125.41 Adequate funding is available in the project budget to pay the contractor retention and to close-out the construction phase of this project, with the balance available for the Eisenhower Rehabilitation Improvements. CHARTER CITY IMPLICATIONS: None. BACKGROUND AND OVERVIEW: On April 16, 2002, the City Council approved the plans, specifications and engineer's estimate (PS&E) and authorized staff to advertise for bid the Washington Street Pavement Reconstruction Improvements, and authorized staff to modify the proposed scope of work for the Eisenhower Drive rehabilitation improvements to include median islands and median island landscape improvements. On June 18, 2002 the City Council awarded a contract in the amount of $689,684 to Matich Corporation to construct the Washington Street Pavement Rehabilitation Improvements, Project No. 2001-02. The Project's Contract Completion Time of 90 consecutive days began on August 5, 2002. Contract Change Orders No.1 -2 added 27 days to contract extending the completion date to November 29, 2002. The Project was completed on October 16, 2002, which was 44 days prior to the contract completion date. The maximum allowable bonus is $500 per day for a maximum of 20 days or $10,000. Therefore, in accordance with the project specifications, the Contractor is entitled to the maximum early completion incentive of $10,000. The project's construction is now 100% complete and is in compliance with the project plans and specifications. A Quantity Adjustment Change Order has been prepared to adjust the contract quantities from the engineer's estimate up or down to the actual quantities installed on the project. In this case additional asphalt removal and replacement, additional concrete removals, and additional cold planing were required in order to repair additional failed areas of asphalt found during construction. Other items, such as the conduit for the proposed signal at Lake La Quinta, were added after the project was bid resulting in an increase to the final 007 contract amount. T:\PWDEPT\COUNCIL\2003\030107rdab.wpd Staff recommends the City Council accept this project as 100% complete and authorize the City Clerk to file a Notice of Completion. FINDINGS AND ALTERNATIVES: The alternatives available to the City Council include: 1 . Accept Project No. 2001-02, Washington Street Pavement Rehabilitation Improvements as 100% complete, authorize the City Clerk to file a Notice of Completion with the Office of the County Recorder, authorize the release of retention in the amount of $42,125.42 thirty-five days following the recording of the Notice of Completion, approve Contract Change Order No. 3 for Early Completion Incentive Bonus in the amount of $10, 000.00 as specified in the project specifications, and approve a final quantity adjustment Contract Change Order No. 4 in the amount of $132,527.25 for additional quantities installed; or 2. Do not accept Project No. 2001-02, Washington Street Pavement Rehabilitation Improvements as 100% complete, do not authorize the City Clerk to file a Notice of Completion with the Office of the County Recorder, do not authorize the release of retention in the amount of $42,125.42 thirty- five days following the recording of the Notice of Completion, do not approve Contract Change Order No. 3 for Early Completion Incentive Bonus in the amount of $10, 000.00 as specified in the project specifications, and do not approve a final quantity adjustment Contract Change Order No. 4 in the amount of $132,527.25 for additional quantities installed; or 3. Provide Staff with alternative direction. Respectfully submitted, �L imothy R. Jdnas'c P.E. Public Works Director/City Engineer Approved for submission by: A Thomas P. Genovese, Executive Director Attachments 1. Contract Change Order No. 3 2. Contract Change Order No. 4 008 T:\PWDEPT\COUNCIL\2003\030107rdab.wpd ATTACHMENT 1 T4'!t 4 w'*A Q" Sheet I of 1 CONTRACT: Washington Street Pavement Rehabilitation Project PROJECT NO.2001-02 CONTRACTOR: Matich Corporation P.O Box 50,000 San Bernardino, Ca. 92412 CONTRACT CHANGE ORDER NO.3 Pursuant to the terms of the original Contract Agreement, you are hereby directed to make the herein described changes or do the following described work not included in the plans and specifications for this Contract. Unless otherwise stated all work shall conform to the terms, general conditions, and special provisions of the original Contract. DESCRIPTION OF CHANGE This Contract Change Order allows for the award of an Early Completion Incentive Bonus as provided for in Section 1400-6.5a of the project specifications. Early Completion Incentive Bonus is awarded at $ 500 per day for a maximum of $ 10,000. Contractor completed project 46 days prior to the contract completion date; therefore the contractor is awarded the maximum Incentive Bonus of $ 10,000. Amount $ 10,000.00 Previous Contract Amount Through Change Order No.2 $ 709,981.00 Add This Change Order No.3 $ 10,000.00 Revised Contract Total $ 719,981.00 By reason of this contract change order, the time of completion is adjusted as follows: -0- days added to contract time due to time delay incurred for preparation of new striping plans. The revised contract completion date shall be: 11/29/02 4r9e9e�'ex�tea4�e�'e�exira'c��e$�e$9e9e9e9e9r�9e�c�c3c$e9c4ex�e�F{eirxx�xx4e9e4e9eieie�c�e�c�r�'e�xxxx4e�e4e�'c�e9e9eiexx�'eiexxx$x9rx9c9c��9e�e9c9e9e9e4r�1r9ex Submitted By: Date: Approved By: We, the undersigned Contractor, have given careful consideration to the change proposed and hereby agree, if this proposal is approved, that we will provide all equipment, furnish all materials, perform all labor, except as may be noted above, and perform all services necessary to complete the above specified work, and hereby accept as full pavmeni the amount shown above, which includes all direct and indirect overhead expenses far any delays. Accepted By: Contractor: Title: Date: T\PWDEPIRPR0JECIS\200] Pdcts\2001-02 Wash_Rehab\Construction\CCOH3.wpd ME ATTACHMENT 2 TWit 4 .tAQur«rw Sheet I of 2 CONTRACT: Washington Street Pavement Rehabilitation Project PROJECT NO.2001-02 CONTRACTOR: Matich Corporation P.O Box 50,000 San Bernardino, Ca. 92412 CONTRACT CHANGE ORDER NO.4 Pursuant to the terms of the original Contract Agreement, you are hereby directed to make the herein described changes or do the following described work not included in the plans and specifications for this Contract. Unless otherwise stated all work shall conform to the terms, general conditions, and special provisions of the original Contract. DESCRIPTION OF CHANGE This Contract Change Order allows for the following additional item quantites to be added or deleted from the project contract. Item Unit Bid Quantity Actual Installed Quantity Difference Unit Price Additional Cost Remove & Replace PCC Cross Gutter SF 435 870 435 $12.00 $5,220.00 Saw Cut & Remove Asphalt Pavement CY 850 1,227 377 $73.00 $27,521.00 Construct AC Base Course TN 1,720 2,189.31 469.31 $47.00 $22,057.57 Cold Mill Asphalt Pavement SY 34,230 39,086 4,856 $1.00 $4,856.00 Redwood Header LF 1,900 0 (1,900) $3.00 ($5,700.00) Construct 1/2" AC Leveling Course TN 2,300 3,537.79 1,237.79 $41.00 $50,749.39 Construct 1 1 /2" ARHM Overlay TN 6,170 6,423.98 253.98 $53.00 $13,460.94 Install Traffic Signal Detector Loops EA 46 61 15 $214.00 $3,210.00 Adjust Sewer Manholes to Grade EA 6 9 3 $800.00 $2,400.00 Adjust Water Valve Cover to Grade EA 16 17 1 $375.00 $375.00 Adjust Monument Well Cover to Grade EA 2 0 (2) $535.00 ($1,070.00) Install Signal Conduit at Lake L.Q. EA 0 1 1 $9,447.35 $9,447.35 Total $132,527.25 TAMDEPPPROJECTS\2001 PdaLs\2001-02 Wash_Rehab\Construction\CCO#4mpd f Previous Contract Amount Through Change Order No.3 $ 719,981.00 Add This Change Order No.4 $ 132,527.25 Revised Contract Total $ 852,508.25 By reason of this contract change order, the time of completion is adjusted as follows: -0- days added to contract time due to time delay incurred for preparation of new striping plans. The revised contract completion date shall be: 11/29/02 Submitted By: Approved By: te: We, the undersigned Contractor, have given careful consideration to the change proposed and hereby agree, if this proposal is approved, that we will provide all equipment, fimnish all materials, perform all labor, except as may be noted above, and perform all services necessary to complete the above specified work, and hereby accept as full pavmeni the amount shown above, which includes all direct and indirect overhead expenses for anv delays. Accepted By: Contractor: Title: Date: O11 T:\PWDEPTIPROJECTS\2001 Prycts\2001-02 Wash_Rehab\Consuuction\CCO #4mpd T4tyl 4 s4� Q" COUNCIL/RDA MEETING DATE: January 7, 2003 ITEM TITLE• Consideration of Agency Reorganization, Selection of Chairperson and Vice Chairperson for the Year 2003 RECOMMENDATION: AGENDA CATEGORY: BUSINESS SESSION: CONSENT CALENDAR: STUDY SESSION: PUBLIC HEARING: Select a Chairperson and Vice Chairperson of the La Quinta Redevelopment Agency for the Year 2003. FISCAL IMPLICATIONS: None. BACKGROUND AND OVERVIEW: The provisions of Redevelopment Agency Resolution No. RA 99-01, adopted on January 19, 1999 amending the agency bylaws, spells out the procedure for electing the Chair and Vice Chair as follows: "Section 2.02 - Chair. Unless otherwise provided by law, ordinance, or resolution of the Agency, the Agency Board shall annually at its first meeting held after December 30th, or as soon thereafter as possible, vote to elect one of its number as Chair. The Mayor shall specifically be excluded from being eligible to serve as chair of the Agency. The Chair shall preside at all meetings of the Agency. Except as otherwise authorized by resolution of the Agency or the provisions of these bylaws, the Chair shall have the authority to sign on behalf of the Agency, all contracts, deeds and other instruments made by the agency. Section 2.03 - Vice Chair. Unless otherwise provided by law, ordinance, or resolution of the Agency, the Agency Board shall annually at its first meeting held after December 30th, or as soon thereafter as possible, vote to elect one of its number as Vice Chair. The Mayor shall specifically be excluded from being eligible to serve as Vice Chair of the Agency. The Vice Chair shall perform the duties of the Chair in the absence or incapacity of the Chair." 012 Copies of the full text of the resolution and bylaws are attached. FINDINGS AND ALTERNATIVES: The alternatives available to the City Council include: 1. Select a Chairperson and Vice Chairperson to serve a term as provided by Resolution No. RA 99-01; or 2. Do not select a Chairperson and Vice Chairperson to serve a term as provided by Resolution No. RA 99-01; or 3. Provide staff with alternative direction. Respectfully submitted, June eek, CMC City Clerk Approved for submission by: Thomas P. Genovese, City Manager ATTACHMENTS: 1. Resolution No. RA 99-01 2. Bylaws of the La Quinta Redevelopment Agency 002 013 ATTACHMENT 1 RESOLUTION NO. RA 99-01 A RESOLUTION OF THE LA QUINTA REDEVELOPMENT AGENCY BOARD AMENDING BYLAWS FOR THE LA QUINTA REDEVELOPMENT AGENCY WHEREAS, the City Council of the City of La Quinta has organized itself as the La Quinta Redevelopment Agency; and, WHEREAS, the Board Members of the Agency have established bylaws to conduct its business; and WHEREAS, it is necessary for the Agency to amend the bylaws. NOW, THEREFORE, the La Quinta Redevelopment Agency Board does hereby RESOLVE as follows: Section 1. The "Bylaws" of the La Quinta Redevelopment Agency are hereby amended in the form attached to this resolution, and incorporated herein by reference, are hereby adopted. PASSED, APPROVED and ADOPTED this 19' day of January, 1999 by the following vote: AYES: Members Adolph, Henderson, Pena, Sniff, Chairman Perkins NOES: None ABSTAIN: None ABSENT: None RON PERKINS, Chairman La Quinta Redevelopment Agency ATTEST: 1 AUNDRA L4. JU LA, Secretary La Quinta Redevelopment Agency 904 014 Rssoludon No. RA 99-01 Adopted: 1119l99 Pepe 2 APPROVED AS TO FORM: C -• �/Y1L/ �CO.P DAWN C. HONEYWE L, Attorney La Quinta Redevelopment Agency nnr� ATTACHMENT 2 BYLAWS OF THE LA QUINTA REDEVELOPMENT AGENCY Section 1.01. - Name of Agency. The official name of the Agency shall be the "La Quinta Redevelopment Agency." Section 1.02. - Seal of Agency. The seal of the Agency shall be in the form of a circle and shall bear the name of the Agency and the year of its organization. Section 1.03. - Office of Agency and Place of Meeting. The office of the Agency shall be at City Hall, 78-495 Calle Tampico, La Quinta, California, but the Agency may hold its meeting at any place in the City of La Quinta, California, which the Agency may from time to time designate by resolution. Section 1.04. -g. The powers of the Agency shall be vested in the members thereof then in office, who reserve unto themselves the right to delegate by resolution such powers as are appropriate and permissible by law. Section 1.05. - members. The members of the Agency shall be the members of the City Council of the City of La Quinta. Section 2.01. - Officers. The officers of the Agency shall be a Chair and a Vice Chair. Ex officio positions acting as its staff shall be an Executive Director, Secretary to the Board and Treasurer. Section 2.02. - Chair. Unless otherwise provided by law, ordinance, or resolution of the Agency, the Agency Board shall annually at its first meeting held after December 30", or as soon thereafter as possible, vote to elect one of its number as Chair. The Mayor shall specifically be excluded from being eligible to serve as chair of the Agency. The Chair shall preside at all meetings of the Agency. Except as otherwise authorized by resolution of the Agency or the provisions of these Bylaws, the Chair shall have the authority to sign on behalf of the Agency, all contracts, deeds and other instruments made by the Agency. .g,n�Ole RDA Bylaws Resolutlon No. RA 99-01 Adopted: 1119199 Pepe 2 Section 2.03. - Vice Chair. Unless otherwise provided by law, ordinance, or resolution of the Agency, the Agency Board shall annually at its first meeting held after December 301h, or as soon thereafter as possible, vote to elect one of its number as Vice Chair. The Mayor shall specifically be excluded from being eligible to serve as Vice Chair of the Agency. The Vice Chair shall perform the duties of the Chair in the absence or incapacity of the Chair. Section 2.04. - Executive Director. The Executive Director shall be the City Manager of the City of La Quinta. The Executive Director shall have general supervision over the administration of Agency business and affairs, subject to the direction of the Agency. The Executive Director shall have the authority to sign on behalf of the Agency all contracts, deeds, and other instruments made by the Agency. Section 2.05. - Secretary to the Board. The Secretary to the Board shall be the City Clerk of the City of La Quinta. The Secretary to the Board shall keep the records of the Agency, act as secretary at meetings of the Agency, record all votes and keep a record of the proceedings of the Agency in a journal of proceedings to be kept for such purpose, and perform all duties incident to the Secretary to the Board's office. The Secretary to the Board shall maintain a record of all official proceedings of the La Quinta Redevelopment Agency and the redevelopment program. Section 2.06. - Treasurer. The Treasurer shall be Treasurer of the City of La Quinta. The Treasurer of the City of La Quinta is the Finance Director. The Treasurer shall have the care and custody of all funds of the Agency and shall deposit same in the name of the Agency in such bank or banks as the Agency may select. The Treasurer shall sign all orders and checks for the payment of money and shall pay out and disburse such monies under the direction of the Agency. The Treasurer shall keep regular books of account, showing receipts and expenditures, and shall render to the Agency at each regular meeting, or more often when requested, an account of transactions and the financial conditions of the Agency. The Treasurer shall give such bond for faithful performance of the Treasurer's duties as the Agency may determine. �,i��,�17 RDA Bylaws Resolution No. RA 99-01 Adopted: 1 /19/99 Pape 3 Section 2.07. - Special Counsel. The Agency may appoint Special Counsel to give advice to the Agency and to provide a variety of services, including without limit, the preparation of all proposed resolutions, laws, rules, contracts, bonds and other legal papers for the Agency. The Special Counsel for the Agency is the City Attorney. The Special Counsel may give advice or opinions in writing to the Chair or other Agency officers whenever requested to do so. The Special Counsel may attend to all suits and other matters to which the Agency is a part or in which the Agency may be legally interested and do such other things pertaining to the Special Counsel's office as the Agency may request. Such Special Counsel shall serve at the pleasure of -the Agency. Section 2.08. - Compensation. The members of the Agency shall receive such compensation as the City Council prescribes, but said compensation shall not exceed that amount as set forth in Section 33114.5 of the Health & Safety Code as such Section may from time to time be amended. Section 2.09. - Additional Duties. The officers and ex officio positions of the Agency shall perform such other duties and functions as may from time to time be required by the Agency or the Bylaws or rules and regulations of the Agency. Section 2.10. - Absences. In the temporary absence of both the Chair and the Vice Chair, the most senior Board Member shall serve as Presiding Officer. In the event that there are two Board Members with equal seniority, then the Member who received the highest number of votes in the General Municipal Election shall serve as Presiding Officer. Section 2.11. - Additional Personnel. The Agency may from time to time appoint or employ such personnel as it deems necessary to exercise its powers, duties and functions as prescribed by the California Community Redevelopment Law and all other laws of the State of California applicable thereto. Additional personnel may include, but is not limited to, contract consultants, attorneys, special counsel and project implementation contractors as conditions warrant. The selection, duties and compensation of such personnel shall determined by the Agency, subject to the laws of the State of California. 00 18 RDA Bylaws Resolution No. RA 9"1 Adopted: 1 /19/99 Page 4 Section 3.01. - Regular Meetings. The regular meetings of the Agency shall be held on the first and third Tuesday of each month at 2:00 p.m. in the Chambers of the City Council, 78-495 Calle Tampico, La Quinta, California. In the event such date shall fall on a legal holiday, the regular meeting shall be held on the next succeeding business day. Section 3.02. - Soecial Meetinas. The Chair of the Agency may, when it is deemed expedient, and shall, upon the written request of two (2) members of the Agency, call a special meeting of the Agency for the purpose of transacting the business designated in the call. The means and method for calling such special meeting shall be as set forth in the Ralph M. Brown Act, California Government Code Sections 54950, at as it now exists or may hereafter be amended. At such special meeting, no business shall be considered other than as designated in the call. Section 3.03. - Quorum. Three (3) members of the Agency shall constitute a quorum fro the purpose of conducting Agency business, exercising Agency powers and for all other purposes, but a smaller number may adjourn from time to time until the quorum is obtained. Every official act of the Agency shall be adopted by a majority vote. A "majority vote" shall mean a majority of all members present when a quorum is present. Section 3.04. - Order of Business. At the regular meetings of the Agency, the following shall be the order of business: (1) Roll Call; (2) Public Comment; (3) Closed Session; (4) Public Comment; (5) Confirmation of Agenda; (6) Approval of Minutes; (7) Consent Calendar; (8) Business Session; (9) Study Session; (10) Department Reports; (1 1) Chair and Board Members' Items; (12) Public Hearings; (13) Adjournment. 0 1,1 9 0 19 RDA Bylaws Resolution No. RA 99-01 Adopted: 1 /19199 Pape 5 All resolutions shall be in writing and designated by number, reference to which shall be inscribed in the minutes and an approved copy of each resolution filed in the official book of resolutions of the Agency. Section 3.05. - Manner of yotina. The voting on formal resolutions, matters to any federal, state, county or city agency, and on such other matters as may be requested by a majority of the Agency members, shall be by electronic voting, and the ayes, noes and members present not voting shall be entered upon the minutes of such meeting, except on the election of officers, which may be by ballot. Section 3.06. - Parliamentary Procedure. Unless a different procedure is established by resolution of the Agency or set forth in these Bylaws, the rules of parliamentary procedure as set forth in Robert's Rules of Order Revised shall govern all meetings of the Agency. Section 4.01. - Public Notice. The Desert Sun, with offices located at 750 North Gene Autry Trail, Palm Springs, California 92262, is hereby designated as the Agency's official newspaper for all legally required public notices. Section 5.01. - Amendments to Bylaws. The Bylaws of the Agency may be amended by resolution by the Agency at any regular or special meeting by majority vote. Section 6.01. - Conflicts. Conflicts shall be determined and governed by a Conflict of Interest Code adopted by the Agency and approved by the City Council. SACity Clerk\RDABYLAWSAD0PTED1999.wpd O?O r) l_ n TO: Redevelopment Chair and Board Members of the Redevelopment Agency FROM: Thomas P. Genovese, Executive Director DATE. January 3, 2003 SUBJECT: Business Item No. 2 Consideration of a Disposition and Development Agreement by and Between the La Quinta Redevelopment Agency and Bison Hotel Group, LLC for the Purchase and Sale of 9.21 Acres of Property to Facilitate the Development of an Embassy Suites Hotel in the Village of La Quinta This item has been pulled. 021 COUNCIL/RDA MEETING DATE: January 7, 2003 ITEM TITLE: Joint Public Hearing for Consideration of 1) an Agreement for Purchase and Sale and Escrow Instructions by and Between the La Quinta Redevelopment Agency ("Agency") and Santa Rosa Plaza, LLC ("Seller") Pursuant to Which the Agency Would Purchase from Santa Rosa Plaza LLC 6.81 Acres of Property (the "Hotel Parcel"); 2) an Agreement for Purchase and Sale and Escrow Instructions by and Between the Agency and Santa Rosa Plaza LLC Pursuant to Which the Agency Would Purchase from Santa Rosa Plaza LLC 2.4 Acres of Property (the "Commercial Parcels"); and 3) a Disposition and Development Agreement by and Between the Agency and Bison Hotel Group, LLC (the "Developer") Pursuant to Which the Agency Would Sell the Hotel Parcel and the Commercial Parcels to the Developer to Facilitate the Development of an Embassy Suites Hotel in the Village of La Quinta AGENDA CATEGORY: BUSINESS SESSION: CONSENT CALENDAR: STUDY SESSION: PUBLIC HEARING: Adopt a Resolution of the Redevelopment Agency approving the Disposition and Development Agreement and authorizes the Agency Chair and Executive Director to execute the necessary documents to fund up to $3,440,000 in expenditures from Project Area No. 1, and appropriate $3,440,000 from the Project Area No. 1 Unreserved Fund Balance account (405-000-300-290). Adopt a Resolution of the Redevelopment Agency approving the purchase of the Hotel Parcel. Adopt a Resolution of the Redevelopment Agency approving the purchase of the Commercial Parcels. FISCAL IMPLICATIONS: The Disposition and Development ("Agreement") will result in expenditure of $3,440,000 in Redevelopment funds over a 24-month period. These funds will be repaid over a five-year term and will accrue interest at a rate of prime plus two percent (2%). When repaid, the Agency will receive the $3,440,000 in principal and an estimated $920,000 of interest earnings. n 22 G:\WPDOCS\CC Stf Rpts\EmbassySuitesDDA-RDAStfRpt.wpd.wpd ► i • \ \ • _ i Bison Hotel Group, Inc. ("Developer") is proposing to develop a resort complex anchored by an Embassy Suites Hotel. The development includes a four story, 146- room Embassy Suites Hotel, 144 casitas vacation rental units, and up to 23,000 square feet of commercial uses. Prior to September 11, 2001 the Developer had secured financing commitments to both purchase the site and develop the hotel. However, since that date, the Developer has not been able to secure the financing needed to build the hotel. In order to stimulate additional economic activity in the Village, the Agency Board considered a proposal to facilitate the Hotel development wherein the Agency would purchase the Hotel Parcel and the Commercial Parcels from the Seller and resell them to the Developer. The purchase terms would entail payment for these parcels over a five year period, which would allow the Developer to establish the Hotel operation and repay the Agency from cash generated by the Hotel operations versus from capital that could otherwise be used to construct and furnish the Embassy Suites Hotel. The attached Summary Report details this transaction. In general, the Agency would purchase four parcels from Santa Rosa Plaza in two phases. Phase one entails purchasing the Hotel Parcel for $1,600,000 at the time the Developer closes the loan which will fund the construction of the Embassy Suites Hotel. The Agency will then sell the Hotel Parcel to the Developer for $1,600,000. The Agency's interest will be secured by the 6.81 acre Hotel Parcel and will be subordinated only to the construction and permanent loans for the Embassy Suites Hotel. Once the City of La Quinta issues a certificate of occupancy for the Embassy Suites Hotel, the Agency will then purchase the second phase of properties from Santa Rosa Plaza, the three Commercial Parcels, for $1,840,000. The three Commercial Parcels will secure the Agency's interest for this acquisition, which per the Agreement, may not be subordinated to any other lien or encumbrance. These parcels will be transferred to the Developer when the Developer repays the $1,840,000 plus accrued interest. The property purchase terms allow the Developer to repay the Agency for both the Hotel Parcel and Commercial Parcels over a five-year period, with outstanding principal accruing interest at the current prime interest rate plus two percent (2%), compounded monthly and adjusted annually on July 1 st of each year. The five-year repayment term commences the day the Hotel Parcel is transferred to the Developer, with principal and interest payments commencing 24 months after the Hotel Parcel is acquired by the Developer. All outstanding principal and accrued interest are due and payable no later than five years after the Hotel Parcel is transferred. Finally, the Agreement includes a covenant that requires an Embassy Suites Hotel to remain in operation from the time the certificate of occupancy is issued to the end of the five-year purchase period. The Agreement obligates the Agency to fund a total of $3,440,000. The Agency will use available tax increment revenue to fund this amount. Per the Agreement, the $3,440,000 accrues interest at the current prime rate plus two percent (2%), with interest expense compounding monthly. Based upon an assumed constant 6.5 percent interest rate and the disbursement and repayment terms contained in the Agreement, the Agency would be paid the $3,440,000 in principal and an estimated $920,000 in O2 interest earnings at the end of the five-year period. A „ G:\WPDOCS\CC Stf Rpts\EmbassySuitesDDA-RDAStfRpt.wpd.wpd Currently, LAW pays two and a half percent (2.5%) or less on invested funds. Assuming a two and a half percent (2.5%) interest rate would stay constant for the five-year term, if the Agency continued to invest the $3,440,000 in LAW funds the Agency would earn approximately $351,831 on the $3,440,000. Comparing the two interest earnings $567,783 in additional interest income contemplated by the Agreement. indicates that the Agency would receive on the funds invested in the transaction The alternatives available to the Redevelopment Agency Board include: 1. Adopt a Resolution of the Redevelopment Agency approving the Disposition and Development Agreement and authorizing the Agency Chair and Executive Director to execute the necessary documents to fund up to $3,440,000 in expenditures from the Project Area No. 1, and appropriate $3,440,000 from the Project Area No. 1 Unreserved Fund Balance. Adopt a Resolution of the Redevelopment Agency approving the purchase of the Embassy Suites Hotel parcel. Adopt a Resolution of the Redevelopment Agency approving the purchase of the Commercial Parcels. 2. Do not approve the Resolutions of the Redevelopment Agency approving the Disposition and Development Agreement, approving the purchase of the hotel parcel, and approves the purchase of the two commercial parcels; or 3. Provide staff with alternative direction. Respectfully submitted, HerMan munity Development Director Approved for Submission: Thomas P. Genovese, Executive Director Attachments: 1 . Summary Report 2. Disposition and Development Agreement 024 3. Agreement for Purchase and Sale and Escrow Instructions (Hotel Parcel) 4. Agreement for Purchase and Sale and Escrow Instructions (Commercial Parcels) 0 G:\WPDOCS\CC Stf Rpts\EmbassysuitesDDA-RDAStfRpt.wpd.wpd RESOLUTION RDA NO. A RESOLUTION OF THE LA QUINTA REDEVELOPMENT AGENCY APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT BETWEEN THE AGENCY AND BISON HOTEL GROUP LLC FOR THE PROPERTY LOCATED AT THE NORTHWEST CORNER OF CALLE TAMPICO AND DESERT CLUB DRIVE DISPOSITION AND DEVELOPMENT AGREEMENT BISON HOTEL GROUP LLC WHEREAS, the La Quinta Redevelopment Agency ("Agency") is a public body, corporate and politic, organized and existing under the California Community Redevelopment Law ("Health & Safety Code § 33000 et seq.) ("CRL"); and WHEREAS, pursuant to the CRL, the City Council of the City of La Quinta ("City" or "City Council," as applicable) approved and adopted the Redevelopment Plan ("Redevelopment Plan") for Project Area No. 1 ("Project Area"), on November 29, 1983, by Ordinance No. 43, and amended the Redevelopment Plan on December 20, 1994, by Ordinance No. 258; and WHEREAS, the Agency staff has negotiated a Disposition and Development Agreement ("Agreement") with Bison Hotel Group LLC, a California limited liability company ("Developer"), pursuant to which (i) the Agency is to convey to the Developer certain real property located within the Project Area (the "Hotel Parcel") for One Million Six Hundred Thousand Dollars ($1,600,000.00) for the Developer's subsequent development thereon of an Embassy Suites Hotel ("Hotel Facility"), and (ii) the Agency is to convey to the Developer certain real property located within the Project Area (the "Commercial Parcels") for One Million Eight Hundred Forty Thousand Dollars ($1,840,000.00) for the Developer's subsequent development and use thereon of commercial uses consistent with City zoning applicable to said property and with the Redevelopment Plan, all as more particularly described in the Agreement; and WHEREAS, the Agreement provides that the Developer's payment for the Hotel Parcel shall be in accordance with the terms and conditions of a promissory note secured by a deed of trust recorded against the Hotel Parcel, and the Developer's payment for the Commercial Parcels shall be in accordance with the terms and conditions of a promissory note secured by a deed of trust recorded against the Commercial Parcels; and WHEREAS, the Agreement provides that Agency may reacquire the Hotel Parcel in the event the Developer fails to commence construction of the Hotel Facility within certain specified time frames, interrupts construction of the Hotel Facility for a specified period of time, or transfers the Hotel Facility in violation of the Agreement, all as more particularly described in the Agreement; and 425 004 G:\WPDOCS\CCReso-COA\Embassy RDA DDA-Reso.wpd.doc Resolution RDA No. Disposition and Development Agreement Bison Hotel Group LLC Adopted: January 7, 2003 WHEREAS, Health and Safety Code Section 33433 requires that the Agency prepare a Summary Report to consider the Agency's proposed sale of the Hotel Parcel and the Commercial Parcels as set forth in the Agreement, that the Agency Board and the City Council conduct a noticed joint public hearing with respect to the Agreement, and that the approval of the Agreement be accompanied by certain findings and determinations as set forth herein; and WHEREAS, a Summary Report for the Agreement has been prepared and the joint public hearing has been conducted in accordance with applicable requirements of law; and WHEREAS, the City Council and the Redevelopment Agency have considered all the information and evidence set forth in the Summary Report presented by the City/Agency staff and presented by persons wishing to appear and be heard concerning the impact of the Agreement on the Project Area and the City as a whole; and WHEREAS, the Agreement is in accordance with the Redevelopment Plan and is of benefit to the Project Area and the City of La Quinta; and WHEREAS, the Agency hereby determines that the Agency's sale of the Hotel Parcel and the Commercial Parcels pursuant to the Agreement are necessary to effectuate the purposes of the Redevelopment Plan; NOW, THEREFORE, BE IT RESOLVED BY THE LA QUINTA REDEVELOPMENT AGENCY AS FOLLOWS: 1 . That the above recitals are true and correct and incorporated herein. 2. That the La Quinta Redevelopment Agency hereby resolves as follows: a. The Agreement effectuates the purposes of the Community Redevelopment Law (Health & Safety Code § 33000 et seq.) and of the Redevelopment Plan and is in the best interests of the citizens of the City of La Quinta. b. The Agency's sale of the Hotel Parcel and the Commercial Parcels will eliminate blight and is consistent with the Agency's Five -Year Implementation Plan, based on the facts and conclusions of the Summary Report, which is incorporated herein by this reference. C. The consideration the Developer will pay for the Hotel Parcel and the Commercial Parcels is not less than the fair market value of the Property at its highest and best use in accordance with the Redevelopment Plan, 096 based on the facts and conclusions of the Summary Report. G:\WPDOCS\CCReso-COA\EmbassyRDA DDA-Reso.wpd.doc U Resolution RDA No. Disposition and Development Agreement Bison Hotel Group LLC Adopted: January 7, 2003 3. The Agreement, a copy of which is on file with the Agency Secretary, is hereby approved. The Agency Executive Director and Agency Counsel are hereby authorized and directed to make final modifications to the Agreement that are consistent with the substantive terms of the Agreement approved hereby, and the Agency Executive Director is authorized to thereafter sign the Agreement on behalf of the Agency. 4. The Agency Executive Director is authorized and directed, on behalf of the Agency, to (i) sign such other and further documents, including but not limited to Subordination Agreements and escrow instructions that require the Agency's signature, and (ii) take such other and further actions, as may be necessary and proper to carry out the terms of the Agreement. PASSED, APPROVED, AND ADOPTED at a regular meeting of the La Quinta Redevelopment Agency held this 7th day of January, 2003, by the following vote: AYES: NOES: ABSENT: ABSTAIN: TERRY HENDERSON, Agency Chair City of La Quinta, California ATTEST: JUNE S. GREEK, Agency Secretary City of La Quinta, California APPROVED AS TO FORM: M. KATHERINE JENSON, Agency Counsel City of La Quinta, California 027 r% GAWPDOCS\CCReso-COA\EmbassyRDA DDA-Reso.wpd.doc to RESOLUTION RDA NO. A RESOLUTION OF THE LA QUINTA REDEVELOPMENT AGENCY APPROVING AN AGREEMENT FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS BETWEEN THE AGENCY AND SANTA ROSA PLAZA, LLC FOR THE PROPERTY LOCATED AT THE NORTHWEST CORNER OF CALLE TAMPICO AND DESERT CLUB DRIVE PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS SANTA ROSA PLAZA LLC WHEREAS, the La Quinta Redevelopment Agency ("Agency") is a public body, corporate and politic, organized and existing under the California Community Redevelopment Law ("Health & Safety Code § 33000 et seq.) ("CRL"); and WHEREAS, pursuant to the CRL, the Agency and the City Council of the City of La Quinta ("City" or "City Council," as applicable) previously approved and adopted the Redevelopment Plan, as amended ("Redevelopment Plan") for Project Area No. 1 ("Project Area"); and WHEREAS, Health and Safety Code Section 33391 authorizes the Agency to acquire real property for purposes of redevelopment; and WHEREAS, Agency staff has negotiated an Agreement for Purchase and Sale and Escrow Instructions ("Agreement") with Santa Rosa Plaza, LLC, a California limited liability company ("Seller"), which provides for Agency's purchase from Seller of certain real property located in the Project Area (the "Property") for One Million Six Hundred Thousand Dollars ($1,600,000.00), conditioned on (i) the Agency's negotiation, approval, and execution of a Disposition and Development Agreement ("DDA") with Bison Hotel Group LLC, a limited liability company ("Developer"), which provides for Agency's sale of the Property to Developer for Developer's subsequent development thereon of an Embassy Suites Hotel, and (ii) the satisfaction or waiver, by the appropriate party, of all of the conditions to close set forth in the DDA; and WHEREAS, the Agreement provides for other conditions, time schedules, and requirements all as set forth in the Agreement; and WHEREAS, all actions required of the Agency to be taken precedent to review and consideration of the Agreement by the Agency have been taken in accordance with applicable law; NOW, THEREFORE, BE IT RESOLVED BY THE LA QUINTA REDEVELOPMENT AGENCY AS FOLLOWS: t 1 . The Agency finds and determines that the Agreement effectuates the purposes of the Community Redevelopment Law (Health & Safety Code § 33000 et seq.) and of the Redevelopment Plan and is in the best interests of the citizens of the City of La Quinta. 02g U �T G:\WPDOCS\CCReso-COA\Embassy RDA Reso-SaleAgreement.wpd.doc Resolution RDA No. Purchase and Sale Agreement Santa Rosa Plaza LLC Adopted: January 7, 2003 2. The Agreement, a copy of which is on file with the Agency Secretary, is hereby approved. The Agency Executive Director and Agency Counsel are hereby authorized and directed to make final modifications to the Agreement that are consistent with the substantive terms of the Agreement approved hereby, and the Agency Executive Director is authorized to thereafter sign the Agreement on behalf of the Agency. 3. The Agency Executive Director is authorized and directed, on behalf of the Agency, to (i) sign such other and further documents, including but not limited to Subordination Agreements and escrow instructions that require the Agency's signature, and (ii) take such other and further actions, as may be necessary and proper to carry out the terms of the Agreement. PASSED, APPROVED, AND ADOPTED at a regular meeting of the La Quinta Redevelopment Agency held this 7th day of January, 2003, by the following vote: AYES: NOES: ABSENT: ABSTAIN: TERRY HENDERSON, Agency Chair City of La Quinta, California ATTEST: JUNE S. GREEK, Agency Secretary City of La Quinta, California APPROVED AS TO FORM: M. KATHERINE JENSON, Agency Counsel City of La Quinta, California 029 U Z &\WPDOCS\CCReso-COA\Embassy RDA Reso-SaleAgreement.wpd.doc RESOLUTION RDA NO. A RESOLUTION OF THE LA QUINTA REDEVELOPMENT AGENCY APPROVING AN AGREEMENT FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS BETWEEN THE AGENCY AND SANTA ROSA PLAZA, LLC FOR THE PROPERTY LOCATED AT THE NORTHWEST CORNER OF CALLE TAMPICO AND DESERT CLUB DRIVE PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS (COMMERCIAL PARCEL) SANTA ROSA PLAZA, LLC WHEREAS, the La Quinta Redevelopment Agency ("Agency") is a public body, corporate and politic, organized and existing under the California Community Redevelopment Law ("Health & Safety Code § 33000 et seq.) ("CRL" ); and WHEREAS, pursuant to the CRL, the Agency and the City Council of the City of La Quinta ("City" or "City Council," as applicable) previously approved and adopted the Redevelopment Plan, as amended ("Redevelopment Plan") for Project Area No. 1 ("Project Area"); and WHEREAS, Health and Safety Code Section 33391 authorizes the Agency to acquire real property for purposes of redevelopment; and WHEREAS, Agency staff has negotiated an Agreement for Purchase and Sale and Escrow Instructions ("Agreement") with Santa Rosa Plaza, LLC, a California limited liability company ("Seller"), which provides for Agency's purchase from Seller of certain real property located in the Project Area (the "Property") for One Million Eight Hundred Forty Thousand Dollars ($1,840,000.00), conditioned on (i) the Agency's negotiation, approval, and execution of a Disposition and Development Agreement ("DDA") with Bison Hotel Group LLC, a limited liability company ("Developer"), which provides for Agency's sale of the Property to Developer for Developer's subsequent development and use thereon of commercial uses consistent with City zoning applicable to the Property and with the Redevelopment Plan, and (ii) the satisfaction or waiver, by the appropriate party, of all of the conditions to close set forth in the DDA; and WHEREAS, the Agreement provides for other conditions, time schedules, and requirements all as set forth in the Agreement; and WHEREAS, all actions required of the Agency to be taken precedent to review and consideration of the Agreement by the Agency have been taken in accordance with applicable law; NOW, THEREFORE, BE IT RESOLVED BY THE LA QUINTA REDEVELOPMENT AGENCY AS FOLLOWS: G:\WPDOCS\CCReso-COA\Embassy RDA ResoComParcelsAgreement.wpd.doc U 9 0,70 Resolution RDA No. Purchase and Sale Agreement - Commercial Parcel Santa Rosa Plaza LLC Adopted: January 7, 2003 1 . The Agency finds and determines that the Agreement effectuates the purposes of the Community Redevelopment Law (Health & Safety Code § 33000 et seq.) and of the Redevelopment Plan and is in the best interests of the citizens of the City of La Quinta. 2. The Agreement, a copy of which is on file with the Agency Secretary, is hereby approved. The Agency Executive Director and Agency Counsel are hereby authorized and directed to make final modifications to the Agreement that are consistent with the substantive terms of the Agreement approved hereby, and the Agency Executive Director is authorized to thereafter sign the Agreement on behalf of the Agency. 3. The Agency Executive Director is authorized and directed, on behalf of the Agency, to (i) sign such other and further documents, including but not limited to Subordination Agreements and escrow instructions that require the Agency's signature, and (ii) take such other and further actions, as may be necessary and proper to carry out the terms of the Agreement. PASSED, APPROVED, AND ADOPTED at a regular meeting of the La Quinta Redevelopment Agency held this 7th day of January, 2003, by the following vote: AYES: NOES: ABSENT: ABSTAIN: TERRY HENDERSON, Agency Chair City of La Quinta, California ATTEST: JUNE S. GREEK, Agency Secretary City of La Quinta, California APPROVED AS TO FORM: 031 M. KATHERINE JENSON, Agency Counsel City of La Quinta, California G:\WPDOCS\CCReso-COA\Embassy RDA ResoComParcelsAgreement.wpd.doc ATTACHMENT #1 Executive Summary Embassy Suites Disposition and Development Agreement Agency staff has negotiated a disposition and development agreement ("DDA") with Bison Hotel Group LLC, an entity owned and controlled by Danny Brown ("Bison"), that provides for the following: 1 . At the close of Bison's construction loan for the Embassy Suites hotel facility ("Hotel"), which must occur within 90 days after full execution of the DDA, the Agency will purchase from Santa Rosa Plaza, LLC, an entity owned and controlled by Danny Brown ("Seller"), the parcel on which the Hotel will be constructed for a purchase price of $1,600,000. The sale will be effected pursuant to a separate purchase and sale agreement that provides the Agency with the right to review and accept or reject, in its sole discretion, the condition of title to the property. Immediately after the Agency acquires title to the property, and at the same escrow, the Agency will sell the property to Bison for $1,600,000. As a condition of sale, Bison will execute a promissory note and deed of trust requiring Bison's repayment of the entire $1,600,000 within five years after the sale. The rate of interest applicable to the amount owed on the promissory note will be the prime interest rate + 2%. The Agency will subordinate the deed of trust to Bison's construction lender and permanent lender pursuant to a subordination agreement approved by Agency counsel. 2. At the time Bison completes construction of the Hotel, which it is required to do within a year after it begins construction, the Agency will purchase from the Seller three undeveloped commercial parcels for a purchase price of $1,840,000. As with the previous transaction, the sale will be effected pursuant to a separate purchase and sale agreement that provides the Agency with the right to review and accept or reject, in its sole discretion, the condition of title to the property. This will, in effect, require the Seller to clear the existing encumbrances from the property. Immediately after the Agency acquires title to the property, and at the same escrow, the Agency will sell the property to Bison for $1,840,000. As a condition of sale, Bison will execute a second promissory note and deed of trust requiring Bison's repayment of the entire $1,840,000 within five years after the sale of the hotel parcel. The rate of interest applicable to the amount owed on the promissory note will be the prime interest rate + 2%. The Agency will remain in first position on the deed of trust and will not subordinate. 3. The transactions described in 1 and 2 above are independent from each other, and in the event Bison fails to complete the Hotel, or fails to clear the title on the three commercial parcels, the second transaction will not occur. In that scenario, Bison will still be required to repay the $1,600,000 under the terms of the initial promissory note and deed of trust. G:\WPDOCS\Documents\EmbassySuiteExec Sum. wpd.doc 032 SUMMARY REPORT FOR THE DISPOSITION AND DEVELOPMENT AGREEMENT BETWEEN THE LA QUINTA REDEVELOPMENT AGENCY AND BISON HOTEL GROUP, LLC December 24, 2002 INTRODUCTION This document is the Summary Report ("Report") for the Disposition and Development Agreement ("Agreement") by and between the La Quinta Redevelopment Agency ("Agency") and Bison Hotel Group LLC, a California limited liability company ("Developer"). The Agreement facilitates the purchase and sale of four parcels of property, one parcel will be developed with an Embassy Suites Hotel and the three parcels will be developed with Tourist Commercial uses ("Development"). Through the Agreement the Agency will expend $3,440,000 to purchase these properties, and will subsequently be repaid this amount plus accrued interest when they are sold to the Developer. This Report has been prepared pursuant to Section 33433 of the California Health and Safety Code (the California Community Redevelopment Law or "Law") and addresses the following: • A summary of the proposed Development. • The cost of the Agreement to the Agency. • The estimated value of the interest to be conveyed, determined at the highest and best uses permitted by the Agency's Redevelopment Plan. • The estimated value of the interest to be conveyed determined at the use with the conditions, covenants, and development costs required by the Agreement. • An explanation of why the sale of property pursuant to the Agreement will assist in the elimination of blight. • Conformance with the Agency's Five Year Implementation Plan. THE DEVELOPMENT The Development entails a 146-room Embassy Suites Hotel and up to 23,000 square feet of Tourist Commercial uses on a 9.21 net acres located north of Calle Tampico, east of Avenida Bermudas and west of Desert Club Drive. This property is located in the Village of La Quinta. The Developer desires to acquire these parcels from Santa Rosa Plaza, a development entity controlled by the Developer, to construct the aforementioned uses. An additional 144 casitas vacation rental units will also be constructed to compliment the Hotel. G:\WPDOCS\Documents\SumRptEmbassySuites.wpd.doc 033 The Embassy Suites Hotel will be four stories in height and will include a 120-seat restaurant and lounge, 11,000 square feet of meeting space, a 5,000 square foot spa, and a 500 square foot fitness center. Outdoor recreation facilities will include a pool, two whirlpools, a chip and putt golf course, a tennis court, and a cabana bar. The commercial space will housed in three one-story structures ranging from 3,600 to 12,600 square feet in size. Per the Agreement the Agency will purchase four parcels from Santa Rosa Plaza in two phases. Phase one entails purchasing the hotel parcel for $1,600,000 at the time the Developer closes the loan that will fund the construction of the Embassy Suites Hotel. The Agency will then sell the parcel to the Developer for $1,600,000. The Agency's interest will be secured by the 6.81 acre Embassy Suites Hotel parcel and will be subordinate only to the construction and permanent loans for the Embassy Suites Hotel. Once the City of La Quinta issues a certificate of occupancy for the Embassy Suites Hotel, the Agency will then purchase the second phase of properties from Santa Rosa Plaza, the three commercial parcels, for $1,840,000. The three commercial pads will secure the Agency's interest for this acquisition, which per the Agreement may not be subordinate to any other lien or encumbrance. These parcels will be transferred to the Developer when the Developer repays the $1,840,000 plus accrued interest. The property purchase terms allow the Developer to repay the Agency for both the hotel and commercial parcels over a five-year period, with outstanding principal accruing interest at the current prime interest rate plus two percent (2%), compounded monthly and adjusted annually on July 1 st of each year. The five-year repayment term commences the day the hotel parcel is transferred to the Developer, with principal and interest payments commencing 24 months after the hotel parcel is acquired by the Developer. All outstanding principal and accrued interest is due and payable no later than five years after the hotel parcel is transferred. Finally the Agreement includes a covenant that requires an Embassy Suites Hotel to remain in operation from the time the certificate of occupancy is issued to the end of the five-year purchase period. THE COST OF THE AGREEMENT TO THE AGENCY The Agreement obligates the Agency to fund a total of $3,440,000. The Agency will use available tax increment revenue to fund this amount. Per the Agreement, the $3,440,000 accrues interest at the current prime rate plus two percent (2%), with interest expense compounding monthly. Based upon an assumed constant 6.5 percent interest rate and the disbursement and repayment terms contained in the Agreement, the Agency would be paid the $3,440,000 in principal and an estimated $920,000 in interest earnings at the end of the five-year period. The Agency currently does not have any other projects or programs in which to invest the $3,440,000. Thus, for this Report it is assumed that the Agency would continue to invest these funds in LAIF. Currently, LAIF pays 2.5 percent or less on invested funds. Assuming a 2.5 percent interest rate would stay constant for the five-year term, the Agency would earn approximately $351,831 on the $3,440,000. G:\WPDOCS\Documents\SumRptEmbassySuites.wpd.doc 034 Comparing the two interest earnings indicates that the Agency would receive $567,783 in additional interest income on the funds invested in the transaction contemplated by the Agreement. ESTIMATED VALUE OF INTEREST TO BE CONVEYED The Agency commissioned an appraisal in August 2002 to identify the value of both the Hotel and commercial parcels. Prepared by Capital Realty Analysts, the appraisal presented both an "as is" and finished value for these parcels. The "as is" value reflect the value of the land before site work and utility costs are included. The "as is" appraised value for both the Hotel and commercial parcels is $3,205,015. The finished appraised value is $4,1 15,335. ESTIMATED VALUE OF THE INTEREST TO BE CONVEYED, DETERMINED AT THE USE AND WITH THE CONDITIONS, COVENANTS, AND DEVELOPMENT COSTS REQUIRED BY THE AGREEMENT The Agreement requires that all site development conform to the Santa Rosa Specific Plan SP2000-050. This document establishes the conditions and covenants that impact development costs. These conditions and covenants were considered by Capital Realty Analysts when determining the aforementioned values of the interest to be conveyed. The estimated value is $3,205,015 in an "as is" condition, and $4,1 15,335 in a finished condition. EXPLANATION OF WHY THE SALE OF THE PROPERTY PURSUANT TO THE AGREEMENT WILL ASSIST IN THE ELIMINATION OF BLIGHT The Property is located in La Quinta Redevelopment Project Area No. 1. which was established in December 1983. One of the conditions of blight cited for establishing Project Area No. 1 was the lack of enterprises that stimulate business activity. The purchase and conveyance of these properties will facilitate the development of an Embassy Suites Hotel that will attract resort patrons to the Project No. 1 . This activity will support other local businesses and increase business activity within the Project. CONFORMANCE WITH THE AGENCY'S FIVE YEAR IMPLEMENTATION PLAN The Second Five Year Implementation Plan calls for the Agency to continue to implement programs and projects that eliminate blight and stimulate economic activity within Project Area No. 1. The conveyance of the Property and the subsequent development of the Embassy Suites Hotel will implement these provisions the Five Year Implementation Plan. A copy of the proposed Agreement is attached to this Report and is available for review at the Community Development Department located at the La Quinta City Hall. The proposed Agreement will be the subject of a joint public hearing to be conducted by the Agency and City Council on January 7, 2003, at 7:00 p.m., in the City Council Chambers, which are located at the La Quinta City Hall, 78-495 Calle Tampico, La Quinta, California. 435 G:\WPDOCS\Documents\SumRptEmbassySuites.wpd.doc DRAFT ATTACHMENT #2 DISPOSITION AND DEVELOPMENT AGREEMENT By and Between the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic, and BISON HOTEL GROUP LLC, a California limited liability company 882/015610-0052 292872.02 PM03 DRAFT DISPOSITION AND DEVELOPMENT AGREEMENT THIS DISPOSITION AND DEVELOPMENT AGREEMENT (this "Agreement") is entered into as of , 2003 ("Effective Date"), by and between the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"), and BISON HOTEL GROUP LLC, a California limited liability company (the "Developer"). RECITALS The following recitals are a substantive part of this Agreement: A. Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under the Community Redevelopment Law of the State of California (Health & Safety Code Section 33000, et seq.). B. Developer is a California limited liability company, specializing in the development of hotels. C. Pursuant to that certain Agreement for Purchase and Sale and Escrow Instructions (Hotel Parcel) ("Hotel Parcel Purchase and Sale Agreement"), entered into on , 2003, by and between Agency and Santa Rosa Plaza, LLC, a California limited liability company ("Seller"), Agency intends to acquire fee title to that certain real property located at 50-777 Santa Rosa Plaza, La Quinta, California 92253 (the "Hotel Parcel"). The Hotel Parcel is located in La Quinta Redevelopment Project No. I (the "Project Area"), which Project Area is located in the City of La Quinta, California. D. Pursuant to that certain Agreement for Purchase and Sale and Escrow Instructions (Commercial Parcels) ("Commercial Parcels Purchase and Sale Agreement") entered into on , 2003, by and between Agency and Seller, Agency intends to acquire fee title to that certain real property located at 78-124 and 78-122 Calle Tampico, and 50-920 Avenida Bermudas, La Quinta, California 92253 (the "Commercial Parcels"). E. The Agency and the Developer desire by this Agreement for Developer to (i) purchase the Hotel Parcel from Agency, and to construct, complete, and operate a new business hotel thereon (the "Hotel Facility"); and (ii) purchase the Commercial Parcels from Agency, to be used for commercial uses consistent with the City of La Quinta Municipal Code and the Redevelopment Plan for the Project Area. F. The Agency's (i) disposition of the Hotel Parcel to the Developer, and the Developer's subsequent construction, completion and operation of the Hotel Facility thereon, and (ii) disposition of the Commercial Parcels for development of commercial uses thereon, pursuant to the terms of this Agreement, are in the vital and best interest of the City of La Quinta and the health, safety and welfare of its residents, and in accord with the public purposes and provisions of applicable federal, state, and local laws and requirements. NOW, THEREFORE, the Agency and Developer hereby agree as follows: 037 882/015610-0052 292872.02 PM03 DRAFT 100. DEFINITIONS "Agency" means the La Quinta Redevelopment Agency, a public body, corporate and politic, exercising governmental functions and powers and organized and existing under Chapter 2 of the Community Redevelopment Law of the State of California, Health and Safety Code, Section 33000, et seq., and any assignee of or successor to its rights, powers and responsibilities. "Agency's Conditions Precedent to the Commercial Parcels Closing" means the conditions precedent to the Commercial Parcels Closing to the benefit of the Agency, as set forth in Section 205.1 hereof. "Agency's Conditions Precedent to the Hotel Parcel Closing" means the condition precedent to the Hotel Parcel Closing to the benefit of the Agency as set forth in Section 405.1 hereof. "Agreement" means this Disposition and Development Agreement between the Agency and the Developer. "Best Knowledge" or "Actual Knowledge" means, for purposes of a representation or warranty given hereunder, that such party has conducted a reasonable review of its files and has made reasonable inquiry of its employees and agents responsible for the acquisition, development and disposition of the Hotel Parcel and/or the Commercial Parcels, as applicable. "City" means the City of La Quinta, a California municipal corporation. "Commercial Parcels" means that certain approximately 2.4 acres of real property located at 78-124 and 78-122 Calle Tampico, and 50-920 Avenida Bermudas, La Quinta, California 92253. "Commercial Parcels Closing" means the close of escrow for the Commercial Parcels from the Agency to the Developer, as set forth in Section 402.4 hereof. "Commercial Parcels Closing Date" means the date of the Commercial Parcels Closing as set forth in Section 402.4 hereof. "Commercial Parcels Conveyance" means the conveyance of the Commercial Parcels by the Agency to the Developer on the Commercial Parcels Closing Date. The Commercial Parcels are legally described in the Commercial Parcels Legal Description and depicted in the Commercial Parcels Map. "Commercial Parcels Deed of Trust" means that certain deed of trust which shall be recorded against the Commercial Parcels as security for the Developer's repayment of the Commercial Parcels Promissory Note, in the form of Attachment No. 12 which is incorporated herein. "Commercial Parcels Environmental Reports" means the collective environmental investigations of the Commercial Parcels conducted pursuant to Section 407.2 hereof. 882/015610-0052 292872.02 PM03 _2- DRAFT "Commercial Parcels Escrow" is defined in Section 402 hereof. "Commercial Parcels Exceptions" is defined in Section 403 hereof. "Commercial Parcels Grant Deed" means the grant deed for the conveyance of the Commercial Parcels from the Agency to the Developer, in the form of Attachment No. 10 hereto, which is incorporated herein. "Commercial Parcels Legal Description" means the description of the Commercial Parcels which is attached hereto and incorporated herein as Attachment No. 8. "Commercial Parcels Site Map" means the map of the Commercial Parcels which is attached hereto and incorporated herein as Attachment No. 9. "Commercial Parcels Promissory Note" means the promissory note for the payment of the Commercial Parcels Purchase Price, substantially in the form attached hereto as Attachment No. 11 and incorporated herein. "Commercial Parcels Purchase and Sale Agreement" means that certain Agreement for Purchase and Sale and Escrow Instructions (Commercial Parcels) pursuant to which the Agency, or its nominee, shall acquire the Commercial Parcels from the Seller. "Commercial Parcels Purchase Price" means the price to be paid by the Developer to the Agency in consideration of the conveyance of fee title to the Commercial Parcels, as set forth in Section 403 hereof. "Commercial Parcels Report" means the preliminary title report for the Commercial Parcels, as described in Section 403 hereof. "Commercial Parcels Title Policy" is described in Section 404 hereof. "Condition of Commercial Parcels Title" is defined in Section 403 hereof. "Condition of Hotel Parcel Title" is defined in Section 203 hereof. "CPI" means the Consumer Price Index for Urban Wage Earners and Clerical Workers, Los Angeles -Long Beach -Anaheim average, All Items, 1984 = 100, published by the United States Department of Labor, Bureau of Labor Statistics. If such index is no longer published, a comparable index shall be selected by the parties. "Default" means the failure of a party to perform any action or covenant required by this Agreement within the time periods provided herein following notice and opportunity to cure, as set forth in Section 601 hereof. "Design Development Drawings" means those plans and drawings to be submitted to the City with respect to the development of the Hotel Facility, as set forth in Section 302 hereof. 039 882/015610-0052 292872.02 PM03 -3- DRAFT "Developer" means Bison Hotel Group LLC, a California limited liability company, and its successors and assigns. "Developer's Conditions Precedent to Commercial Parcels Closing" means the conditions precedent to the Commercial Parcels Closing to the benefit of the Developer, as set forth in Section 405.2. "Developer's Conditions Precedent to Hotel Parcel Closing" means the conditions precedent to the Hotel Parcel Closing to the benefit of Developer, as set forth in Section 205.2. "Development Budget" means the development budget for the Hotel Facility, which is submitted by the Developer and approved by the Agency pursuant to Section 304 hereof. "Environmental Consultant" means the consultant which conducts the environmental investigations of the Hotel Parcel and/or the Commercial Parcels pursuant to Section 207.2 or 407.2 hereof, as applicable. "Escrow Agent" is defined in Section 202 hereof. "Evidence of Financial Capability" means evidence reasonably satisfactory to Agency's Executive Director that Developer has the financial resources and commitments necessary for the acquisition of the Hotel Parcel and Commercial Parcels, and development of the Hotel Facility. "FIRPTA" means the Foreign Investment in Real Property Transfer Act. "Governmental Requirements" means all laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the State of California, the County of Riverside, the City, or any other political subdivision in which the Hotel Parcel and/or the Commercial Parcels are located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over the Agency, the Developer, the Hotel Parcel, and/or the Commercial Parcels. "Hazardous Materials" means any substance, material, or waste which is, or becomes, regulated by any local governmental authority, the State of California, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated byphenyls, (viii) methyl tertiary butyl ether, (ix) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 20, (x) designated as "hazardous substances" pursuant to Section 311 of the `I 882/015610-0052 292872.02 PM03 DRAFT Clean Water Act (33 U.S.C. §1317), (xi) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq. (42 U.S.C. §6903) or (xii) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §9601 et seq. "Hotel Facility" means the new one hundred forty-six (146) room, four (4) story business hotel to be constructed and operated by the Developer upon the Hotel Parcel as provided herein. "Hotel Parcel" means that certain approximately 6.81 acres of real property located at 50-777 Santa Rosa Plaza in the City of La Quinta. The Hotel Parcel is legally described in the Hotel Parcel Legal Description and depicted in the Hotel Parcel Map. "Hotel Parcel Closing" means the close of escrow for the conveyance of the Hotel Parcel from the Agency to the Developer, as set forth in Section 202.4 hereof. "Hotel Parcel Closing Date" means the date of the Hotel Parcel Closing, as set forth in Section 202.4 hereof. "Hotel Parcel Conveyance" means the conveyance of the Hotel Parcel by the Agency to the Developer on the Hotel Parcel Closing Date. The Hotel Parcel is legally described in the Hotel Parcel Legal Description and depicted in the Hotel Parcel Map. "Hotel Parcel Deed of Trust" means that certain deed of trust which shall be recorded against the Hotel Parcel as security for the Developer's repayment of the Hotel Parcel Promissory Note in the form of Attachment No. 5, which is incorporated herein. "Hotel Parcel Environmental Reports" means the collective environmental investiga- tions of the Hotel Parcel conducted pursuant to Section 207.2 hereof. "Hotel Parcel Escrow" is defined in Section 202 hereof. "Hotel Parcel Exceptions" is defined in Section 203 hereof. "Hotel Parcel Grant Deed" means the grant deed for the conveyance of the Hotel Parcel from the Agency to the Developer, in the form of Attachment No. 3 hereto, which is incorporated herein. "Hotel Parcel Legal Description" means the description of the Hotel Parcel which is attached hereto as Attachment No. 1 and incorporated herein. "Hotel Parcel Site Map" means the map of the Hotel Parcel which is attached hereto as Attachment No. 2 and incorporated herein. "Hotel Parcel Promissory Note" means the promissory note for the payment of the Hotel Parcel Purchase Price, substantially in the form attached hereto as Attachment No. 4 and incorporated herein. 011 �e p 882/015610-0052 iq .A 292872.02 PM03 -5- DRAFT "Hotel Parcel Purchase and Sale Agreement" means that certain Agreement for Purchase and Sale and Escrow Instructions (Hotel Parcel) pursuant to which the Agency, or its nominee, shall acquire the Hotel Parcel from the Seller. "Hotel Parcel Purchase Price" means the price to be paid by the Developer to the Agency in consideration for the conveyance of fee title to the Hotel Parcel, as set forth in Section 201 hereof. "Hotel Parcel Report" means the preliminary title report for the Hotel Parcel, as described in Section 203 hereof. "Hotel Parcel Title Policy" is defined in Section 204 hereof. "Notice" shall mean a notice in the form prescribed by Section 701 hereof. "Operating Covenant" means the Operating Covenant which is attached hereto as Attachment No. 15 and incorporated herein. "Operating Covenant Termination Date" is defined in Section 502. "Outside Date for Commercial Parcels Closing" shall mean the last date the Commercial Parcels Closing shall occur as set forth in Section 402.4 hereof. "Outside Date for Hotel Parcel Closing" shall mean the last date the Hotel Parcel Closing shall occur, as set forth in Section 202.4 hereof. "Preliminary Development Budget" means the preliminary budget attached hereto as Attachment No. 14 and incorporated herein. "Project Area" means the La Quinta Redevelopment Project No. 1, adopted by the City pursuant to the Redevelopment Plan. "Redevelopment Plan" means the Redevelopment Plan for the Project Area, adopted by Ordinance No. 43, on November 29, 1983, and amended by Ordinance No. 258, on December 20, 1994, of the City Council of the City of La Quinta, which Redevelopment Plan is incorporated herein by reference. "Release of Construction Covenants" means the document which evidences the Developer's satisfactory completion of the Hotel Facility, as set forth in Section 309 hereof, in the form of Attachment No. 7 hereto which is incorporated herein. "Schedule of Performance" means the Schedule of Performance attached hereto as Attachment No. 13 and incorporated herein, setting out the dates and/or time periods by which certain obligations set forth in this Agreement must be accomplished. "Scope of Development" means the Scope of Development attached hereto as Attachment No. 6 and incorporated herein, which describes the scope, amount and quality of 01, 882/015610_0052 Yi 292872.02 PM03 -6- DRAFT development of the Hotel Facility to be constructed by the Developer pursuant to the terms and conditions of this Agreement. "Seller" means Santa Rosa Plaza, LLC, a California limited liability company. "Substantial Completion Date" is defined in Section 402 hereof. "Title Company" is defined in Section 203 hereof. "Transfer" is defined in Section 703.1 hereof. 200. CONVEYANCE OF THE HOTEL PARCEL 201. Disposition of Hotel Parcel. The Agency intends to acquire the Hotel Parcel from Seller, pursuant to the Hotel Parcel Purchase and Sale Agreement, at or prior to the Hotel Parcel Closing; provided, however, nothing herein shall require Agency to acquire the Hotel Parcel from Seller except on terms acceptable to Agency in its sole and absolute discretion. In the event the Agency acquires the Hotel Parcel, the Developer agrees to purchase the Hotel Parcel from the Agency, and the Agency agrees to sell to the Developer the Hotel Parcel, in accordance with and subject to all of the terms, covenants, and conditions of this Agreement, for the all-inclusive purchase price of One Million Six Hundred Thousand Dollars ($1,600,000) (the "Hotel Parcel Purchase Price"). The Hotel Parcel Purchase Price represents the fair market value of the Hotel Parcel. 201.1 Payment of Hotel Parcel Purchase Price. The Developer shall pay the Hotel Parcel Purchase Price in installments, in accordance with the terms and conditions of the Hotel Parcel Promissory Note, which shall be secured by recordation of the Hotel Parcel Deed of Trust as an encumbrance to the Hotel Parcel. 201.2 Subordination of Hotel Parcel Deed of Trust. The Hotel Parcel Deed of Trust shall be made subordinate to the construction financing which is approved by the Agency pursuant to Section 310 hereof, and to permanent financing which is reasonably acceptable to the Agency provided that (1) the maximum cumulative principal amount of the loan shall not exceed eighty percent (80%) of the lender's appraised value of the Hotel Parcel upon completion of the Hotel Facility, which amount shall be verified in writing to Agency's Executive Director's reasonable satisfaction; (ii) the loan(s) shall obligate Developer to expend loan proceeds for no other purpose than the Hotel Facility; and (iii) the loan(s) shall provide that any notice of Developer breach or default shall also be sent to the Agency at the address listed in Section 701 and that upon receipt of such notice, Agency shall have the right to (A) cure the noticed breach or default, (B) negotiate with the lender regarding the noticed breach or default, and (C) purchase the Hotel Parcel from Developer subject to the lender's deed of trust, without the consent of Developer or the holder of the lender's deed of trust, and that Agency's exercise of the foregoing rights shall not, in and of itself, give rise to any right on the part of the lender to accelerate the amounts due under the loan. Agency's Executive Director shall have authority to sign such subordination agreements on behalf of the Agency. In agreeing to provide the subordination referred to in this Section, Agency hereby incorporates the finding required to be made in accordance with Health and Safety Code Section 33334.1. Notwithstanding anything herein to the contrary, the Hotel Parcel Promissory Note shall not be subordinate to any equity financing. 44 1 882/015610-0052 292872.02 PM03 -7- DRAFT 202. Hotel Parcel Escrow. Within five (5) days after the Effective Date, the parties shall open escrow (the "Hotel Parcel Escrow") with First American Title Company, at its office located at 3625 Fourteenth Street, Riverside, California 92502-0986, or another escrow company mutually satisfactory to both parties (the "Escrow Agent"). 202.1 Costs of Hotel Parcel Escrow. Developer shall pay the premium for the Hotel Parcel Title Policy as set forth in Section 204 hereof, the Developer shall pay for the documentary transfer taxes, if any, due with respect to the conveyance of the Hotel Parcel, and Developer and Agency each agree to pay one-half of all other usual fees, charges, and costs which arise from the Hotel Parcel Escrow. 202.2 Hotel Parcel Escrow Instructions. This Agreement constitutes the joint escrow instructions of Developer and Agency for the Hotel Parcel Escrow, and the Escrow Agent to whom these instructions are delivered is hereby empowered to act under this Agreement. Insurance policies for fire or casualty are not to be transferred, and Agency will cancel its own policies after the Hotel Parcel Closing. All funds received in the Hotel Parcel Escrow shall be deposited with other escrow funds in a general escrow account(s) and may be transferred to any other such escrow trust account in any State or National Bank doing business in the State of California. All disbursements shall be made by check from such account. If in the opinion of either party and/or the construction lender it is necessary or convenient in order to accomplish the Hotel Parcel Closing, and to specify the order of recording of closing and loan documents, such party may require that the parties sign supplemental escrow instructions; provided that if there is any inconsistency between this Agreement and the supplemental escrow instructions, then the provisions of this Agreement shall control. The parties agree to execute such other and further documents as may be reasonably necessary, helpful or appropriate to effectuate the provisions of this Agreement. The Hotel Parcel Closing shall take place within thirty (30) days after the date when both the Agency's Conditions Precedent to the Hotel Parcel Closing and the Developer's Conditions Precedent to the Hotel Parcel Closing as set forth in Section 205 have been satisfied or waived by the respective parties. Hotel Parcel Escrow Agent is instructed to release Agency's escrow closing and Developer's escrow closing statements to the respective parries. 202.3 Authority of Escrow Agent. At the Hotel Parcel Closing, Escrow Agent is authorized to, and shall: (a) Pay and charge Developer and Agency for their respective shares of the premium of the Hotel Parcel Title Policy and any endorsements thereto as set forth in Section 204 and any amount necessary to place title in the condition necessary to satisfy Section 203 of this Agreement. (b) Pay and charge Developer and Agency for their respective shares of any escrow fees, charges, and costs payable under Section 202.1 of this Agreement. (c) Disburse funds, deliver the Hotel Parcel Promissory Note and the Operating Covenant to the Agency, and deliver and record the Hotel Parcel Grant Deed, Hotel Parcel Deed of Trust, and Operating Covenant, when both the Developer's Conditions Precedent 044 892/015610-0052 C S .^ 292872.02 PM03 DRAFT to the Hotel Parcel Closing and the Agency's Conditions Precedent to the Hotel Parcel Closing have been fulfilled or waived by Developer and Agency. (d) Do such other actions as necessary, including obtaining the Hotel Parcel Title Policy, to fulfill its obligations under this Agreement. (e) Within the discretion of Hotel Parcel Escrow Agent, direct Agency and Developer to execute and deliver any instrument, affidavit and statement, and to perform any act reasonably necessary to comply with the provisions of the Foreign Investment in Real Property Transactions Act ("FIRPTA") and any similar state act and regulation promulgated thereunder. Agency agrees to execute a Certificate of Non -Foreign Status by individual transferor and/or a Certification of Compliance with Real Estate Reporting Requirement of the 1986 Tax Reform Act as may be required by Hotel Parcel Escrow Agent, on the form to be supplied by Hotel Parcel Escrow Agent. (0 Prepare and file with all appropriate governmental or taxing authorities a uniform settlement statement, closing statement, tax withholding forms including an IRS 1099-5 form, and be responsible for withholding taxes, if any such forms are provided for or required by law. 202.4 Hotel Parcel Closing. This transaction shall close ("Hotel Parcel Closing") within thirty (30) days after the parties' satisfaction of all of Agency's Conditions Precedent to the Hotel Parcel Closing and all of the Developer's Conditions Precedent to the Hotel Parcel Closing as set forth in Section 205 hereof, but in no event later than ninety (90) days after the Effective Date (the "Outside Date for Hotel Parcel Closing"). The Outside Date for Hotel Parcel Closing may be extended for up to six months in the sole and absolute discretion of the Agency, by written notice from the Agency to the Developer. Subject to the provisions in this Section 202.4, the Hotel Parcel Closing shall occur at a time reasonably agreed on by the parties. The "Hotel Parcel Closing" shall mean the time and day the Hotel Parcel Grant Deed is recorded with the Riverside County Recorder. The "Hotel Parcel Closing Date" shall mean the day on which the Hotel Parcel Closing occurs. 202.5 Termination. If the Escrow is not in condition to close by the Outside Date for Hotel Parcel Closing, then either party which has fully performed under this Agreement may, in writing, demand the return of money or property and terminate the Hotel Parcel Escrow. If either party makes a written demand for return of documents or properties, the Hotel Parcel Escrow shall not terminate until ten (10) days after Escrow Agent shall have delivered copies of such demand to all other parties at the respective addresses shown in this Agreement. If any objections are raised within said ten (10) day period, Escrow Agent is authorized to hold all papers and documents until instructed by a court of competent jurisdiction or by mutual written instructions of the parties. Developer, however, shall have the sole option to withdraw any money deposited by it with respect to the Hotel Parcel Closing less Developer's share of costs of the Hotel Parcel Escrow. Termination of the Hotel Parcel Escrow shall be without prejudice as to whatever legal rights either party may have against the other arising from this Agreement. If no demands are made, the Hotel Parcel Escrow Agent shall proceed with the Hotel Parcel Closing as soon as possible. 882/015610-0052 292872.02 PM03 -9- 1 C_7.1v" 202.6 Hotel Parcel Closing Procedure. Escrow Agent shall close the Hotel Parcel Escrow for the Hotel Parcel as follows: (a) Record the Hotel Parcel Grant Deed, the Hotel Parcel Deed of Trust, the Operating Covenant, deeds of trust and other security instruments securing Developer's construction financing, and a subordination agreement that satisfies the requirements of Section 201.2, and deliver copies thereof showing recording information to Agency and Developer; (b) Deliver the Hotel Parcel Promissory Note, subordination agreement, and the Operating Covenant to the Agency and copies to Developer; (c) Deliver the Hotel Parcel Title Policy and Hotel Parcel Grant Deed to Developer, (d) File any informational reports required by Internal Revenue Code Section 6045(e), as amended and any other applicable requirements; and (e) Deliver the FIRPTA Certificate, if any, to Developer; and (f) Forward to both Developer and Agency a separate accounting of all funds received and disbursed for each party and copies of all executed and recorded or filed documents deposited into Hotel Parcel Escrow, with such recording and filing date and information endorsed thereon. 203. Review of the Hotel Parcel Title. The Agency shall cause First American Title Company, or another title company mutually agreeable to both parties (the "Title Company"), to deliver to Developer a standard preliminary title report dated no earlier than the Effective Date (the "Hotel Parcel Report") with respect to the title to the Hotel Parcel, together with legible copies of the documents underlying the exceptions ("Hotel Parcel Exceptions") set forth in the Hotel Parcel Report, within thirty (30) days after the Effective Date. The Developer shall have the right to approve or disapprove the Hotel Parcel Exceptions and any proposed encumbrances to the Hotel Parcel in the exercise of its sole discretion; provided, however, that the Developer hereby approves the following Hotel Parcel Exceptions: (a) The Redevelopment Plan. (b) The lien of any non -delinquent property taxes and assessments (to be prorated at close of the Hotel Parcel Escrow). (c) All documents to be recorded at Close of the Hotel Parcel Escrow. Developer shall have fifteen (15) days after the date of its receipt of the Hotel Parcel Report to give written notice to Agency and Escrow Holder of Developer's approval or disapproval of any of such Hotel Parcel Exceptions. Developer's failure to give written disapproval of the Hotel Parcel Report within such time limit shall be deemed approval of the Hotel Parcel Report. If Developer notifies Agency of its disapproval of any Hotel Parcel Exceptions in the Hotel Parcel Report, Agency shall have the right, but not the obligation, to remove any disapproved Hotel 04(; 882/015610-0052 292872.02 PM03 -10- DRAFT Parcel Exceptions within thirty (30) days after receiving written notice of Developer's disapproval or provide assurances satisfactory to Developer that such Hotel Parcel Exception(s) will be removed on or before the Hotel Parcel Closing. If Agency cannot or does not elect to remove any of the disapproved Hotel Parcel Exceptions within that period, Developer shall have fifteen (15) days after the expiration of such thirty (30) day period to either give the Agency written notice that Developer elects to proceed with the purchase of the Hotel Parcel subject to the disapproved Hotel Parcel Exceptions or to give the Agency written notice that the Developer elects to terminate this Agreement. Developer's failure to give written notice of its election within such fifteen (15) day period shall be deemed to be an election to proceed with the purchase of the Hotel Parcel subject to the disapproved Hotel Parcel Exceptions. The conditions of title, including all of the Hotel Parcel Exceptions to title approved by Developer as provided herein shall hereinafter be referred to as the "Condition of Hotel Parcel Title." Developer shall have the right to approve or disapprove any further Hotel Parcel Exceptions reported by the Title Company after Developer has approved the Condition of Hotel Parcel Title (which are not created by Developer). Agency shall not voluntarily create any new exceptions to title following the Effective Date. Developer and the Executive Director of the Agency, on behalf of the Agency, shall have the authority to extend the foregoing fifteen day period by written agreement. 204. Hotel Parcel Title Insurance. Concurrently with recordation of the Hotel Parcel Grant Deed conveying title to the Hotel Parcel, there shall be issued to Developer an ALTA owner's policy of title insurance (the "Hotel Parcel Title Policy"), together with such endorsements as are reasonably requested by the Developer, issued by the Title Company insuring that the title to the Hotel Parcel is vested in Developer in the Condition of Hotel Parcel Title approved by Developer pursuant to Section 203 of this Agreement. The Title Company shall provide the Agency with a copy of the Hotel Parcel Title Policy. The Developer shall pay the premium for the Hotel Parcel Title Policy. 205. Conditions of Hotel Parcel Closing. The Hotel Parcel Closing is conditioned upon the satisfaction of the following terms and conditions within the times designated below: 205.1 A�z,ency's Conditions of Closing for Hotel Parcel. Agency's obligation to proceed with the Hotel Parcel Closing is subject to the fulfillment or waiver by Agency of each and all of the conditions precedent (a) through (k), inclusive, described below ("Agency's Conditions Precedent to the Hotel Parcel Closing"), which are solely for the benefit of Agency, and which shall be fulfilled or waived by the time periods provided for herein: (a) No Default. Prior to the close of the Hotel Parcel Escrow, Developer shall not be in default in any of its obligations under the terms of this Agreement and all representations and warranties of Developer contained herein shall be true and correct in all material respects. (b) Execution of Documents. The Developer shall have executed the Hotel Parcel Grant Deed, Hotel Parcel Promissory Note, Hotel Parcel Deed of Trust, and Operating Covenant, and executed any other documents required hereunder and delivered such documents into the Hotel Parcel Escrow. 882/015610-0052 292872.02 PM03 DRAFT (c) Ownership. The Agency shall have acquired fee title to the Hotel Parcel. (d) Payment of Funds. Prior to the Hotel Parcel Close of Escrow, Developer shall have paid all of its required costs of the Hotel Parcel Closing into the Hotel Parcel Escrow in accordance with Sections 202 hereof. (e) Design Approvals. The Developer shall have obtained approval by the City of the Design Development Drawings as set forth in Section 302 hereof. (f) Land Use Approvals. The Developer shall have received all land use approvals required pursuant to Section 302.5 hereof. (g) Insurance. The Developer shall have provided proof of insurance as required by Section 305 hereof and Agency shall have approval of the same. (h) Financing. The Agency shall have approved financing of the Hotel Facility as provided in Section 310.1 hereof, and such financing shall close and be available to the Developer upon the Hotel Parcel Closing. (i) Plans and Permits. The Developer shall have obtained City approval of its final grading and building plans for all of the Hotel Facility, and grading and building permits shall be ready to be issued (upon payment of necessary fees, posting of required security, and similar items). 0) Construction Costs and Contract. The Agency shall have approved the Development Budget pursuant to Section 304 hereof, and the Developer shall have provided the Agency Executive Director a copy of the proposed contract between the Developer and one or more duly licensed general contractors reasonably acceptable to the Agency for the construction of the Hotel Facility, certified by the Developer to be a true and correct copy thereof. (k) Performance Bond. The Developer shall have obtained from Developer's contractor and delivered to the Agency evidence, in a form satisfactory to Agency, that said contractor has obtained payment and performance bonds for the completion of the construction of the Hotel Facility (the "Contractor Bonds"), which provide that the Agency is authorized to enforce the Contractor Bonds as a third party beneficiary. 205.2 Developer's Conditions of Closing for the Hotel Parcel. Developer's obligation to proceed with the purchase of the Hotel Parcel is subject to the fulfillment or waiver by Developer of each and all of the conditions precedent (a) through 0), inclusive, described below ("Developer's Conditions Precedent to the Hotel Parcel Closing"), which are solely for the benefit of Developer, and which shall be fulfilled or waived by the time periods provided for herein: (a) No Default. Prior to the Hotel Parcel Closing, Agency shall not be in default in any of its obligations under the terms of this Agreement and all representations and warranties of Agency contained herein shall be true and correct in all material respects. 013 882/015610-0052 292872.02 PM03 -12- 28 io (b) Ownership of Hotel Parcel. The Agency shall own fee title to the Hotel Parcel. (c) Execution of Documents. The Agency shall have executed the Hotel Parcel Grant Deed and Operating Covenant, and any other documents required hereunder, and delivered such documents into the Hotel Parcel Escrow. (d) Review and Approval of Title. Developer shall have reviewed and approved the Condition of Hotel Parcel Title, as provided in Section 203 hereof. (e) Hotel Parcel Title Policy. The Title Company shall, upon payment of Title Company's regularly scheduled premium, have agreed to provide to the Developer the Hotel Parcel Title Policy at the Hotel Parcel Closing, in accordance with Section 204 hereof. (f) Environmental. The Developer shall have approved the environmental condition of the Hotel Parcel and shall not have elected to cancel the Hotel Parcel Escrow and terminate this Agreement pursuant to Section 207.2 hereof. (g) Design Approvals. The Developer shall have obtained approval by the City of the Design Development Drawings as set forth in Section 302 hereof, subject only to such conditions of approval as are reasonably satisfactory to the Developer. (h) Land Use Approvals. The Developer shall have received all land use approvals and other discretionary permits and approvals required pursuant to Section 302.5 hereof. (i) Building Permits. All grading and building permits required for the construction of the Hotel Facility shall be available for issuance upon the payment of applicable permit fees. 0) Financing. The Agency shall have approved financing of the Hotel Facility as provided in Section 310.1 hereof, and such financing shall close and be available to the Developer upon the Hotel Parcel Closing. 206. Studies and Reports. 206.1 Access to Hotel Parcel. Prior to the Hotel Parcel Closing, Agency, if it has acquired fee title to the Hotel Parcel or has obtained an assignable right of entry from the Seller, shall provide representatives of Developer the right of access to all portions of the Hotel Parcel for the purpose of obtaining data and making surveys and tests necessary to carry out this Agreement, including without limitation the investigation of the environmental condition of the Hotel Parcel pursuant to Section 207 hereof Any preliminary work undertaken on the Hotel Parcel by Developer prior to the Hotel Parcel Closing shall be done at the sole expense of the Developer. In no event shall Developer conduct any intrusive testing procedures on the Hotel Parcel without the prior written consent of Agency, which consent shall not be unreasonably withheld. Such investigations may be made by Developer or its directors, engineers, analysts, officers, employees, agents, contractors, representatives, attorneys or advisors (collectively, the "Developer Representatives") during any normal business hours. Developer shall also have the 01 882/015610-0052 13 292872.02 PM03 DRAFT right to investigate all matters relating to the zoning, use and compliance with other applicable laws, codes, and ordinances which relate to the use and occupancy of the Hotel Parcel. Agency shall cooperate to assist Developer in completing such inspections and special investigations at no cost or expense to Agency. Such inspections and investigations shall be conducted only upon no less than twenty-four (24) hours' notice to Agency and shall be conducted at such times and in such a manner as to minimize any disruption to the Hotel Parcel. Agency shall have the right, but not the obligation, to accompany Developer during such investigations and/or inspections. As a condition to any such entry, Developer shall (i) conduct all work or studies in a diligent, expeditious and safe manner and not allow any dangerous or hazardous conditions to occur on the Hotel Parcel during or after such investigation; (ii) comply with all applicable laws and governmental regulations; (iii) keep the Hotel Parcel free and clear of all materialmen's liens, lis pendens and other liens arising out of the entry and work performed under this paragraph; (iv) maintain or assure maintenance of workers' compensation insurance (or state approved self- insurance) on all persons entering the property in the amounts required by the State of California; (v) provide to Agency prior to initial entry a certificate of insurance evidencing that Developer and/or the persons entering the Hotel Parcel have procured and has in effect the insurance required by Section 305. Any preliminary work undertaken pursuant to this Section 206 shall be undertaken only after securing any necessary permits from the appropriate governmental agencies. The Developer's approval of the environmental and soils condition of the Hotel Parcel shall be a Developer's Condition Precedent to the Hotel Parcel Closing, as set forth in Section 205.2 hereof. If the Developer, based upon the above tests, reports and review, disapproves the environmental or soils condition of the Hotel Parcel in its sole and absolute discretion, then the Developer may terminate this Agreement by written Notice to the Agency pursuant to Section 603 hereof. 206.2 Indemnification. Developer shall protect, defend, indemnify and hold harmless Agency and City and Agency's and City's respective officers, officials, members, employees, agents, and representatives (any of the foregoing shall be known individually as "Indemnitee" and collectively as "Indemnitees"), and each of them, jointly and severally, against and from any and all claims, demands, causes of action, damages, costs, expenses, losses and liabilities, at law or in equity, of every kind or nature whatsoever, including attorneys' fees and expert witness fees, but excluding those resulting from environmental contamination of the Hotel Parcel or other defects on the Hotel Parcel existing prior to Developer's entry thereon or not otherwise caused by Developer or any of the Developer Representatives, but including, without limitation, injury to or death of any person or persons and damage to or destruction of any property, threatened, brought or instituted ("Claims"), arising out of or in any manner directly or indirectly connected with the entry upon the Hotel Parcel by Developer or any of the Developer Representatives pursuant to this Section, including without limitation: (a) any damage to the Hotel Parcel and any liability to any third party incurred by reason of any acts or omission of, or any commission of any negligent or tortious acts, by Developer or the Developer Representatives; (b) any mechanics' or materialmen's liens, claims, demands, actions or suits arising (directly or indirectly) from (i) any work performed or materials supplied to or for Developer, or (ii) any activities of any of the Developer Representatives on or relating to the 06 882/015610-0052 292872.02 PM03 -14- DRAFT Hotel Parcel (including, without limitation, any claims by any of such Developer Representa- tives); and (c) any costs of removing Developer or the Developer Representatives from the Hotel Parcel after the expiration of the term hereof unless Developer is otherwise entitled to possession of the Hotel Parcel at such time. 207. Condition of the Hotel Parcel 207.1 Disclosure. The Agency shall provide to the Developer copies of any environmental studies and reports with respect to the Hotel Parcel which it has in its possession. 207.2 Investigation of Hotel Parcel. Pursuant to Section 206 hereof, the Developer may, at its sole cost and expense, engage its own environmental consultant (the m "Environental Consultant") to make such investigations as Developer deems necessary, including any "Phase 1" and/or "Phase 2" investigations of the Hotel Parcel, and the Agency shall promptly be provided a copy of all reports and test results provided by the Environmental Consultant (the "Hotel Parcel Environmental Reports"). The Developer shall be permitted to make such inspections of the Hotel Parcel pursuant to the requirements of Section 206. The Developer shall approve or disapprove of the environmental condition of the Hotel Parcel, in the Developer's sole discretion, not later than thirty (30) days prior to the scheduled date for Hotel Parcel Close of Escrow. The Developer's approval of the environmental condition of the Hotel Parcel shall be a Developer's Condition Precedent to the Hotel Parcel Closing, as set forth in Section 205 hereof. If the Developer, based upon the Hotel Parcel Environmental Reports, disapproves the environmental condition of the Hotel Parcel for any reason, in the Developer's sole discretion, then the Developer may terminate this Agreement by written Notice to the Agency pursuant to Section 603 hereof. 207.3 No Further Warranties As To Hotel Parcel: Release of Agency. The physical condition, possession or title of the Hotel Parcel is and shall be delivered from Agency to Developer in an "as -is" "where is" "with all faults" condition, with no warranty expressed or implied by Agency, including without limitation, the presence of Hazardous Materials or the condition of the soil, its geology, the presence of known or unknown seismic faults, or the suitability of the Hotel Parcel for the development purposes intended hereunder. The Developer hereby waives, releases and discharges forever the Agency and the City, and their employees, officers, agents, members and representatives, from all present and future claims, demands, suits, legal and administrative proceedings and from all liability for damages, losses, costs, liabilities, fees and expenses, present and future, arising out of or in any way connected with the condition of the Hotel Parcel, any Hazardous Materials on the Hotel Parcel, or the existence of Hazardous Materials contamination due to the generation of Hazardous Materials from the Hotel Parcel, however they came to be placed there, except that arising out of the active negligence or intentional misconduct of the Agency, the City, or their employees, officers, agents or representatives. The Developer acknowledges that it is aware of and familiar with the provisions of Section 1542 of the California Civil Code which provides as follows: 0,71 882/015610-0052 292872.02 PM03 -15- �. DRAFT "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." Only with respect to the condition of the Hotel Parcel as set forth in this Section 207.3, the Developer hereby waives and relinquishes all rights and benefits which it may have under Section 1542 of the California Civil Code. Developer's Initials 207.4 Developer Precautions After the Hotel Parcel Closing. Upon the Hotel Parcel Closing, the Developer shall take all necessary precautions to prevent the release into the environment of any Hazardous Materials which are located in, on or under the Hotel Parcel. Such precautions shall include compliance with all Governmental Requirements with respect to Hazardous Materials. In addition, the Developer shall install and utilize such equipment and implement and adhere to such procedures as are consistent with commercially reasonable standards as respects the disclosure, storage, use, removal and disposal of Hazardous Materials. 207.5 Developer Indemnity. Upon the Hotel Parcel Closing, Developer agrees to indemnify, defend and hold Agency harmless from and against any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without limitation, attorneys' fees), resulting from, arising out of, or based upon (i) the presence, release, use, generation, discharge, storage or disposal of any Hazardous Materials on, under, in or about, or the transportation of any such Hazardous Materials to or from, the Hotel Parcel which occurs after the Hotel Parcel Closing, or (ii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous Materials on, under, in or about to or from, the Hotel Parcel which occurs after the Hotel Parcel Closing. This indemnity shall include, without limitation, any damage, liability, fine, penalty, cost or expense arising from or out of any claim, action, suit or proceeding for personal injury (including sickness, disease or death), tangible or intangible property damage, compensation for lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, contamination, leak, spill, release or other adverse effect on the environment. At the request of the Developer, the Agency shall cooperate with and assist the Developer in its defense of any such claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense; provided that the Agency shall not be obligated to incur any expense in connection with such cooperation or assistance. 300. DEVELOPMENT OF THE HOTEL PARCEL 301. Scope of Development. The Developer shall develop or cause the development of the Hotel Facility in accordance with the Scope of Development, the City Municipal Code, and the plans, drawings and documents submitted by the Developer and approved by the Agency as set forth herein. The Hotel Facility shall generally consist of a one hundred forty-six (146) room, four (4) story business hotel, and appurtenant landscaping, parking, and all other onsite and offsite improvements associated therewith. Prior to commencement of construction the 05Z 882/015610-0052 292872.02 PM03 -16- �' `� �. DRAFT Developer shall obtain and deliver to the Agency evidence of the Contractor Bonds, in an amount sufficient to complete the construction of the Hotel Facility, in the form approved by the Agency pursuant to Section 205.1(k), which provides that the Agency is authorized to enforce such completion bond as the primary beneficiary or as a third party beneficiary. 302. Design Review. 302.1 Developer Submissions. Before commencement of construction of the Hotel Facility or other works of improvement upon the Hotel Parcel, and as a Condition Precedent pursuant to Section 205(i), and at or prior to the times set forth herein, the Developer shall submit to the City any plans and drawings (collectively, the "Design Development Drawings") which may be required by the City with respect to any permits and entitlements which are required to be obtained to develop the Hotel Facility, and such plans for the Hotel Facility as required by the City in order for the Developer to obtain building and grading permits for the Hotel Facility. Within thirty (30) days after the City's disapproval or conditional approval of such plans, the Developer shall revise the portions of such plans identified by the City as requiring revisions and resubmit the revised plans to the City. 302.2 City Review and Approval. The City shall have all rights to review and approve or disapprove all Design Development Drawings and other required submittals in accordance with the City Municipal Code, and nothing set forth in this Agreement shall be construed as the City's approval of any or all of the Design Development Drawings. 302.3 Revisions. Any and all change orders or revisions required by the City and its inspectors which are required under the City Municipal Code and all other applicable Uniform Codes (e.g. Building, Plumbing, Fire, Electrical, etc.) and under other applicable laws and regulations shall be included by the Developer in its Design Development Drawings and other required submittals and shall be completed during the construction of the Hotel Facility. 302.4 Defects in Plans. The Agency and the City shall not be responsible either to the Developer or to third parties in any way for any defects in the Design Development Drawings, nor for any structural or other defects in any work done according to the approved Design Development Drawings, nor for any delays reasonably caused by the review and approval processes established by this Section 302. 302.5 Land Use Approvals. Before commencement of construction of the Hotel Facility or other works of improvement upon the Hotel Parcel, the Developer shall, at its own expense, secure or cause to be secured any and all land use and other entitlements, permits and approvals which may be required for the Hotel Facility by the City or any other governmental agency affected by such construction or work, including but not limited to, any environmental studies and documents required pursuant to the California Environmental Quality Act. 303. Schedule of Performance. The Developer shall submit all Design Development Drawings, commence and complete all construction of the Hotel Facility, and satisfy all other obligations and conditions of this Agreement, within the times established therefor in the Schedule of Performance. 053 882/015610-0052 292872.02 PM03 -17- DRAFT 304. Cost of Construction. Attached hereto as Attachment No. 14 is a development budget for the Hotel Facility, which sets forth the proposed development costs in detail (the "Development Budget"). The Developer shall also solicit and obtain at least three bids from general contractors for the general construction contract, and shall submit copies of such bids to the Agency concurrently with the submission of the proposed Development Budget. The Developer is not required to select the lowest bidder as the general contractor, but the Agency may consider such bids in evaluating and approving the Development Budget. Notwithstanding the foregoing, in the event that the Developer elects to undertake the design and construction of the Hotel Facility through a design -build or negotiated bid process, the Developer shall not be required to solicit and submit general construction contract bids to the Agency, and the Agency may, at its cost, obtain an evaluation of the proposed Development Budget from an independent construction cost estimator, and may consider such independent evaluation in evaluating and approving the Development Budget. All of the cost of planning, designing, developing and constructing the Hotel Facility, site preparation and grading shall be borne solely by the Developer. 305. Insurance Requirements. The Developer shall indemnify, defend, and hold harmless the Agency and the City, and their respective officers, officials, employees, agents, and representatives, from all claims or suits for, and damages to, property and injuries to persons, including accidental death (including expert witness fees, attorneys fees, and costs), which may be caused by any of the Developer's activities under this Agreement. Commencing with the Effective Date hereof and ending on the Operating Covenant Termination Date, Developer shall procure and maintain, at its sole cost and expense, in a form and content satisfactory to the Executive Director, the following policies of insurance: A policy of commercial general liability insurance written on a per occurrence basis in an amount not less than: (A) for death and bodily injury, either (i) a combined single limit of Three Million Dollars ($3,000,000.00) or (ii) Three Million Dollars ($3,000,000.00) per person and Three Million Dollars ($3,000,000.00) per occurrence, and Three Million Dollars ($3,000,000.00) in the aggregate, and (B) for property damage, Three Million Dollars ($3,000,000.00) per occurrence. A policy of worker's compensation insurance in such amount as will fully comply with the laws of the State of California and which shall indemnify, insure, and provide legal defense for both the Developer and Agency against any loss, claim or damage arising from any injuries or occupational diseases occurring to any worker employed by or any persons retained by Developer in the course of carrying out the work or services contemplated in this Agreement. A policy of comprehensive automobile liability insurance written on a per occurrence basis in an amount not less than either (i) bodily injury liability limits of Three Million Dollars ($3,000,000.00) per person and Three Million Dollars ($3,000,000.00) per occurrence, and property damage liability limits of Three Million Dollars ($3,000,000.00) per occurrence and Three Million Dollars ($3,000,000.00) in the aggregate or (ii) combined single limit liability of Three Million Dollars ($3,000,000.00). Said policy shall include coverage for owned, non - owned, leased, and hired cars. 054 882/015610-0052 292872.02 PM03 -1 g- DRAFT The following additional requirements shall apply to all of the above policies of insurance: All of the above policies of insurance shall be primary insurance and, except the Worker's Compensation insurance, shall name Agency, City, and their respective officers, officials, members, employees, agents, and representatives as additional insureds. The insurer shall waive all rights of subrogation and contribution it may have against Agency, City, and their officers, officials, members, employees, agents, and representatives, and their respective insurers. All of said policies of insurance shall provide that said insurance may not be amended or cancelled without providing thirty (30) days' prior written notice to Agency and City. In the event any of said policies of insurance are cancelled, the Developer shall, prior to the cancellation date, submit new evidence of insurance in conformance with this Section to the Executive Director. Not later than the Effective Date of this Agreement, Developer shall provide the Executive Director with Certificates of Insurance or appropriate insurance binders evidencing the above insurance coverages and said Certificates of Insurance or binders shall be subject to the reasonable approval of the Executive Director. The policies of insurance required by this Agreement shall be satisfactory only if issued by companies qualified to do business in California, rated "A" or better in the most recent edition of Best Rating Guide, The Key Rating Guide or in the Federal Register, and only if they are of a financial category Class VII or better, unless such requirements are waived by the Risk Manager of City ("Risk Manager") due to unique circumstances. The policies of insurance required by this Agreement shall not require Developer to meet a deductible of more than Twenty -Five Thousand Dollars ($25,000) unless approved in writing by Agency's Executive Director in his or her sole and absolute discretion. Developer agrees that the provisions of this Section shall not be construed as limiting in any way the extent to which Developer may be held responsible for the payment of damages to any persons or property resulting from the Developer's activities or the activities of any person or persons for which the Developer is otherwise responsible. 306. Indemnity. Commencing on the Effective Date and ending on the Operating Covenant Termination Date, the Developer shall defend, indemnify, assume all responsibility for, and hold the Agency and the City, and their representatives, volunteers, officers, employees and agents, harmless from all claims, demands, damages, defense costs or liability of any kind for damage to property or injuries to persons, including accidental death (including attorneys' fees and costs), which may be caused by any acts or omissions of the Developer under this Agreement, whether such activities or performance thereof be by the Developer or by anyone directly or indirectly employed or contracted with by the Developer and whether such damage shall accrue or be discovered before or after termination of this Agreement including, but not limited to, Developer's failure to pay prevailing wages on the construction and development of the Hotel Facility. The Developer shall not be liable for property damage or bodily injury occasioned by the active negligence or willful misconduct of the Agency, the City or their respective agents or employees. 882/015610-0052 292872.02 PM03 -19 - DRAFT 307. Rights of Access. Prior to the issuance of a Release of Construction Covenants, for purposes of assuring compliance with this Agreement, representatives of the Agency shall have the right of access to the Hotel Parcel, without charges or fees, at normal construction hours during the period of construction for the purposes of this Agreement, including but not limited to, the inspection of the work being performed in constructing the Hotel Facility so long as Agency representatives comply with all safety rules and do not interfere with construction. The Agency (or its representatives) shall, except in emergency situations, notify the Developer prior to exercising its rights pursuant to this Section 307. Agency shall indemnify, defend, and hold Developer harmless from and against all costs, claims, liability and judgments arising from the Agency's exercise of its right of access hereunder. 308. Compliance With Laws,• Payment of Taxes. 308.1 Compliance with Laws. The Developer shall carry out the design, construction and operation of the Hotel Facility in conformity with all applicable laws, including all applicable state labor standards, the City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the City Municipal Code, and all applicable disabled and handicapped access requirements, including without limitation the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, at seq., and the Unruh Civil Rights Act, Civil Code Section 51, at seq. 308.2 Taxes and Assessments. The Developer shall pay prior to delinquency all ad valorem real estate taxes and assessments on the Hotel Parcel and the Commercial Parcels (after such time that Developer acquires fee title to the Commercial Parcels), subject to the Developer's right to contest in good faith any such taxes. The Developer shall not apply for or receive any exemption from the payment of property taxes or assessments on any interest in or to the Hotel Parcel, the Hotel Facility, or the Commercial Parcels. The Developer shall not take action to decrease the assessed valuation of the Hotel Parcel (including the value of the Hotel Facility) below the sum of Twenty -Eight Million Dollars ($28,000,000); or the assessed value of the land comprising the Commercial Parcels below the sum of One Million Eight Hundred Forty Thousand Dollars ($1,840,000.00). 309. Release of Construction Covenants. Upon the City's issuance of a certificate of occupancy for the Hotel Facility, the Developer may request that the Agency furnish the Developer with a "Release of Construction Covenants," substantially in the form of Attachment No. 7 hereto which is incorporated herein by reference. The Agency shall not unreasonably withhold such Release of Construction Covenants, and if the Developer is entitled thereto shall furnish to Developer the Release of Construction Covenants within fifteen (15) days of Developer's request thereof. The Release of Construction Covenants shall be a conclusive determination of satisfactory completion of the Hotel Facility and the Release of Construction Covenants shall so state. Any party then owning or thereafter purchasing, leasing or otherwise acquiring any interest in the Hotel Parcel shall not (because of such ownership, purchase, lease or acquisition) incur any obligation or liability under this Agreement except for those continuing covenants as described in Section 500 of this Agreement. 05g 882/015610-0052 292872.02 PM03 -20- DRAFT If the Agency refuses or fails to furnish the Release of Construction Covenants after written request from the Developer, the Agency shall, within fifteen (15) days of written request therefor, provide the Developer with a written statement of the reasons the Agency refused or failed to furnish the Release of Construction Covenants. The statement shall also contain the Agency's opinion of the actions the Developer must take to obtain the Release of Construction Covenants. The Release of Construction Covenants shall not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any holder of any mortgage, or any insurer of a mortgage securing money loaned to finance the Hotel Facility, or any part thereof. The Release of Construction Covenants is not a notice of completion as referred to in Section 309.3 of the California Civil Code. 310. Financing of the Hotel Facility. 310.1 Approval of Financing. Within the time set forth in the Schedule of Performance, and as an Agency Condition Precedent to the Hotel Parcel Closing, Developer shall submit to Agency evidence that Developer has obtained (i) commitments for construction financing from a commercial lender necessary to undertake the development of the Hotel Parcel and the construction of the Hotel Facility in accordance with this Agreement ("Construction Loan"); (ii) "Mezzanine" financing in a form acceptable to Agency; and (iii) sufficient equity capital to cover the difference between (a) the sum of the Construction Loan and the Mezzanine financing and (b) the total cost of developing the Hotel Facility ("Developer's Equity Contribution"). The Agency shall approve or disapprove such evidence of financing commitments within thirty (30) days after receipt of a complete submission. Approval shall not be unreasonably withheld or conditioned. If Agency shall disapprove any such evidence of financing, Agency shall do so by Notice to Developer stating the reasons for such disapproval and Developer shall promptly obtain and submit to Agency new evidence of financing. Agency shall approve or disapprove such new evidence of financing in the same manner and within the same times established in this Section 310.1 for the approval or disapproval of the evidence of financing as initially submitted to Agency. Developer shall close the approved Construction Loan prior to or concurrently with the Hotel Parcel Closing. Such evidence of financing shall include the following: (a) a copy of a loan commitment(s) obtained by Developer from one or more financial institutions for the Construction Loan, subject to such lenders' reasonable, customary and normal conditions and terms, and (b) documentation satisfactory to the Agency as evidence of the "Mezzanine" financing and Developer's Equity Contribution. 310.2 No Encumbrances Except Mortgages Deeds of Trust or Sale and Lease Back for Development. Mortgages, deeds of trust and sales and leases -back shall be permitted as encumbrances to the Hotel Parcel only for the purpose of securing the financing approved pursuant to Section 310.1 above, and for no other purposes. The Developer shall notify the Agency in advance of any mortgage, deed of trust and/or sale and lease -back if the Developer proposes to enter into the same before the Agency's issuance of a Release of Construction Covenants for the Hotel Facility. The Developer shall not enter into any such conveyance for financing without the prior written approval of the Agency, which approval the Agency agrees to give if any such conveyance is given to a reputable financial or lending institution or other acceptable person or entity; provided, however, that any financing approved pursuant to Section 310.1 shall be deemed approved under this Section 310.2. 882/015610.0052 292872.02 PM03 -21- DRAFT 310.3 Changes Requested by Lenders. In the event that a lender which has been approved pursuant to Section 310.1 hereof requires one or more amendments to this Agreement, or any of the attachments hereto, which amendments are reasonably acceptable to the Agency Executive Director and do not materially affect Agency's interest hereunder, the Agency Executive Director or his or her designee is hereby authorized to make such amendments without further authorization from the Agency; provided, however, that the foregoing is not intended to restrict or limit the Agency's legislative discretion. 310.4 Notice of Default to Mortgagee or Deed of Trust Holders: Right to Cure. With respect to any mortgage or deed of trust granted by Developer, whenever the Agency may deliver any notice or demand to Developer with respect to any breach or default by the Developer in completion of construction of the Hotel Facility, the Agency shall at the same time deliver a copy of such notice or demand to each holder of record of any mortgage or deed of trust which has previously requested such notice in writing. Each such holder shall (insofar as the rights granted by the Agency are concerned) have the right, at its option, within sixty (60) days after the receipt of the notice, to cure or remedy or commence to cure or remedy and thereafter to pursue with due diligence the cure or remedy of any such default and to add the cost thereof to the mortgage debt and the lien of its mortgage. It is understood that a holder shall be deemed to have satisfied the sixty (60) day time limit set forth above for commencing to cure or remedy a Developer default which requires title and/or possession of the Hotel Parcel (or portion thereof) if and to the extent any such holder has within such sixty (60) day period commenced proceedings to obtain title and/or possession and thereafter the holder diligently pursues such proceedings to completion and cures or remedies the default. 310.5 Failure of Holder to Complete Hotel Facility. In any case where, sixty (60) days after the holder of any mortgage or deed of trust creating a lien or encumbrance upon the Hotel Parcel or any part thereof receives a notice from Agency of a default by the Developer in completion of construction of the Hotel Facility under this Agreement, and such holder has not elected to construct as set forth in this Section 310, or if it has exercised the option but has defaulted hereunder and failed to timely cure such default, the Agency may purchase the mortgage or deed of trust by payment to the holder of the amount of the unpaid mortgage or deed of trust debt, including principal and interest and all other sums secured by the mortgage or deed of trust. If the ownership of the Hotel Parcel or any part thereof has vested in the holder, the Agency, if it so desires, shall be entitled to a conveyance from the holder to the Agency upon payment to the holder of an amount equal to the sum of the following: (a) The unpaid mortgage or deed of trust debt at the time title became vested in the holder (less all appropriate credits, including those resulting from collection and application of rentals and other income received during foreclosure proceedings); (b) All expenses with respect to foreclosure including reasonable attorneys' fees; (c) The net expense, if any (exclusive of general overhead), incurred by the holder as a direct result of the subsequent management of the Hotel Parcel or part thereof, (d) The costs of any improvements made by such holder; AM: 882/015610-0052 292872.02 PM03 -22- DRAFT (e) An amount equivalent to the interest that would have accrued on the aggregate of such amounts had all such amounts become part of the mortgage or deed of trust debt and such debt had continued in existence to the date of payment by the Agency; and (0 Any customary prepayment charges imposed by the lender pursuant to its loan documents and agreed to by the Developer. 310.6 Right of the Agency to Cure Mortgage or Deed of Trust Default. In the event of a mortgage or deed of trust default or breach by the Developer prior to the completion of the construction of the Hotel Facility, Developer shall immediately deliver to Agency a copy of any mortgage holder's notice of default. If the holder of any mortgage or deed of trust has not elected to construct, the Agency shall have the right but no obligation to cure the default. In such event, the Agency shall be entitled to reimbursement from the Developer of all costs and expenses incurred by the Agency in curing such default. The Agency shall also be entitled to a lien upon the Hotel Parcel to the extent of such costs and disbursements, which lien shall be secured by the Hotel Parcel Deed of Trust. 310.7 Holder Not Obliszated to Construct Hotel Facility. The holder of any mortgage or deed of trust encumbering the Hotel Parcel shall not be obligated by the provisions of this Agreement to construct or complete the Hotel Facility or any portion thereof, or to guaranty such construction or completion; nor shall any such covenant or any other provision in this Agreement be construed so to obligate such holder. 400. CONVEYANCE OF THE COMMERCIAL PARCELS 401. Disposition of Commercial Parcels. The Agency intends to acquire the Commercial Parcels from Seller, pursuant to the Commercial Parcels Purchase and Sale Agreement, at or prior to the Commercial Parcels Closing; provided, however, nothing herein shall require Agency to acquire the Commercial Parcels from Seller except on terms acceptable to Agency in its sole and absolute discretion. In the event the Agency acquires the Commercial Parcels, the Developer agrees to purchase the Commercial Parcels from the Agency, and the Agency agrees to sell to the Developer the Commercial Parcels, in accordance with and subject to all of the terms, covenants, and conditions of this Agreement, for the all-inclusive purchase price of One Million Eight Hundred Forty Thousand Dollars ($1,840,000) (the "Commercial Parcels Purchase Price"). The Commercial Parcels Purchase Price represents the fair market value of the Commercial Parcels. 401.1 Payment of Commercial Parcels Purchase Price. The Developer shall pay the Commercial Parcels Purchase Price in installments, in accordance with the terms and conditions of the Commercial Parcels Promissory Note, which shall be secured by recordation of the Commercial Parcels Deed of Trust as an encumbrance to the Commercial Parcels. 402. Commercial Parcels Escrow. Within five (5) days after the "Substantial Completion Date" (as that term is defined below), the parties shall open escrow (the "Commercial Parcels Escrow") with the Escrow Agent at its office located at 3625 Fourteenth Street, Riverside, California 92502-0986, or another escrow company mutually satisfactory to both parties. For purposes of this Agreement, the term "Substantial Completion Date" shall refer 03 4 882/015610-0052 292872.02 PM03 -23- DRAFT to the date Developer has completed ninety percent (90%) of the Hotel Facility, as certified in writing by the Hotel Facility Architect. 402.1 Costs of Commercial Parcels Escrow. Developer shall pay the premium for the Commercial Parcels Title Policy as set forth in Section 404 hereof, the Developer shall pay for the documentary transfer taxes, if any, due with respect to the conveyance of the Commercial Parcels, and Developer and Agency each agree to pay one-half of all other usual fees, charges, and costs which arise from the Commercial Parcels Escrow. 402.2 Commercial Parcels Escrow Instructions. This Agreement constitutes the joint escrow instructions of Developer and Agency for the Commercial Parcels Escrow, and the Escrow Agent to whom these instructions are delivered is hereby empowered to act under this Agreement. Insurance policies for fire or casualty are not to be transferred, and Agency will cancel its own policies after the Commercial Parcels Closing. All funds received in the Commercial Parcels Escrow shall be deposited with other escrow funds in a general escrow account(s) and may be transferred to any other such escrow trust account in any State or National Bank doing business in the State of California. All disbursements shall be made by check from such account. If in the opinion of either party and/or the construction lender it is necessary or convenient in order to accomplish the Commercial Parcels Closing of this transaction, and to specify the order of recording of closing and loan documents, such party may require that the parties sign supplemental escrow instructions; provided that if there is any inconsistency between this Agreement and the supplemental escrow instructions, then the provisions of this Agreement shall control. The parties agree to execute such other and further documents as may be reasonably necessary, helpful or appropriate to effectuate the provisions of this Agreement. The Commercial Parcels Closing shall take place within thirty (30) days after the date when both the Agency's Conditions Precedent to the Commercial Parcels Closing and the Developer's Conditions Precedent to the Commercial Parcels Closing as set forth in Section 405 have been satisfied or waived by the respective parties. Escrow Agent is instructed to release Agency's escrow closing and Developer's escrow closing statements to the respective parries. 402.3 Authority of Escrow Agent. At the Commercial Parcels Closing, Escrow Agent is authorized to, and shall: (a) Pay and charge Developer and Agency for their respective shares of the premium of the Commercial Parcels Title Policy and any endorsements thereto as set forth in Section 404 and any amount necessary to place title in the condition necessary to satisfy Section 403 of this Agreement. (b) Pay and charge Developer and Agency for their respective shares of any escrow fees, charges, and costs payable under Section 402.1 of this Agreement. (c) Disburse funds, deliver the Commercial Parcels Promissory Note to the Agency, and deliver and record the Commercial Parcels Grant Deed and Commercial Parcels Deed of Trust, when both the Developer's Conditions Precedent to the Commercial � Ot, 882/015610-0052 04 292872.02 PM03 -24- Parcels Closing and the Agency's Conditions Precedent to the Commercial Parcels Closing have been fulfilled or waived by the Developer and Agency. (d) Do such other actions as necessary, including obtaining the Commercial Parcels Title Policy, to fulfill its obligations under this Agreement. (e) Within the discretion of Escrow Agent, direct Agency and Developer to execute and deliver any instrument, affidavit and statement, and to perform any act reasonably necessary to comply with the provisions of the Foreign Investment in Real Property Transactions Act ("FIRPTA") and any similar state act and regulation promulgated thereunder. Agency agrees to execute a Certificate of Non -Foreign Status by individual transferor and/or a Certification of Compliance with Real Estate Reporting Requirement of the 1986 Tax Reform Act as may be required by Escrow Agent, on the form to be supplied by Escrow Agent. (f) Prepare and file with all appropriate governmental or taxing authorities a uniform settlement statement, closing statement, tax withholding forms including an IRS 1099-S form, and be responsible for withholding taxes, if any such forms are provided for or required by law. 402.4 Closing. This transaction shall close ("Commercial Parcels Closing") within thirty (30) days after the parties' satisfaction of all of Agency's Conditions Precedent to the Commercial Parcels Closing and all of the Developer's Conditions Precedent to the Commercial Parcels Closing as set forth in Section 405 hereof, but in no event later than fourteen (14) months after the Hotel Parcel Closing (the "Outside Date for Commercial Parcels Closing"). The Outside Date for Commercial Parcels Closing may be extended for up to six months in the sole and absolute discretion of the Agency, by written notice from the Agency to the Developer. Subject to the provisions in this Section 402.4, the Commercial Parcels Closing shall occur at a time reasonably agreed on by the parties. The "Commercial Parcels Closing" shall mean the time and day the Commercial Parcels Grant Deed is recorded with the Riverside County Recorder. The "Commercial Parcels Closing Date" shall mean the day on which the Commercial Parcels Closing occurs. 402.5 Termination. If the Commercial Parcels Escrow is not in condition to close by the Outside Date for Commercial Parcels Closing, then either party which has fully performed under this Agreement may, in writing, demand the return of money or property and terminate the Commercial Parcels Escrow. If either party makes a written demand for return of documents or properties, the Commercial Parcels Escrow shall not terminate until ten (10) days after Escrow Agent shall have delivered copies of such demand to all other parties at the respective addresses shown in this Agreement. If any objections are raised within said ten (10) day period, Escrow Agent is authorized to hold all papers and documents until instructed by a court of competent jurisdiction or by mutual written instructions of the parties. Developer, however, shall have the sole option to withdraw any money deposited by it with respect to the Commercial Parcels Closing less Developer's share of costs of the Commercial Parcels Escrow. Termination of the Commercial Parcels Escrow shall be without prejudice as to whatever legal rights either party may have against the other arising from this Agreement. If no demands are made, the Commercial Parcels Escrow Agent shall proceed with the Commercial Parcels Closing as soon as possible. 061 882/015610-0052 292872.02 PM03 -25- DRAFT 402.6 Commercial Parcels Closing Procedure. Escrow Agent shall close the Commercial Parcels Escrow for the Commercial Parcels as follows: (a) Record the Commercial Parcels Grant Deed, the Commercial Parcels Deed of Trust, and deeds of trust and other security instruments securing Developer's construction financing, and deliver copies thereof showing recording information to Agency and Developer; (b) Deliver the Commercial Parcels Promissory Note to the Agency and copies to Developer; (c) Deliver the Commercial Parcels Title Policy to Developer, (d) File any informational reports required by Internal Revenue Code Section 6045(e), as amended and any other applicable requirements; and (e) Deliver the FIRPTA Certificate, if any, to Developer; and (f) Forward to both Developer and Agency a separate accounting of all funds received and disbursed for each party and copies of all executed and recorded or filed documents deposited into Commercial Parcels Escrow, with such recording and filing date and information endorsed thereon. 403. Review of the Commercial Parcels Title. The Agency shall cause First American Title Company, or another title company mutually agreeable to both parties (the "Title Company"), to deliver to Developer a standard preliminary title report dated no earlier than the date the Commercial Parcels Escrow is opened ("Opening of Commercial Parcels Escrow Date") with respect to the title to the Commercial Parcels (the "Commercial Parcels Report"), together with legible copies of the documents underlying the exceptions ("Commercial Parcels Exceptions") set forth in the Commercial Parcels Report, within thirty (30) days after the Opening of Commercial Parcels Escrow Date. The Developer shall have the right to approve or disapprove the Commercial Parcels Exceptions and any proposed encumbrances to the Commercial Parcels in the exercise of its sole discretion; provided, however, that the Developer hereby approves the following Commercial Parcels Exceptions: (a) The Redevelopment Plan. (b) The lien of any non -delinquent property taxes and assessments (to be prorated at close of the Commercial Parcels Escrow). (c) All documents to be recorded at Close of the Commercial Parcels Escrow. Developer shall have fifteen (15) days after the date of its receipt of the Commercial Parcels Report to give written notice to Agency and Escrow Holder of Developer's approval or disapproval of any of such Commercial Parcels Exceptions. Developer's failure to give written disapproval of the Commercial Parcels Report within such time limit shall be deemed approval of the Commercial Parcels Report. If Developer notifies Agency of its disapproval of any 0 6Z 882/015610-0052 292872.02 PM03 -26- (C 4 DRAFT Commercial Parcels Exceptions in the Commercial Parcels Report, Agency shall have the right, but not the obligation, to remove any disapproved Commercial Parcels Exceptions within thirty (30) days after receiving written notice of Developer's disapproval or provide assurances satisfactory to Developer that such Commercial Parcels Exception(s) will be removed on or before the Commercial Parcels Closing. If Agency cannot or does not elect to remove any of the disapproved Commercial Parcels Exceptions within that period, Developer shall have fifteen (15) days after the expiration of such thirty (30) day period to either give the Agency written notice that Developer elects to proceed with the purchase of the Commercial Parcels subject to the disapproved Commercial Parcels Exceptions or to give the Agency written notice that the Developer elects to terminate this Agreement. Developer's failure to give written notice of its election within such fifteen (15) day period shall be deemed to be an election to proceed with the purchase of the Commercial Parcels subject to the disapproved exceptions. The conditions of title, including all of the Commercial Parcels Exceptions to title approved by Developer as provided herein shall hereinafter be referred to as the "Condition of Commercial Parcels Title." Developer shall have the right to approve or disapprove any further Commercial Parcels Exceptions reported by the Title Company after Developer has approved the Condition of Commercial Parcels Title (which are not created by Developer). Agency shall not voluntarily create any new exceptions to title following the Effective Date. Developer and the Executive Director of the Agency, on behalf of the Agency, shall have the authority to extend the foregoing fifteen day period by written agreement. 404. Commercial Parcels Title Insurance. Concurrently with recordation of the Commercial Parcels Grant Deed conveying title to the Commercial Parcels, there shall be issued to Developer an ALTA owner's policy of title insurance (the "Commercial Parcels Title Policy"), together with such endorsements as are reasonably requested by the Developer, issued by the Title Company insuring that the title to the Commercial Parcels is vested in Developer in the Condition of Commercial Parcels Title approved by Developer pursuant to Section 403 of this Agreement. The Title Company shall provide the Agency with a copy of the Commercial Parcels Title Policy. The Developer shall pay the premium for the Commercial Parcels Title Policy. 405. Conditions of Commercial Parcels Closing. The Commercial Parcels Closing is conditioned upon the satisfaction of the following terms and conditions within the times designated below: 405.1 Agency's Conditions of Closing for Commercial Parcels. Agency's obligation to proceed with the Commercial Parcels Closing is subject to the fulfillment or waiver by Agency of each and all of the conditions precedent (a) through (f), inclusive, described below ("Agency's Conditions Precedent to the Commercial Parcels Closing"), which are solely for the benefit of Agency, and which shall be fulfilled or waived by the time periods provided for herein: (a) No Default. Prior to the close of the Commercial Parcels Escrow, Developer shall not be in default in any of its obligations under the terms of this Agreement and all representations and warranties of Developer contained herein shall be true and correct in all material respects. ds3 882/015610.0052 292872.02 PM03 -27- DRAFT (b) Execution of Documents. The Developer shall have executed the Commercial Parcels Grant Deed, Commercial Parcels Promissory Note, and the Commercial Parcels Deed of Trust, and executed any other documents required hereunder and delivered such documents into the Commercial Parcels Escrow. (c) Ownership. The Agency shall have acquired fee title to the Commercial Parcels. (d) Payment of Funds. Prior to the Commercial Parcels Close of Escrow, Developer shall have paid all of its required costs of the Commercial Parcels Closing into the Commercial Parcels Escrow in accordance with Section 402 hereof. (e) Insurance. The Developer shall have provided proof of insurance as required by Section 305 hereof and Agency shall have approval of the same. (f) Completion of Hotel Facility. Developer shall have completed construction of the Hotel Facility, as evidenced by Agency's issuance to Developer of the Release of Construction Covenants. 405.2 Developer's Conditions of Closing for the Commercial Parcels. Developer's obligation to proceed with the purchase of the Commercial Parcels is subject to the fulfillment or waiver by Developer of each and all of the conditions precedent (a) through (f), inclusive, described below ("Developer's Conditions Precedent to the Commercial Parcels Closing"), which are solely for the benefit of Developer, and which shall be fulfilled or waived by the time periods provided for herein: (a) No Default. Prior to the Commercial Parcels Closing, Agency shall not be in default in any of its obligations under the terms of this Agreement and all representations and warranties of Agency contained herein shall be true and correct in all material respects. (b) Ownership of Commercial Parcels. The Agency shall own fee title to the Commercial Parcels. (c) Execution of Documents. The Agency shall have executed the Commercial Parcels Grant Deed and any other documents required hereunder, and delivered such documents into the Commercial Parcels Escrow. (d) Review and Approval of Title. Developer shall have reviewed and approved the Condition of Commercial Parcels Title, as provided in Section 403 hereof. (e) Commercial Parcels Title Policy. The Title Company shall, upon payment of Title Company's regularly scheduled premium, have agreed to provide to the Developer the Commercial Parcels Title Policy at the Commercial Parcels Closing, in accordance with Section 404 hereof. ' 06 882/015610-0052 292872.02 PM03 -28- DRAFT (f) Environmental. The Developer shall have approved the environmental condition of the Commercial Parcels and shall not have elected to cancel the Commercial Parcels Escrow pursuant to Section 406.1 hereof. 406. Studies and Reports. 406.1 Access to Commercial Parcels. Prior to the Commercial Parcels Closing, Agency, if it has acquired fee title to the Commercial Parcels or has obtained an assignable right of entry from the Seller, shall provide representatives of Developer the right of access to all portions of the Commercial Parcels for the purpose of obtaining data and making surveys and tests necessary to carry out this Agreement, including without limitation the investigation of the environmental condition of the Commercial Parcels pursuant to Section 407 hereof. Any preliminary work undertaken on the Commercial Parcels by Developer prior to the Commercial Parcels Closing shall be done at the sole expense of the Developer. In no event shall Developer conduct any intrusive testing procedures on the Commercial Parcels without the prior written consent of Agency, which consent shall not be unreasonably withheld. Such investigations may be made by Developer or its directors, engineers, analysts, officers, employees, agents, contractors, representatives, attorneys or advisors (collectively, the "Developer Representatives") during any normal business hours. Developer shall also have the right to investigate all matters relating to the zoning, use and compliance with other applicable laws, codes, and ordinances which relate to the use and occupancy of the Commercial Parcels. Agency shall cooperate to assist Developer in completing such inspections and special investigations at no cost or expense to Agency. Such inspections and investigations shall be conducted only upon no less than twenty-four (24) hours' notice to Agency and shall be conducted at such times and in such a manner as to minimize any disruption to the Commercial Parcels. Agency shall have the right, but not the obligation, to accompany Developer during such investigations and/or inspections. As a condition to any such entry, Developer shall (i) conduct all work or studies in a diligent, expeditious and safe manner and not allow any dangerous or hazardous conditions to occur on the Commercial Parcels during or after such investigation; (ii) comply with all applicable laws and governmental regulations; (iii) keep the Commercial Parcels free and clear of all materialmen's liens, lis pendens and other liens arising out of the entry and work performed under this paragraph; (iv) maintain or assure maintenance of workers' compensation insurance (or state approved self-insurance) on all persons entering the property in the amounts required by the State of California; (v) provide to Agency prior to initial entry a certificate of insurance evidencing that Developer and/or the persons entering the Commercial Parcels have procured and has in effect the insurance required by Section 305. Any preliminary work undertaken pursuant to this Section 406 shall be undertaken only after securing any necessary permits from the appropriate governmental agencies. The Developer's approval of the environmental and soils condition of the Commercial Parcels shall be a Developer's Condition Precedent to the Commercial Parcels Closing, as set forth in Section 405.2 hereof. If the Developer, based upon the above tests, reports and review, disapproves the environmental or soils condition of the Commercial Parcels in its sole and absolute discretion, then the Developer may cancel the Commercial Parcels Escrow. 406.2 Indemnification. Developer shall protect, defend, indemnify and hold harmless Agency and City and Agency's and City's respective officers, officials, members, employees, agents, and representatives (any of the foregoing shall be known individually as 065 882/015610-0052 292872.02 PM03 -29- DRAFT "Indemnitee" and collectively as "Indemnitees"), and each of them, jointly and severally, against and from any and all claims, demands, causes of action, damages, costs, expenses, losses and liabilities, at law or in equity, of every kind or nature whatsoever, including attorneys' fees and expert witness fees, but excluding those resulting from environmental contamination of the Commercial Parcels or other defects on the Commercial Parcels existing prior to Developer's entry thereon or not otherwise caused by Developer or any of the Developer Representatives, but including, without limitation, injury to or death of any person or persons and damage to or destruction of any property, threatened, brought or instituted ("Claims"), arising out of or in any manner directly or indirectly connected with the entry upon the Commercial Parcels by Developer or any of the Developer Representatives pursuant to this Section, including without limitation: (a) any damage to the Commercial Parcels and any liability to any third party incurred by reason of any acts or omission of, or any commission of any negligent or tortious acts, by Developer or the Developer Representatives; (b) any mechanics' or materialmen's liens, claims, demands, actions or suits arising (directly or indirectly) from (i) any work performed or materials supplied to or for Developer, or (ii) any activities of any of the Developer Representatives on or relating to the Commercial Parcels (including, without limitation, any claims by any of such Developer Representatives); and (c) any costs of removing Developer or the Developer Representatives from the Commercial Parcels after the expiration of the term hereof unless Developer is otherwise entitled to possession of the Commercial Parcels at such time. 407. Condition of the Commercial Parcels 407.1 Disclosure. The Agency shall provide to the Developer copies of any environmental studies and reports with respect to the Commercial Parcels which it has in its possession. 407.2 Investigation of Commercial Parcels. Pursuant to Section 406 hereof, the Developer may, at its sole cost and expense, engage its own environmental consultant (the "Environmental Consultant") to make such investigations as Developer deems necessary, including any "Phase 1" and/or "Phase 2" investigations of the Commercial Parcels, and the Agency shall promptly be provided a copy of all reports and test results provided by the Environmental Consultant (the "Commercial Parcels Environmental Reports"). The Developer shall be permitted to make such inspections of the Commercial Parcels pursuant to the requirements of Section 406. The Developer shall approve or disapprove of the environmental condition of the Commercial Parcels, in the Developer's sole discretion, not later than thirty (30) days prior to the scheduled date for Commercial Parcels Close of Escrow. The Developer's approval of the environmental condition of the Commercial Parcels shall be a Developer's Condition Precedent to the Commercial Parcels Closing, as set forth in Section 405 hereof. If the Developer, based upon the Commercial Parcels Environmental Reports, disapproves the environmental condition of the Commercial Parcels for any reason, in the Developer's sole 882/015610-0052 292872.02 PM03 -30- discretion, then the Developer may cancel the Commercial Parcels Escrow; provided, however, that such cancellation shall not effect any of Developer's . 407.3 No Further Warranties As To Commercial Parcels; Release of A2ency. The physical condition, possession or title of the Commercial Parcels is and shall be delivered from Agency to Developer in an "as -is" "where is" "with all faults" condition, with no warranty expressed or implied by Agency, including without limitation, the presence of Hazardous Materials or the condition of the soil, its geology, the presence of known or unknown seismic faults, or the suitability of the Commercial Parcels for the development purposes intended hereunder. The Developer hereby waives, releases and discharges forever the Agency and the City, and their employees, officers, agents, members and representatives, from all present and future claims, demands, suits, legal and administrative proceedings and from all liability for damages, losses, costs, liabilities, fees and expenses, present and future, arising out of or in any way connected with the condition of the Commercial Parcels, any Hazardous Materials on the Commercial Parcels, or the existence of Hazardous Materials contamination due to the generation of Hazardous Materials from the Commercial Parcels, however they came to be placed there, except that arising out of the active negligence or intentional misconduct of the Agency, the City, or their employees, officers, agents or representatives. The Developer acknowledges that it is aware of and familiar with the provisions of Section 1542 of the California Civil Code which provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." Only with respect to the condition of the Commercial Parcels as set forth in this Section 407.3, the Developer hereby waives and relinquishes all rights and benefits which it may have under Section 1542 of the California Civil Code. Developer's Initials 407.4 Developer Precautions After the Commercial Parcels Closing. Upon the Commercial Parcels Closing, the Developer shall take all necessary precautions to prevent the release into the environment of any Hazardous Materials which are located in, on or under the Commercial Parcels. Such precautions shall include compliance with all Governmental Requirements with respect to Hazardous Materials. In addition, the Developer shall install and utilize such equipment and implement and adhere to such procedures as are consistent with commercially reasonable standards as respects the disclosure, storage, use, removal and disposal of Hazardous Materials. 407.5 Developer Indemnity. Upon the Commercial Parcels Closing, Developer agrees to indemnify, defend and hold Agency harmless from and against any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without limitation, attorneys' fees), resulting from, arising out of, or based upon (i) 882/015610-0052 292872.02 PM03 -31- W DRAFT the presence, release, use, generation, discharge, storage or disposal of any Hazardous Materials on, under, in or about, or the transportation of any such Hazardous Materials to or from, the Commercial Parcels which occurs after the Commercial Parcels Closing, or (ii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous Materials on, under, in or about to or from, the Commercial Parcels which occurs after the Commercial Parcels Closing. This indemnity shall include, without limitation, any damage, liability, fine, penalty, cost or expense arising from or out of any claim, action, suit or proceeding for personal injury (including sickness, disease or death), tangible or intangible property damage, compensation for lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, contamination, leak, spill, release or other adverse effect on the environment. At the request of the Developer, the Agency shall cooperate with and assist the Developer in its defense of any such claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense; provided that the Agency shall not be obligated to incur any expense in connection with such cooperation or assistance. 500. COVENANTS AND RESTRICTIONS 501. Use in Accordance with Redevelopment Plan. 501.1 The Developer covenants and agrees for itself, its successors, assigns, and every successor in interest to the Hotel Parcel or any part thereof, that upon the Hotel Parcel Closing and during construction and operation of the Hotel Facility, and thereafter, the Developer shall devote the Hotel Parcel to the uses specified in the Redevelopment Plan and this Agreement for the term of the land use controls of the Redevelopment Plan. 501.2 The Developer covenants and agrees for itself, its successors, assigns, and every successor in interest to the Commercial Parcels or any part thereof, that upon the Commercial Parcels Closing and thereafter, the Developer shall devote the Commercial Parcels to uses specified in the Redevelopment Plan and this Agreement for the term of the land use controls of the Redevelopment Plan. 501.3 All uses conducted on the Hotel Parcel and on the Commercial Parcels, including, without limitation, all activities undertaken by the Developer pursuant to this Agreement, shall conform to the Redevelopment Plan and all applicable provisions of the City Municipal Code. The foregoing covenants shall run with the land until the expiration of the land use controls of the Redevelopment Plan. 502. Operating Covenant. For a term commencing upon the Hotel Parcel Closing, and ending on the date Developer has paid in full all sums then owed on the Hotel Parcel Promissory Note and the Commercial Parcels Promissory Note (the "Operating Covenant Termination Date"), the Developer hereby agrees to devote the Hotel Facility on the Hotel Parcel to hotel uses only and such use shall qualify as a transient occupancy use under Section 3.24 of the City Municipal Code. The Hotel Facility shall at all times be operated pursuant to a franchise, management or lease arrangement with a lessee, franchisee, manager or licensee operating under the "flag" name of Embassy Suites hotels Except with the prior written consent of the Agency 1, .106 S 882/015610-0052 292872.02 PM03 -32- DRAFT for each instance, which consent may be granted or withheld in the Agency's reasonable discretion, the failure of the Developer to operate the Hotel Facility on the Hotel Parcel as required herein for thirty (30) or more consecutive days shall, at the Agency's option, constitute a Default hereunder; provided, however, that the Developer shall for purposes of this Section 502 be deemed to be operating the Hotel Facility during any period that the Developer is prevented from operating the Hotel Facility due to (i) required or necessary rehabilitation of the Hotel Facility on the Hotel Parcel (provided that the period during which the Hotel Facility is not operated as a result of the rehabilitation shall in no event exceed thirty (30) days), or (ii) events of force majeure as set forth in Section 702 hereof. Developer shall exercise commercially reasonable efforts to operate the Hotel Facility on the Hotel Parcel in such a manner as to produce the maximum amount of transient occupancy taxes to be received by the City. In no event shall the Hotel Facility be used for residential purposes during the terms of the Operating Covenant. Developer agrees to execute, acknowledge and record in the official records of Riverside County as an encumbrance to the Hotel Parcel, concurrently with the Hotel Parcel Closing and recordation of the Hotel Parcel Grant Deed, the Operating Covenant substantially in the form attached hereto as Attachment No. 15. 503. Maintenance Covenants. The Developer shall maintain the Hotel Parcel and the Commercial Parcels and all improvements thereon, including all landscaping, in compliance with the terms of the Redevelopment Plan, the Operating Covenant, and with all applicable provisions of the City Municipal Code. 504. Nondiscrimination Covenants. The Developer covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Hotel Parcel and the Commercial Parcels, nor shall the Developer itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Hotel Parcel and the Commercial Parcels. The foregoing covenants shall run with the land. The Developer shall refrain from restricting the rental, sale or lease of the Hotel Parcel and/or the Commercial Parcels on the basis of race, color, religion, sex, marital status, ancestry or national origin of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." 882/015610-0052 292872.02 PM03 —33- 069 r.. �. ys. DRAFT (b) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin, or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased." (c) In contracts relating to the disposition of the realty: "There shall be no discrimination against or segregation of, any person, or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the premises. 505. Effect of Violation of the Terms and Provisions of this Agreement After Completion of Construction. The Agency is deemed the beneficiary of the terms and provisions of this Agreement and of the covenants running with the land, for and in its own right, without regard to whether the Agency has been, remains or is an owner of any land or interest therein in the Hotel Parcel, the Commercial Parcels, or the Project Area. The Agency shall have the right, if the Agreement or covenants are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches and to avail itself of the rights granted herein to which it may be entitled, except as may be otherwise set forth in this Agreement, or the Operating Covenant. The covenants contained in this Agreement shall not benefit or be enforceable by any owner of any other real property within or outside the Project Area, or any person or entity having an interest in such other real property. The covenants contained in this Agreement shall remain in effect for the periods described herein, specifically including, without limitation, the following: (a) The environmental covenants set forth in Sections 207.3, 207.4, 207.5, 407.3, 407.4, and 407.5 shall remain in effect in perpetuity. (b) The covenants pertaining to use of the Hotel Parcel and the Commercial Parcels which are set forth in Section 502 shall remain in effect until the expiration of the land use controls of the Redevelopment Plan. (c) The covenants pertaining to operation of the Hotel Facility which are set forth in Section 502 shall remain in effect for the time period set forth in Section 502. 882/015610-0052 292872.02 PM03 -34- DRAFT (d) The covenants pertaining to maintenance of the Hotel Parcel and the Commercial Parcels, and all improvements thereon, as set forth in Section 503, shall remain in effect until the expiration of the land use controls of the Redevelopment Plan. (e) The covenants against discrimination, as set forth in Section 504, shall remain in effect in perpetuity. (0 The indemnity obligations, as set forth in Section 306 hereof, shall remain in effect for the time period set forth in Section 306. (g) The indemnity obligations, as set forth in Sections 207.5 and 407.5 hereof, shall remain in effect in perpetuity. 506. Representations and Warranties. 506.1 Agency Representations. Agency represents and warrants to Developer as follows: (a) Authority. Agency is a public body, corporate and politic, existing pursuant to the California Community Redevelopment Law (California Health and Safety Code Section 33000), which has been authorized to transact business pursuant to action of the City. Agency has full right, power and lawful authority to acquire, grant, sell and convey the Hotel Parcel and the Commercial Parcels as provided herein, and the execution, performance and delivery of this Agreement by Agency has been fully authorized by all requisite actions on the part of Agency. (b) FIRPTA. Agency is not a "foreign person" within the parameters of FIRPTA or any similar state statute, or is exempt from the provisions of FIRPTA or any similar state statute, or has complied and will comply with all the requirements under FIRPTA or any similar state statute. (c) No Conflict. To the Agency's best knowledge, Agency's execution, delivery and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement or order to which Agency is a party or by which it is bound. (d) Conformance with Redevelopment Plan. The development and use of the Hotel Facility as required hereunder is in conformance with the Redevelopment Plan. Until the Hotel Parcel Closing or the Commercial Parcels Closing, as applicable, Agency shall, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 506.1 not to be true as of the respective closing, immediately give written notice of such fact or condition to Developer. Such exception(s) to a representation shall not be deemed a breach by Agency hereunder, but shall constitute an exception which Developer shall have a right to approve or disapprove. If Developer elects to close the applicable escrow following disclosure of such information, Agency's representations and warranties contained herein shall be deemed to have been made as of the closing, subject to such exception(s). If, following the disclosure of such information, Developer elects to not close the applicable 882/015610-0052 292872.02 PM03 -35- DRAFT escrow, then this Agreement and the Hotel Parcel Escrow or the Commercial Parcels Escrow, as applicable, shall automatically terminate, and neither party shall have any further rights, obligations or liabilities hereunder; provided, however, that in the event the Hotel Parcel Closing occurs, a failure to close the Commercial Parcels Escrow shall not terminate this Agreement. The representations and warranties set forth in this Section 506.1 shall survive the Commercial Parcels Closing. 506.2 Developer's Representations. Developer represents and warrants to Agency as follows: (a) Authority. Developer is a duly organized limited liability company formed within and in good standing under the laws of the State of California. Developer has full right, power and lawful authority to purchase and accept the conveyance of the Hotel Parcel and the Commercial Parcels and undertake all obligations as provided herein and the execution, performance and delivery of this Agreement by Developer has been fully authorized by all requisite actions on the part of the Developer. (b) Experience. The Developer is experienced in the development of the type of business hotels which would satisfy the development requirements set forth herein. (c) No Conflict. To the best of Developer's knowledge, Developer's execution, delivery and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement or order to which the Developer is a party or by which it is bound. (d) No Developer Bankruptcy. Developer is not the subject of a current or pending bankruptcy proceeding. Until the Hotel Parcel Closing or the Commercial Parcels Closing, as applicable, Developer shall, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 506.2 not to be true as of the respective closing, immediately give written notice of such fact or condition to Agency. Such exception(s) to a representation shall not be deemed a breach by Developer hereunder, but shall constitute an exception which Agency shall have a right to approve or disapprove. If Agency elects to close the applicable escrow following disclosure of such information, Developer's representations and warranties contained herein shall be deemed to have been made as of the applicable closing, subject to such exception(s). If, following the disclosure of such information, Agency elects to not close the applicable escrow, then this Agreement and the Hotel Parcel Escrow or the Commercial Parcels Escrow, as applicable shall automatically terminate, and neither party shall have any further rights, obligations or liabilities hereunder; provided, however, that in the event the Hotel Parcel Closing occurs, a failure to close the Commercial Parcels Escrow shall not terminate this Agreement. The representations and warranties set forth in this Section 506.2 shall survive the Commercial Parcels Closing. 600. DEFAULTS AND REMEDIES 601. Default Remedies. Subject to the extensions of time set forth in Section 702 of this Agreement, failure by either party to perform any action or covenant required by this 882/015610-0052 � o 292872.02 PM03 -36- Agreement within the time periods provided herein following notice and failure to cure as described hereafter, constitutes a "Default" under this Agreement. A party claiming a Default shall give written notice of Default to the other party specifying the Default complained of. Except as otherwise expressly provided in this Agreement, the claimant shall not institute any proceeding against any other party, and the other party shall not be in Default if such party cures such default within thirty (30) days from receipt of such notice, or if the nature of such default is that it cannot reasonably be expected to be cured within such thirty (30) day period, if such party, with due diligence, commences to cure, correct or remedy such failure or delay within thirty (30) days from receipt of such notice, and completes such cure, correction or remedy with diligence. 602. Institution of Lefzal Actions. In addition to any other rights or remedies and subject to the restrictions otherwise set forth in this Agreement, either party may institute an action at law or equity to seek specific performance of the terms of this Agreement, or to cure, correct or remedy any Default, to recover damages for any Default, or to obtain any other remedy consistent with the purpose of this Agreement. Agency shall also have the right to pursue damages for Developer's defaults. Notwithstanding the foregoing, however, in no event shall the Developer be entitled to damages of any kind from Agency, including damages for economic loss, lost profits, or any other losses or consequential damages of any kind. Such legal actions must be instituted in the Superior Court of the County of Riverside, State of California, in an appropriate municipal court in that county, or in the District of the United States District Court in which such county is located. 603. Termination by the Developer Prior to the Hotel Parcel Conveyance. In the event that prior to the Hotel Parcel Conveyance (a) the Agency does not tender title to the Hotel Parcel pursuant to the Hotel Parcel Grant Deed in the manner and condition and by the date provided in this Agreement, or (b) one or more of the Developer's Conditions Precedent to the Hotel Parcel Closing is not fulfilled on or before the time set forth in the Schedule of Performance and such failure is not caused by the Developer, or (c) any default of the Agency prior to the Hotel Parcel Closing is not cured within the time set forth in Section 601 hereof, after written demand by the Developer, or (d) the Developer timely disapproves the environmental condition of the Hotel Parcel pursuant to Section 207 hereof, then this Agreement may, at the option of the Developer, be terminated by written Notice thereof to the Agency. From the date of the written Notice of termination of this Agreement by the Developer to the Agency and thereafter this Agreement shall be deemed terminated and there shall be no further rights or obligations between the parties with respect to the Hotel Parcel or the Commercial Parcels by virtue of or with respect to this Agreement. 604. Termination by the Agency Prior to the Hotel Parcel Conveyance. In the event that prior to the Hotel Parcel Conveyance (a) the Developer (or any successor in interest) assigns the Agreement or any rights therein or in the Hotel Parcel in violation of this Agreement; or (b) one or more of the Agency's Conditions Precedent to the Hotel Parcel Closing is not fulfilled on or before the Outside Date for Hotel Parcel Closing (as it may be extended) and such failure is not caused. by the Agency; or (c) the Developer is otherwise in default of this Agreement and fails to cure such default within the time set forth in Section 601 hereof; then this Agreement and any rights of the Developer or any assignee or transferee with respect to or arising out of the Agreement or the Hotel Parcel, or (d) the Developer is the subject of a bankruptcy proceeding, whether voluntarily or involuntarily commenced, then this Agreement shall, at the option of thy, 73 882/015610-0052 3 7_ 4 4A e 292872.02 PM03 DRAFT Agency, be terminated by the Agency by written Notice thereof to the Developer. From the date of the written Notice of termination of this Agreement by the Agency to the Developer and thereafter this Agreement shall be deemed terminated and there shall be no further rights or obligations between the parties. 605. Agency Option to Acquire Plans. If this Agreement is terminated for any reason, at the option of the Agency and without any additional consideration, which option may be exercised in the Agency's sole and absolute discretion, the Developer shall deliver to the Agency an executed assignment in a form reasonably acceptable to the Agency of the Developer's right to use all plans, blueprints, drawings, sketches, specifications, tentative or final subdivision maps, landscape plans, utilities plans, soils reports, noise studies, environmental assessment reports, grading plans and any other materials relating to the construction of the Hotel Facility on the Hotel Parcel (the "Plans"), together with copies of all of the Plans, as have been prepared for the development of the Hotel Parcel to date of the termination. Notwithstanding the foregoing, however, Developer does not covenant to convey to the Agency the copyright or other ownership rights of third parties. Agency understands and agrees that the assignment to Agency under this Section 605 is subject and subordinate to any assignment which Developer may make to a lender providing financing for the project, and Agency agrees to execute any documents required by such lender acknowledging and effectuating such subordination of Agency's rights in and to the assignment. Agency's acquisition or use of the Plans or any of them shall be without any representation or warranty by Developer as to the accuracy or completeness of any such Plans, and Agency shall assume all risks in the use of the Plans. 606. Reentry and Revesting of Title in the Agency After the Closing and Prior to Completion of Construction. The Agency has the right, at its election, to reenter and take possession of the Hotel Parcel, with all improvements thereon, and terminate and revest in the Agency the estate conveyed to the Developer if after the Hotel Parcel Closing and prior to the issuance of the Release of Construction Covenants, the Developer (or its successors in interest) shall: a. fail to start construction of the Hotel Facility as required by this Agreement for a period of thirty (30) days after written notice thereof from the Agency; or b. abandon or substantially suspend construction of the Hotel Facility required by this Agreement and fail to resume construction within thirty (30) days after written notice thereof from the Agency; or C. contrary to the provisions of Section 703 Transfer or suffer any involuntary Transfer in violation of this Agreement, and such Transfer is not rescinded within thirty (30) days of notice thereof from the Agency. Such right to reenter, terminate and revest shall be subject to and be limited by, shall not defeat, render invalid or limit, and shall be subordinate to: 1. Any mortgage or deed of trust permitted by this Agreement; or 2. Any rights or interests provided in this Agreement for the protection of the holders of such mortgages or deeds of trust. ,074 882/015610-0052 i. 15 292872.02 PM03 -38- DRAFT The Hotel Parcel Grant Deed shall contain appropriate reference and provision to give effect to the Agency's right as set forth in this Section 606, under specified circumstances prior to recordation of the Release of Construction Covenants, to reenter and take possession of the Hotel Parcel, with all improvements thereon, and to terminate and revest in the Agency the estate conveyed to the Developer. Upon the revesting in the Agency of title to the Hotel Parcel as provided in this Section 606, the Agency shall, pursuant to its responsibilities under state law, use its reasonable efforts to resell the Hotel Parcel as soon and in such manner as the Agency shall find feasible and consistent with the objectives of such law and of the Redevelopment Plan, as it exists or may be amended, to a qualified and responsible party or parties (as determined by the Agency) who will assume the obligation of making or completing the Hotel Facility, or such improvements in their stead as shall be satisfactory to the Agency and in accordance with the uses specified for such Hotel Parcel or part thereof in the Redevelopment Plan. Upon such resale of the Hotel Parcel, the net proceeds thereof after repayment in full of any mortgage or deed of trust encumbering the Hotel Parcel which is permitted by this Agreement, shall be applied: First, to reimburse the Agency, on its own behalf or on behalf of the City, all costs and expenses incurred by the Agency, excluding City and Agency staff costs, but specifically, including, but not limited to, any expenditures by the Agency or the City in connection with the recapture, management and resale of the Hotel Parcel or part thereof (but less any income derived by the Agency from the Hotel Parcel or part thereof in connection with such management); all taxes, assessments and water or sewer charges with respect to the Hotel Parcel or part thereof which the Developer has not paid; any payments made or necessary to be made to discharge any encumbrances or liens existing on the Hotel Parcel or part thereof at the time or revesting of title thereto in the Agency, or to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations, defaults or acts of the Developer, its successors or transferees; any expenditures made or obligations incurred with respect to the making or completion of the improvements or any part thereof on the Hotel Parcel, or part thereof; and any amounts otherwise owing the Agency, and in the event additional proceeds are thereafter available, then ii. Second, to reimburse the Developer, its successor or transferee, up to the amount equal to the sum of (a) the costs incurred for the acquisition and development of the Hotel Parcel and for the improvements existing on the Hotel Parcel at the time of the reentry and possession, less (b) any gains or income withdrawn or made by the Developer from the Hotel Parcel or the improvements thereon. Any balance remaining after such reimbursements shall be retained by the Agency as its property. The rights established in this Section 606 are not intended to be exclusive 882/015610-0052 -39- 292872.02 PM03 DRAFT of any other right, power or remedy, but each and every such right, power, and remedy shall be cumulative and concurrent and shall be in addition to any other right, power and remedy authorized herein or now or hereafter existing at law or in equity. These rights are to be interpreted in light of the fact that the Agency will have conveyed the Hotel Parcel to the Developer for redevelopment purposes, particularly for development of a new business hotel facility, and not for speculation in undeveloped land. 607. Acceptance of Service of Process. In the event that any legal action commenced by the Developer against the Agency, service of process on the Agency shall be made by personal service upon the Executive Director of the Agency or in such other manner as may be provided by law. In the event that any legal action is commenced by the Agency against the Developer, service of process on the Developer shall be made by personal service upon any officer of the Developer, whether made within or outside the State of California, or in such other manner as may be provided by law. 608. Rights and Remedies Are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. 609. Inaction Not a Waiver of Default. Any failures or delays by either party in asserting any of its rights and remedies as to any Default shall not operate as a waiver of any Default or of any such rights or remedies, or deprive either such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 610. Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 611. Non -Liability of Officials and Employees of the Agency. No member, official or employee of the Agency or the City shall be personally liable to the Developer, or any successor in interest, in the event of any Default or breach by the Agency (or the City) or for any amount which may become due to the Developer or its successors, or on any obligations under the terms of this Agreement. 612. Attorneys' Fees. In any action between the parties to interpret, enforce, reform, modify, rescind, or otherwise in connection with any of the terms or provisions of this Agreement, the prevailing party in the action shall be entitled, in addition to damages, injunctive relief, or any other relief to which it might be entitled, reasonable costs and expenses including, without limitation, litigation costs, reasonable attorneys' fees and expert witness fees. 700. GENERAL PROVISIONS 701. Notices Demands and Communications Between the Parties. Any approval, disapproval, demand, document or other notice ("Notice") which either party may desire to give to the other party under this Agreement must be in writing and may be given by any 079 882/015610-0052 !.' 'Y-• 292872.02 PM03 -40- DRAFT commercially acceptable means to the party to whom the Notice is directed at the address of the party as set forth below, or at any other address as that party may later designate by Notice. To Agency: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, California 92253 Attention: Assistant Executive Director To Developer: Bison Hotel Group LLC Attention: With a copy to: M. Katherine Jenson, Esq. Rutan & Tucker, LLP 611 Anton, Suite 1400 P.O. Box 1950 Costa Mesa, California 92628 Any written notice, demand or communication shall be deemed received immediately if delivered by hand and shall be deemed received on the third day from the date it is postmarked if delivered by registered or certified mail. 702. Enforced Delay' Extension of Times of Performance. In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in Default, and all performance and other dates specified in this Agreement shall be extended, where delays or Defaults are due to causes beyond the control or without the fault of the party claiming an extension of time to perform, which may include the following: war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor or supplier; acts or omissions of the other party; or acts or failures to act of the City or any other public or governmental agency or entity (other than the acts or failures to act of the Agency which shall not excuse performance by the Agency). Notwithstanding anything to the contrary in this Agreement, an extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. Times of performance under this Agreement may also be extended in writing by the mutual agreement of Agency and Developer. Notwithstanding any provision of this Agreement to the contrary, the lack of funding to complete the Hotel Facility shall not constitute grounds of enforced delay pursuant to this Section 702. 703. Transfers of Interest in Hotel Parcel or Agreement. 703.1 Prohibition. The qualifications and identity of the Developer as the developer of high quality business hotels are of particular concern to the Agency. Furthermore, 882/015610-0052 292872.02 PM03 -41- DRAFT the parties acknowledge that the Agency has negotiated the terms of this Agreement in contemplation of the development and operation of a business hotel on the Hotel Parcel and the property tax increment and transient occupancy tax revenues to be generated by the operation of the Hotel Facility on the Hotel Parcel. Accordingly, until the Operating Covenant Termination Date, (a) no voluntary or involuntary successor in interest of the Developer shall acquire any rights or powers under this Agreement, (b) nor shall the Developer make any total or partial sale, transfer, conveyance, assignment, subdivision, refinancing or lease of the whole or any part of the Hotel Parcel or the Hotel Facility thereon, (c) nor shall any business other than a hotel be operated thereon, either in addition to or in replacement of the hotel being operated on the Hotel Parcel (collectively referred to herein as a "Transfer"), except as provided in this Section 703. 703.2 Transfers Prior to Completion of Hotel Facility. Prior to the issuance of the Release of Construction Covenants for the Hotel Facility, the Agency may approve or disapprove a proposed Transfer in its sole and absolute discretion; provided that the Agency agrees to reasonably consider a proposed Transfer to an entity in which the Developer retains a minimum of fifty-one percent (51%) of the ownership or beneficial interest and retains management and control of the transferee entity. The Agency may condition its approval of such a proposed Transfer prior to the issuance of the Release of Construction Covenants (other than transfers approved pursuant to the immediately preceding sentence) upon the payment of one- half of the net proceeds of the Transfer. Notwithstanding the foregoing, Agency approval of a Transfer prior to the issuance of the Release of Construction Covenants for the Hotel Facility shall not be required in connection with any of the following: (a) The conveyance or dedication of any portion of the Hotel Facility to the City or other appropriate governmental agency, or the granting of easements or permits to facilitate construction of the Hotel Facility (as defined herein). (b) Any assignment for financing purposes (subject to such financing being permitted pursuant to Section 310 herein), including the grant of a deed of trust to secure the funds necessary for land acquisition, construction and permanent financing of the Hotel Facility. In the event of a Transfer by Developer under subparagraphs (a) or (b) above not requiring the Agency's prior approval, Developer nevertheless agrees that at least thirty (30) days prior to such Transfer it shall give written notice to Agency of such assignment and satisfactory evidence that the assignee has assumed in writing through an assignment and assumption agreement of all of the obligations of this Agreement. 703.3 Transfers After Completion of Hotel Facility. After the issuance of the Release of Construction Covenants for the Hotel Facility, and until the Operating Covenant Termination Date, the Agency shall not unreasonably withhold approval of a request for approval of a Transfer made pursuant to this Section 703. The Developer shall deliver written notice to the Agency requesting its approval of a proposed Transfer. Such notice shall be accompanied by evidence regarding the proposed transferee's hotel development and/or ownership qualifications and experience, and its financial commitments and resources, in 882/015610-0052 292872.02 PM03 -42- DRAFT sufficient detail to enable the Agency to evaluate the proposed assignee or purchaser pursuant to the criteria set forth in this Section 703 and as reasonably determined by the Agency. The Agency may, in considering any such request, take into consideration such factors as (1) the quality of any new and/or replacement operator, (ii) the transient occupancy tax revenues projected to be received from the Hotel Parcel, (iii) the transferee's past performance as an owner of hotels, (iv) the current financial condition of the transferee, and similar factors. Within thirty (30) days after the receipt of the Developer's written notice requesting Agency approval of a Transfer pursuant to this Section 703, the Agency shall either approve or disapprove such proposed assignment or shall respond in writing by stating what further information, if any, the Agency reasonably requires in order to determine the request complete and determine whether or not to grant the requested approval. Upon receipt of such a response, the Developer shall promptly furnish to the Agency such further information as may be reasonably requested. 703.4 Assignment and Assumption of Obligations. An assignment and assumption agreement in form reasonably satisfactory to the Agency's legal counsel shall also be required for all proposed Transfers requiring the Agency's approval. The transferee shall also assume the obligations pursuant to the Hotel Parcel Promissory Note, Hotel Parcel Deed of Trust, Commercial Parcels Promissory Note and Commercial Parcels Deed of Trust unless either of the aforementioned promissory notes have previously been paid in full. 703.5 Successors and Assigns. All of the terms, covenants and conditions of this Agreement shall be binding upon the Developer and its permitted successors and assigns. Whenever the term "Developer" is used in this Agreement, such term shall include any other permitted successors and assigns as herein provided. 703.6 Assignment byAgency. The Agency may assign or transfer any of its rights or obligations under this Agreement with the approval of the Developer, which approval shall not be unreasonably withheld; provided, however, that the Agency may assign or transfer any of its interests hereunder to the City at any time without the consent of the Developer. 704. Relationship Between Agency and Developer. It is hereby acknowledged that the relationship between the Agency and the Developer is not that of a partnership or joint venture and that the Agency and the Developer shall not be deemed or construed for any purpose to be the agent of the other. Accordingly, except as expressly provided herein or in the Attachments hereto, the Agency shall have no rights, powers, duties or obligations with respect to the development, operation, maintenance or management of the Hotel Facility. 705. Agency Approvals and Actions. The Agency shall maintain authority of this Agreement and the authority to implement this Agreement through the Agency Executive Director (or his duly authorized representative). The Agency Executive Director shall have the authority to make approvals, issue interpretations, waive provisions, and/or enter into amendments of this Agreement on behalf of the Agency so long as such actions do not materially or substantially change the uses or development permitted on the Hotel Parcel and/or Commercial Parcels, or materially or substantially add to the costs incurred or to be incurred by the Agency as specified herein, and such approvals, interpretations, waivers and/or amendments may include extensions of time to perform as specified in the Schedule of Performance. All other f 'PI 882/015610-0052 292872.02 PM03 -43- DRAFT material and/or substantial interpretations, waivers, or amendments shall require the consideration, action and written consent of the Agency Board. 706. Counterparts. This Agreement may be signed in multiple counterparts which, when signed by all parties, shall constitute a binding agreement. This Agreement is executed in three (3) originals, each of which is deemed to be an original. 707. Integration. This Agreement contains the entire understanding between the parties relating to the transaction contemplated by this Agreement, notwithstanding any previous negotiations or agreements between the parties or their predecessors in interest with respect to all or any part of the subject matter hereof All prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged in this Agreement and shall be of no further force or effect. Each party is entering this Agreement based solely upon the representations set forth herein and upon each party's own independent investigation of any and all facts such party deems material. This Agreement includes Attachment Nos. 1 through 11, which are incorporated herein. 708. Real Estate Brokerage Commission. The Agency and the Developer each represent and warrant to the other that no broker or finder is entitled to any commission or finder's fee in connection with the Developer's acquisition of the Hotel Parcel or the Commercial Parcels from the Agency. The parties agree to defend and hold harmless the other party from any claim to any such commission or fee from any other broker, agent or finder with respect to this Agreement which is payable by such party as a result of the actions of the indemnifying party. 709. Titles and Captions. Titles and captions are for convenience of reference only and do not define, describe or limit the scope or the intent of this Agreement or of any of its terms. Reference to section numbers are to sections in this Agreement, unless expressly stated otherwise. 710. Interpretation. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others where and when the context so dictates. The word "including" shall be construed as if followed by the words "without limitation." This Agreement shall be interpreted as though prepared jointly by both parties. 711. No Waiver. A waiver by either party of a breach of any of the covenants, conditions or agreements under this Agreement to be performed by the other party shall not be construed as a waiver of any succeeding breach of the same or other covenants, agreements, restrictions or conditions of this Agreement. 712. Modifications. Any alteration, change or modification of or to this Agreement, in order to become effective, shall be made in writing and in each instance signed on behalf of each party. 713. Severability. If any term, provision, condition or covenant of this Agreement or is application to any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Agreement, or the application of the term, provision, condition or covenant h 882/015610-0052 V 292872.02 PM03 -44- 1 DRAFT to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted bylaw. 714. Computation of Time. The time in which any act is to be done under this Agreement is computed by excluding the first day (such as the day escrow opens), and including the last day, unless the last day is a holiday or Saturday or Sunday, and then that day is also excluded. The term "holiday" shall mean all holidays as specified in Section 6700 and 6701 of the California Government Code. If any act is to be done by a particular time during a day, that time shall be Pacific Time Zone Time. 715. Legal Advice. Each party represents and warrants to. the other the following: they have carefully read this Agreement, and in signing this Agreement, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in this Agreement, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Agreement; and, they have freely signed this Agreement without any reliance upon any agreement, promise, statement or representation by or on behalf of the other party, or their respective agents, employees, or attorneys, except as specifically set forth in this Agreement, and without duress or coercion, whether economic or otherwise. 716. Time of Essence. Time is expressly made of the essence with respect to the performance by the Agency and the Developer of each and every obligation and condition of this Agreement. 717. Cooperation. Each party agrees to cooperate with the other in this transaction and, in that regard, to sign any and all documents which may be reasonably necessary, helpful, or appropriate to carry out the purposes and intent of this Agreement including, but not limited to, releases or additional agreements. 718. Conflicts of Interest. No member, official or employee of the Agency shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership or association in which he is directly or indirectly interested. 719. Time for Acceptance of Agreement byA eg ncy. This Agreement, when executed by the Developer and delivered to the Agency, must be authorized, executed and delivered by the Agency on or before forty-five (45) days after signing and delivery of this Agreement by the Developer or this Agreement shall be void, except to the extent that the Developer shall consent in writing to a further extension of time for the authorization, execution and delivery of this Agreement. n�j 882/015610-0052 292872.02 PM03 -45- DRAFT IN WITNESS WHEREOF, the Agency and the Developer have executed this Disposition and Development Agreement as of the date set forth above. ATTEST: Agency Secretary APPROVED AS TO FORM: RUTAN & TUCKER, LLP M. Katherine Jenson Agency Counsel AGENCY: LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic Executive Director DEVELOPER: BISON HOTEL GROUP, LLC, a California limited liability company I0 LI-A 882/015610-0052 G 292872.02 PM03 -46- DRAFT List of Attachments 1. Hotel Parcel Legal Description 2. Hotel Parcel Site Map 3. Hotel Parcel Grant Deed 4. Hotel Parcel Promissory Note 5. Hotel Parcel Deed of Trust 6. Scope of Development 7. Release of Construction Covenants 8. Commercial Parcels Legal Description 9. Commercial Parcels Site Map 10. Commercial Parcels Grant Deed 11. Commercial Parcels Promissory Note 12. Commercial Parcels Deed of Trust 13. Schedule of Performance 14. Preliminary Budget 15. Operating Covenant 033 882/015610.0052 292872.02 PM03 -1 1- DRAFT ATTACHMENT NO. 1 HOTEL PARCEL LEGAL DESCRIPTION THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF RIVERSIDE, AND IS DESCRIBED AS FOLLOWS: 882/015610-0052 292872.02 PM03 DRAFT ATTACHMENT NO.2 HOTEL PARCEL SITE MAP [SEE ATTACHED MAP] n.8 Ors 882/015610-0052 292872.02 PM03 DRAFT ATTACHMENT NO.3 HOTEL PARCEL GRANT DEED [See Following Pages] 0^9 6 882/015610-0052 292872.02 PM03 ., DRAFT RECORDING REQUESTED BY, MAIL TAX STATEMENTS TO AND WHEN RECORDED MAIL TO: Bison Hotel Group LLC Attn: This document is exempt from payment of a recording fee pursuant to Government Code Section 27383 GRANT DEED (HOTEL PARCEL) For valuable consideration, receipt of which is hereby acknowledged, The LA QUlNTA REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"), acting to carry out the Redevelopment Plan ("Redevelopment Plan") for the La Quinta Redevelopment Project No. 1 (the "Project Area"), under the Community Redevelopment Law of California, hereby grants to BISON HOTEL GROUP LLC, a California limited liability company ("Developer"), the real property hereinafter referred to as the "Hotel Parcel," described in Exhibit A attached hereto and incorporated herein, subject to the existing easements, restrictions and covenants of record described there. 1. Reservation of Mineral Rights. Agency excepts and reserves from the conveyance herein described all interest of the Agency in oil, gas, hydrocarbon substances and minerals of every kind and character lying more than five hundred (500) feet below the surface, together with the right to drill into, through, and to use and occupy all parts of the Hotel Parcel lying more than five hundred (500) feet below the surface thereof for any and all purposes incidental to the exploration for and production of oil, gas, hydrocarbon substances or minerals from said Hotel Parcel or other lands, but without, however, any right to use either the surface of the Hotel Parcel or any portion thereof within five hundred (500) feet of the surface for any purpose or purposes whatsoever, or to use the Hotel Parcel in such a manner as to create a disturbance to the use or enjoyment of the Hotel Parcel. 2. Hotel Parcel Conveyance in Accordance With Redevelopment Plan, Disposition and Development Agreement. The Hotel Parcel is conveyed in accordance with and subject to the Redevelopment Plan for the La Quinta Redevelopment Project No. 1 which was approved and adopted by Ordinance No. 43, on November 29, 1983, and amended by Ordinance No. 258, on December 20, 1994, of the City Council of the City of La Quinta, and a Disposition and Development Agreement entered into between Agency and Developer dated , 2003 (the "DDA"),a copy of which is on file with the Agency at its offices as a public record and which is incorporated herein by reference. The DDA generally requires the Developer to construct and operate a new hotel on the Hotel Parcel (the "Hotel Facility"), and other requirements as set forth therein. All terms used herein shall have the same meaning as those used in the DDA. 0 F 7 882/015610-0052 r 292872.02 PM03 i 3 DRAFT 3. Permitted Uses. The Developer covenants and agrees for itself, its successors, its assigns, and every successor in interest to the Hotel Parcel or any part thereof, that upon the date of this Grant Deed (Hotel Parcel) ("Grant Deed") and during construction through completion of development and thereafter, the Developer shall devote the Hotel Parcel to the uses specified in the Redevelopment Plan and that certain Operating Covenant entered into by and between Developer and Agency that was recorded on even date herewith ("Operating Covenant") for the periods of time specified therein. All uses conducted on the Hotel Parcel, including, without limitation, all activities undertaken by the Developer pursuant to the DDA, shall conform to the DDA, the Redevelopment Plan, the Operating Covenant, and all applicable provisions of the City Municipal Code. The foregoing covenants shall run with the land. 4. Restrictions on Transfer. The Developer further agrees that for the period commencing upon the date of this Grant Deed and until the date Developer has paid to Agency all sums then -owed under the Hotel Parcel Promissory Note and the Commercial Parcels Promissory Note ("Operating Covenant Termination Date"), no voluntary or involuntary successor in interest of the Developer shall acquire any rights or powers under the DDA or this Grant Deed, nor shall the Developer make any total or partial sale, transfer, conveyance, assignment, subdivision, refinancing or lease of the whole or any part of the Hotel Parcel or the Hotel Facility thereon, except as permitted or approved by the Agency pursuant to Section 703 of the DDA. 5. Binding on Successors. All of the terms, covenants and conditions of this Grant Deed shall be binding upon the Developer and the permitted successors and assigns of the Developer. Whenever the term "Developer" is used in this Grant Deed, such term shall include any other successors and assigns as herein provided. 6. Nondiscrimination. The Developer herein covenants by and for itself, its heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the Developer itself or any person claiming under or through Developer, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land. The Developer shall refrain from restricting the rental, sale or lease of the Hotel Parcel on the basis of race, color, religion, sex, marital status, ancestry or national origin of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or r,.. e 882/015610-0052 292872.02 PM03 DRAFT permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin, or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased." (c) In contracts relating to the disposition of the realty: "There shall be no discrimination against or segregation of, any person, or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the premises." 7. Reentry and Revesting of Title in the Agency After the Closing and Prior to Completion of Construction. The Agency has the right, at its election, to reenter and take possession of the Hotel Parcel, with all improvements thereon, and terminate and revest in the Agency the estate conveyed to the Developer if after the Closing and prior to the issuance of the Release of Construction Covenants, the Developer (or its successors in interest) shall: a. fail to start construction of the Hotel Facility as required by this Agreement for a period of thirty (30) days after written notice thereof from the Agency; or b. abandon or substantially suspend construction of the Hotel Facility required by this Agreement and fail to resume construction within thirty (30) days after written notice thereof from the Agency; or C. contrary to the provisions of Section 703 Transfer or suffer any involuntary Transfer in violation of this Agreement, and such Transfer is not rescinded within thirty (30) days of notice thereof from the Agency. Such right to reenter, terminate and revest shall be subject to and be limited by, shall not defeat, render invalid or limit, and shall be subordinate to: 1. Any mortgage or deed of trust permitted by this Agreement; or 882/015610.0052 292872.02 PM03 _3_ DRAFT 2. Any rights or interests provided in this Agreement for the protection of the holders of such mortgages or deeds of trust. Upon the reverting in the Agency of title to the Hotel Parcel as provided in this Section 7, the Agency shall, pursuant to its responsibilities under state law, use its reasonable efforts to resell the Hotel Parcel as soon and in such manner as the Agency shall find feasible and consistent with the objectives of such law and of the Redevelopment Plan, as it exists or may be amended, to a qualified and responsible party or parties (as determined by the Agency) who will assume the obligation of making or completing the Hotel Facility, or such improvements in their stead as shall be satisfactory to the Agency and in accordance with the uses specified for such Hotel Parcel or part thereof in the Redevelopment Plan. Upon such resale of the Hotel Parcel, the net proceeds thereof after repayment of any mortgage or deed of trust encumbering the Hotel Parcel which is permitted by the DDA, shall be applied: i. First, to reimburse the Agency, on its own behalf or on behalf of the City, all costs and expenses incurred by the Agency, excluding City and Agency staff costs, but specifically, including, but not limited to, any expenditures by the Agency or the City in connection with the recapture, management and resale of the Hotel Parcel or part thereof (but less any income derived by the Agency from the Hotel Parcel or part thereof in connection with such management); all taxes, assessments and water or sewer charges with respect to the Hotel Parcel or part thereof which the Developer has not paid; any payments made or necessary to be made to discharge any encumbrances or liens existing on the Hotel Parcel or part thereof at the time or revesting of title thereto in the Agency, or to discharge or prevent . from attaching or being made any subsequent encumbrances or liens due to obligations, defaults or acts of the Developer, its successors or transferees; any expenditures made or obligations incurred with respect to the making or completion of the improvements or any part thereof on the Hotel Parcel, or part thereof; and any amounts otherwise owing the Agency, and in the event additional proceeds are thereafter available, then ii. Second, to reimburse the Developer, its successor or transferee, up to the amount equal to the sum of (a) the costs incurred for the acquisition and development of the Hotel Parcel and for the improvements existing on the Hotel Parcel at the time of the reentry and possession, less (b) any gains or income withdrawn or made by the Developer from the Hotel Parcel or the improvements thereon. Any balance remaining after such reimbursements shall be retained by the Agency as its property. The rights established in this Section 7 are not intended to be exclusive of any other right, power or remedy, but each and every such right, power, and remedy shall be cumulative and concurrent and shall be in addition to any other right, power and remedy authorized herein or now or hereafter existing at law or in equity. These rights are to be interpreted in light of the fact that the Agency will have conveyed the Hotel Parcel to the Developer for redevelopment purposes, particularly for development of a new business hotel facility and appurtenant uses, and not for speculation in undeveloped land. 8. Violations Do Not Impair Liens. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Grant Deed shall defeat or 882/015610-0052 292872.02 PM03 _4_ DRAFT render invalid or in any way impair the lien or charge of any mortgage or deed of trust or security interest permitted by Section 703 of the DDA. 9. Covenants Run With Land. All covenants contained in this Grant Deed shall be covenants running with the land. All of Developer's obligations hereunder, except as otherwise provided hereunder, shall terminate and shall become null and void upon the expiration of the effectiveness of the Redevelopment Plan. Every covenant contained in this Grant Deed against discrimination contained in paragraph 6 of this Grant Deed shall remain in effect in perpetuity. 10. Covenants For Benefit of Agency. All covenants without regard to technical classification or designation shall be binding for the benefit of the Agency, and such covenants shall run in favor of the Agency for the entire period during which such covenants shall be in force and effect, without regard to whether the Agency is or remains an owner of any land or interest therein to which such covenants relate. The Agency, in the event of any breach of any such covenants, shall have the right to exercise all the rights and remedies and to maintain any actions at law or suits in equity or other proper proceedings to enforce the curing of such breach. 11. Revisions to Grant Deed. Both Agency, its successors and assigns, and Developer and the successors and assigns of Developer in and to all or any part of the fee title to the Hotel Parcel shall have the right with the mutual consent of the Agency to consent and agree to changes in, or to eliminate in whole or in part, any of the covenants, easements or restrictions contained in this Grant Deed without the consent of any tenant, lessee, easement holder, licensee, mortgagee, trustee, beneficiary under a deed of trust or any other person or entity having any interest less than a fee in the Hotel Parcel. However, Developer and Agency are obligated to give written notice to and obtain the consent of any first mortgagee prior to consent or agreement between the parties concerning such changes to this Grant Deed. The covenants contained in this Grant Deed, without regard to technical classification, shall not benefit or be enforceable by any owner of any other real property within or outside the Project Area, or any person or entity having any interest in any other such realty. No amendment to the Redevelopment Plan shall require the consent of the Developer, but no such amendment shall diminish or restrict the Developer's rights or expand the Developer's obligations hereunder or under the DDA without the Developer's consent. ATTEST: Secretary of the Agency AGENCY: LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic LIZA Executive Director t�J 882/015610-0052 292872.02 PM03 -5- DRAFT APPROVED AS TO FORM: RUTAN & TUCKER, LLP M. Katherine Jenson Agency Counsel DEVELOPER: BISON HOTEL GROUP LLC, a California limited liability company By: Its: 882/015610-0052 292872.02 PM03 -6- DRAFT STATE OF CALIFORNIA ) ) ss COUNTY OF On personally appeared before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. [SEAL] STATE OF CALIFORNIA ) ) ss COUNTY OF On personally appeared Notary Public before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] r, 9 882/015610-0052 _ 292872.02 PM03 _7 DRAFT EXHIBIT A LEGAL DESCRIPTION OF HOTEL PARCEL [TO BE INSERTED] 0 94,E 882/015610-0052 292872.02 PM03 DRAFT ATTACHMENT NO. 4 HOTEL PARCEL PROMISSORY NOTE [SEE ATTACHED] 095 882/015610-0052 292872.02 PM03 DRAFT HOTEL PARCEL PROMISSORY NOTE 2003 ("Hotel Parcel Note Date") $1,600,000 ("Principal Amount") FOR VALUE RECEIVED, the undersigned (herein, the "Maker") hereby promises to pay to the order of the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic ("Holder" or "Agency"), at a place designated by Holder, the principal sum of ONE MILLION SIX HUNDRED THOUSAND DOLLARS ($1,600,000) ("Principal Amount"), plus accrued interest, or such lesser amount which shall from time to time be owing hereunder pursuant to the terms hereof. The principal sum hereof is Maker's purchase price for certain real property (the "Hotel Parcel") that Maker purchased from Holder for purposes of redeveloping the same pursuant to that certain Disposition and Development Agreement by and between Maker and Holder, dated , 2003 ("DDA"), all as further set forth therein. Reference is also made to the following additional agreements and documents, involving Maker and Holder and/or pertaining to the Hotel Parcel: (i) Deed of Trust (Hotel Parcel) with Assignment of Rents and Rider Attached Hereto Containing Terms Including Security Agreement and Fixture Filing entered into on even date herewith by and among Maker as borrower, Holder as beneficiary, and as Trustee, and recorded in the Office of the Riverside County Recorder ("Hotel Parcel Deed of Trust"). The Hotel Parcel Deed of Trust partially secures repayment of this Hotel Parcel Note. (ii) Commercial Parcels Promissory Note, to be entered into on the date described in the DDA, by and between Maker and Holder, which Commercial Parcels Promissory Note describes the payment terms for Maker's payment to Holder of the Commercial Parcels Purchase Price. (iii) Deed of Trust (Commercial Parcels) with Assignment of Rents and Rider Attached Hereto, to be entered into and recorded in the Office of the Riverside County Recorder, on the date described in the DDA, by and among Maker as borrower, Holder as beneficiary, and as Trustee ("Commercial Parcels Deed of Trust"). The Commercial Parcels Deed of Trust partially secures repayment of the Commercial Parcels Promissory Note. (iv) Operating Covenant by and between Maker and Holder, for the benefit of Holder, and recorded in the Office of the Riverside County Recorder ("Operating Covenant"). The DDA, Hotel Parcel Deed of Trust, Commercial Parcels Promissory Note, Commercial Parcels Deed of Trust, and Operating Covenant are referred to herein collectively as the "Agency Agreements." The Agency Agreements are incorporated herein as though fully set forth. Except as otherwise provided herein, the defined terms used in this Hotel Parcel Note shall have the same meaning as set forth in the DDA. 098 882/015610-0052 _ 353588.02 PM03 1 DRAFT 1. Principal Amount. The principal amount of this payment obligation shall be ONE MILLION SIX HUNDRED THOUSAND DOLLARS ($1,600,000) ("Principal Amount"). Interest shall accrue on the outstanding balance of the Principal Amount at two percent (2%) over the prime rate then being charged by Bank of America, N.A., compounded monthly, and adjusted annually on July I" of each year during the term of this Hotel Parcel Note. Interest shall accrue as set forth in Section 3 in the event of a Maker default. 2. Term of Hotel Parcel Note; Payment. Payment of the Principal Amount, as adjusted and redefined as the "Adjusted Principal Amount" pursuant to this Section 2, shall be through monthly installment payment amounts. 2.1 Subject to the provisions of Section 3 herein, which provide for acceleration of the then outstanding principal and accrued interest and immediate payment thereof in the event of a default by Maker: (A) Maker shall not be required to make any payments of principal or interest on this Hotel Parcel Note for a period of twenty-four (24) months following the Hotel Parcel Note Date ("Grace Period"). (B) Maker agrees that interest shall accrue on the Principal Amount during the Grace Period, and that as a result thereof, as of the first day of the next calendar month following expiration of the Grace Period (the "Payment Commencement Date"), the outstanding principal and accrued interest to date due Holder on which payments are to be made shall be adjusted to reflect said accrual ("Adjusted Principal Amount"), and interest shall continue to accrue on the Adjusted Principal Amount, at the rate specified in Paragraph 1, throughout the term of this Hotel Parcel Note. (C) Maker shall commence payment of the Adjusted Principal Amount and interest thereon (at the rate specified in Paragraph 1) in thirty-six (36) monthly installments that are based on a fifteen (15) year amortization schedule, with the first thirty-five of said payments in equal amounts and the last payment a final "balloon" installment in the amount of then - remaining balance of the Adjusted Principal Amount plus all accrued and unpaid interest thereon. The first monthly payment shall be due on the Payment Commencement Date. 2.2 Notwithstanding the foregoing, this Hotel Parcel Note shall be deemed paid in full when Maker, through monthly payments, has repaid the Holder an amount equal to the Adjusted Principal Amount plus interest, as set forth in this Hotel Parcel Note. 2.3 Maker shall have the right to prepay all or any portion of this Hotel Parcel Note at any time without penalty, and upon such repayment the Hotel Parcel Deed of Trust shall be reconveyed. Prepayment shall not affect the Operating Covenant or the term of the Operating Covenant, except as set forth in the DDA and the Operating Covenant. 2.4 Any payments made by Maker in payment of this Hotel Parcel Note shall be applied in the following order: (i) first to the interest then accrued and due on the unpaid principal balance under this Hotel Parcel Note, (ii) second to reduction of the principal balance of this Hotel Parcel Note. 0 9*1 882/015610-0052 353588.02 PM03 -2- DRAFT 3. Default,• Acceleration: Cross -Default. In the event: 3.1 Maker fails to timely make a payment required by this Hotel Parcel Note within ten (10) days following the due date of any payment due hereunder; or 3.1 Maker fails to timely make any other payment due hereunder within ten (10) days after notice thereof from Holder; or 3.2 Maker is in material default of any of the covenants, terms, or provisions of this Hotel Parcel Note, or any of the Agency Agreements, and Maker .fails to timely cure such default under the terms of the applicable agreement, it being understood and agreed by Maker that a default of this Hotel Parcel Note, or of any of the Agency Agreements shall be a default of all of the foregoing listed documents; then Maker shall be in default of this Hotel Parcel Note, and the remaining balance of the Principal Amount and all accrued interest thereon shall become immediately due and payable. The rate of interest applicable to periods of default for the defaults set forth in this Section 3 shall be calculated at the lesser of ten percent (10%) per annum or the maximum legal rate, and shall accrue as of the date such payment was originally due. 4. Collection Costs; Attorneys' Fees. If, because of any event of default under this Hotel Parcel Note or any of the Agency Agreements, any attorney is engaged by Holder to enforce or defend any provision of this instrument, whether or not suit is filed hereon, then Maker shall pay upon demand reasonable attorneys' fees, expert witness fees and all costs so incurred by Holder together with interest thereon until paid at the applicable rate of interest payable hereunder, as if such fees and costs had been added to the principal owing hereunder. 5. Waivers by Maker. Maker and all endorsers, guarantors and persons liable or to become liable on this Hotel Parcel Note waive presentment, protest and demand, notice of protest, demand and dishonor and nonpayment of this Hotel Parcel Note and any and all other notices or matters of a like nature, and consent to any and all renewals and extensions near the time of payment hereof and agree further that at any time and from time to time without notice, the terms of payment herein may be modified or the security described in any documents securing this Hotel Parcel Note released in whole or in part, or increased, changed or exchanged by agreement between Holder and any owner of the premises affected by said documents securing this Hotel Parcel Note, without in any way affecting the liability of any party to this Hotel Parcel Note or any persons liable or to become liable with respect to any indebtedness evidenced hereby. 6. Severability. The unenforceability or invalidity of any provision or provisions of this Hotel Parcel Note as to any persons or circumstances shall not render that provision or those provisions unenforceable or invalid as to any other provisions or circumstances, and all provisions hereof, in all other respects, shall remain valid and enforceable. 7. Modifications. Neither this Hotel Parcel Note nor any term hereof may be waived, amended, discharged, modified, changed or terminated orally; nor shall any waiver of any provision hereof be effective except by an instrument in writing signed by Maker and Holder. No delay or omission on the part of Holder in exercising any right hereunder shall operate as a waiver of such right or of any other right under this Hotel Parcel Note. 882/015610-0052 099 353588.02 PM03 -3- ii;• 8. No Waiver by Holder. No waiver of any breach, default or failure of condition under the terms of this Hotel Parcel Note shall be implied from any failure of the Holder of this Hotel Parcel Note to take, or any delay be implied from any failure by the Holder in taking action with respect to such breach, default or failure from any prior waiver of any similar or unrelated breach, default or failure. 9. UsujY. Notwithstanding any provision in this Hotel Parcel Note, the total liability for payment in the nature of interest shall not exceed the limit imposed by applicable laws of the State of California. 10. NonassignabilL. Maker may only Transfer (as that term is defined in the DDA) this Hotel Parcel Note in accordance with provisions and restrictions pertaining to a transfer of the DDA as set forth in the DDA. Holder may freely Transfer Holder's interest in this Hotel Parcel Note in any manner, at Holder's sole discretion. 11. Governing Law. This Hotel Parcel Note has been executed and delivered by Maker in the State of California and is to be governed and construed in accordance with the laws thereof. 12. Time of Essence. Time is of the essence in the performance of the obligations and Li - provisions set forth in this Hotel Parcel Note. IN WITNESS WHEREOF, Maker has executed this Hotel Parcel Note as of the Hotel Parcel Note Date. "MAKER" BISON HOTEL GROUP LLC, a California limited liability company Its: 882/015610-0052 (� 353588.02 PM03 -4- 091, DRAFT ATTACHMENT NO. 5 HOTEL PARCEL DEED OF TRUST [SEE ATTACHED] 1no 882/015610-0052 292872.02 PM03„ Recording Requested By And When Recorded Return to: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, CA 92253 Attn: Executive Director SPACE ABOVE THIS LINE FOR RECORDER'S USE EXEMPT FROM RECORDING FEE PER GOV. CODE § 6103 DEED OF TRUST (HOTEL PARCEL) WITH ASSIGNMENT OF RENTS AND RIDER ATTACHED HERETO CONTAINING TERMS INCLUDING SECURITY AGREEMENT AND FIXTURE FILING NOTE: RIDER ATTACHED TO THIS DEED OF TRUST CONTAINING TERMS INCLUDING SECURITY AGREEMENT AND FIXTURE FILING. This DEED OF TRUST (HOTEL PARCEL) WITH ASSIGNMENT OF RENTS AND RIDER ATTACHED HERETO CONTAINING TERMS INCLUDING SECURITY AGREEMENT AND FIXTURE FILING ("Deed of Trust"), is made 1 , between BISON HOTEL GROUP LLC, a California limited liability company, herein called TRUSTOR, whose address is , a California corporation, herein called TRUSTEE, and LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic, herein called BENEFICIARY. WITNESSETH: That Trustor grants to Trustee in trust, with power of sale, Trustor's estate, dated on or about the date hereof, in that property in the City of La Quinta, County of Riverside, State of California, described as: together with the rents, issues and profits thereof, subject, however, to the right, power and authority hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues and profits for the purpose of securing (1) payment of the sum of ONE MILLION SIX HUNDRED THOUSAND DOLLARS ($1,600,000), with interest thereon according to the terms of a promissory note or notes of even date herewith made by Trustor, payable to order of Beneficiary, and extensions or renewals thereof; (2) the performance of each agreement of Trustor incorporated by reference or contained herein; and (3) payment of additional sums and interest thereon which may hereafter be loaned to Trustor, or his successors or assigns, when evidenced by a promissory note or notes reciting that they are secured by this Deed of Trust. To protect the security of this Deed of Trust, and with respect to the Property above described, Trustor expressly makes each and all of the agreements, and adopts and agrees to perform and be bound by each and all of the terms and provisions set forth in subdivision A, and it is mutually agreed that each and all of the terms and provisions set forth in subdivision B of the fictitious deed of trust recorded in Orange County August 17, 1964, and in all other counties August 18, 1964, in the book and at the page of Official Records in the office of the county recorder of the county where said property is located, noted below opposite the name of such county, namely: COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE Alameda 1288 556 Kings 858 713 Placer 1028 379 Sierra 38 187 Alpine 3 130-31 Lake 437 110 Plumas 166 1307 Siskiyou 506 762 Amador 133 438 Lassen 192 367 Riverside 3778 347 Solano 1287 621 Butte 1330 513 Los Angeles T-3878 874 Sacramento 5039 124 Sonoma 2067 427 Calaveras 185 338 Madera 911 136 San Benito 300 405 Stanislaus 1970 56 Colusa 323 391 Marin 1849 122 San Bernardino 6213 768 Sutter 655 585 Contra Costa 4684 1 Mariposa 90 453 San Francisco A-804 596 Tehama 457 183 Del Norte 101 549 Mendocino 667 99 San Joaquin 2855 283 Trinity 108 595 El Dorado 704 635 Merced 1660 753 San Luis Obispo 1311 137 Tulare 2530 108 Fresno 5052 623 Modoc 191 93 San Mateo 4778 175 Tuolumne 177 160 1 n ,J 882/015610-0052 353901.02 AM03 COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE Glenn 469 76 Mono 69 302 Santa Barbara 2065 881 Ventura 2607 237 Humboldt 801 83 Monterey 357 239 Santa Clara 6626 664 Yolo 769 16 Imperial 1189 701 Napa 704 742 Santa Cruz 1638 607 Yuba 398 693 Inyo 165 672 Nevada 363 94 Shasta 800 633 Kern 3756 690 Orange 7182 18 San Diego SERIES 5 Book 1964, Page 149774 shall inure to and bind the parties hereto, with respect to the property above described. Said agreements, terms and provisions contained in said subdivisions A and B (identical in all counties, and printed on pages 3 and 4 hereof) are by the within reference thereto, incorporated herein and made a part of this Deed of Trust for all purposes as fully as if set forth at length herein, and Beneficiary may charge for a statement regarding the obligation secured hereby, provided the charge therefor does not exceed the maximum allowed by law. The undersigned Trustor, requests that a copy of any notice of default and any notice of sale hereunder be mailed to him at his address hereinbefore set forth. SEE RIDER ATTACHED TO THIS DEED OF TRUST Signature of Trustor STATE OF CALIFORNIA } COUNTY OF } BISON HOTEL GROUP LLC, a California limited liability company On before me, By: personally appeared personally known to me (or proved to me on the basis of Its: satisfactory evidence) to be the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signatures(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature (This area for official notarial seal) 10 4, 882/015610-0052 353901.02 AM03 DO NOT RECORD The following is a copy of Subdivisions A and B of the fictitious Deed of Trust recorded in each county in California as stated in the foregoing Deed of Trust and incorporated by reference in said Deed of Trust as being a part thereof as if set forth at length therein. A. To protect the security of this Deed of Trust, Trustor agrees: 1) To keep said property in good condition and repair, not to remove or demolish any building thereon; to complete or restore promptly and in a good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor, to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property may be reasonably necessary, the specific enumerations herein not excluding the general. 2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary. The amount collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured hereby and in such order as Beneficiary may determine, or at the option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. 3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed. 4) To pay: at least ten (10) days before delinquency all taxes and assessments affecting said property, including assessments on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on said property or any part thereof, which appear to be prior or superior hereto; all costs, fees and expenses of this Trust. Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary of Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same is such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees. 5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from the date of expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof regarding the obligation secured hereby any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time when said statement is demanded. B. It is mutually agreed: 1) That any award in connection with any condemnation for public use of or injury to said property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such moneys received by him in the same manner and with the same effect as above provided for disposition of proceeds of fire or other insurance. 2) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive his right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay. 3) That at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed and said note for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of said property; consent to the making of any map or plat thereof; join in granting any easement thereon, or join in any extension agreement or any agreement subordinating the lien or charge hereof. 4) That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed and said note to Trustee for cancellation and retention or other disposition as Trustee in its sole discretion may choose and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The Grantee in such reconveyance may be described as "the person or persons legally entitled thereto." 5) That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and authority, during the continuance of these Trusts, to collect the rents, issues and profits of said property, reserving unto Trustor the right, prior to any default by Trustor in payment of any indebtedness secured hereby or in the performance of any agreement hereunder, to collect and retain such rents, issues and profits as they become due and payable. Upon any such default (beyond any applicable cure period), Beneficiary may at any time without notice, either in person, by agent, or be a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured, enter upon and take possession of said property or any part thereof, in his own name sue for or otherwise collect 1011 882/015610-0052 ^ 353901.02 AM03 t . such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorney's fees, upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking possession of said property, the collecting of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. 6) That upon default by Trustor in payment of any indebtedness secured hereby or in the performance of any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and of election to cause to be sold said property, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed, said note and all documents evidencing expenditures secured hereby. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale. After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. 7) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed by the Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where said property is situated shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties. Said instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed is recorded and the name and address of the new Trustee. 8) That this Deed applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of the note secured hereby, whether or not named as Beneficiary herein. In this Deed, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. 9) That Trustee accepts this Trust when this Deed, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee. DO NOT RECORD REQUEST FOR FULL RECONVEYANCE TO TRUSTEE: The undersigned is the legal owner and holder of the note or notes and of all indebtedness secured by the foregoing Deed of Trust. Said note or notes, together with all other indebtedness secured by said Deed of Trust, have been fully paid and satisfied; and you are hereby requested and directed, on payment to you of any sums owing to you under the terms of said Deed of Trust, to cancel said note or notes above mentioned, an all other evidences of indebtedness secured by said Deed of Trust delivered to you herewith, together with the said Deed of Trust, and to reconvey, without warranty, to the parties designated by the terms of said Deed of Trust, all the estate now held by you under the same. Dated Please mail Deed of Trust. Note and Reconveyance to Do Not lose or destroy this Deed of Trust OR THE NOTE which it secures. Both must be delivered to the Trustee for cancellation befor, reconveyance will be made. 104 S" t 882/015610-0052 353901.02 AM03 2 RIDER TO SUBORDINATED DEED OF TRUST WITH ASSIGNMENT OF RENTS THIS RIDER TO DEED OF TRUST WITH ASSIGNMENT OF RENTS ("Rider") is executed this day of , by BISON HOTEL C, GROUP LLa California limited liability company, herein "Trustor," in favor of the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic, herein "Beneficiary," the same parties to that certain form Deed of Trust With Assignment of Rents, of even date hereto, to which this Rider is attached. This Rider is made a part of and is incorporated into said Deed of Trust. This Rider shall supersede any conflicting term or provision of the form Deed of Trust to which it is attached. Reference is made to (i) that certain Hotel Parcel Promissory Note by and between Trustor and Beneficiary, dated on or about the date set forth above, the repayment of which by Trustor is secured by this Deed of Trust ("Hotel Parcel Note"), and (ii) to the Agency Agreements which are described in the Hotel Parcel Note. The parties hereto agree: 1. Property. The estate subject to this Deed of Trust is Trustor's fee estate in the real property legally described in the foregoing Deed of Trust to which this Rider is attached (the "Property"). 2. Obligations Secured. Trustor makes this grant and assignment for the purpose of securing the following obligations ("Secured Obligations"): a. Payment to Beneficiary of all indebtedness at any time owing under the terms of the Hotel Parcel Note; b. Payment and performance of all obligations of Trustor under this Deed of Trust; C. Payment and performance of all obligations of Trustor under the Agency Agreements. d. Payment and performance of all future advances and other obligations of Trustor or any other person, firm, or entity with the approval of Trustor, may agree to pay and/or perform (whether as principal, surety or guarantor) for the benefit of Beneficiary, when the obligation is evidenced by a writing which recites that it is secured by this Deed of Trust; and e. All modifications, extensions and renewals of any of the obligations secured hereby, however evidenced. 3. Obligations. The term "obligations" is used herein in its broadest and most comprehensive sense and shall be deemed to include, without limitation, all interest and charges, prepayment charges, late charges and fees at any time accruing or assessed on any of the Secured Obligations. 882/015610-0052 _ 353901.02 AM03 1 4. Subordination. Beneficiary agrees to subordinate this Deed of Trust to Trustor's construction loan and to permanent financing, provided that (i) the maximum cumulative principal amount of the loan shall not exceed eighty percent (80%) of the lender's appraised value of the Property upon completion of the Hotel Facility described in the Agency Agreements ("Project"), which amount shall be verified in writing to Beneficiary's Executive Director's reasonable satisfaction; (ii) the loan(s) shall obligate Trustor to expend loan proceeds for no other purpose than the Project; and (iii) the loan(s) shall provide that any notice of Trustor breach or default shall also be sent to the Beneficiary at the address listed in Section 10 and that upon receipt of such notice, Beneficiary shall have the right to (A) cure the noticed breach or default, (B) negotiate with the lender regarding the noticed breach or default, and (C) purchase the Property from Trustor subject to the lender's deed of trust, without the consent of Trustor or the holder of the lender's deed of trust, and that Beneficiary's exercise of the foregoing rights shall not, in and of itself, give rise to any right on the part of the lender to accelerate the amounts due under the loan. Beneficiary's Executive Director shall have authority to sign such subordination agreements on behalf of the Beneficiary. In agreeing to provide the subordination referred to in the preceding sentence, Beneficiary hereby incorporates the finding required to be made in accordance with Health and Safety Code Section 33334.14. 5. Incorporation. All terms of the Hotel Parcel Note, Agency Agreements, and the Secured Obligations are incorporated herein by this reference. All persons who may have or acquire an interest in the Property shall be deemed to have notice of the terms of all of the foregoing documents. 6. Mortgagee -in -Possession. Neither the assignment of rents set forth in the Deed of Trust nor the exercise by Beneficiary of any of its rights or remedies hereunder shall be deemed to make Beneficiary a "mortgagee -in -possession" or otherwise liable in any manner with respect to the Property, unless Beneficiary, in person or by agent, assumes actual possession thereof. Nor shall appointment of a receiver for the Property by any court at the request of Beneficiary or by agreement with Trustor, or the entering into possession of the Property by such receiver, be deemed to make Beneficiary a "mortgagee -in -possession" or otherwise liable in any manner with respect to the Property. 7. No Cure. In the event Beneficiary collects and receives any rents under the Deed of Trust upon any default hereof, such collection or receipt shall in no way constitute a curing of the default. 8. Possession Upon Default. Upon the occurrence of and during the continuation of a default, Beneficiary, after having given notice and the applicable cure periods having expired with the default having not been cured (hereinafter, a "default"), may, at its option, without any action on its part being required and without in any way waiving such default, take possession of the Property in accordance with applicable law and have, hold, manage, lease and operate the same, on such terms and for such period of time as Beneficiary may deem proper, and may collect and receive all rents and profits, with full power to make, from time to time, all commercially reasonable alterations, renovations, repairs or replacements thereto as may seem proper to Beneficiary, and to apply such rents and profits to the payment of (a) the cost of all such alterations, renovations, repairs and replacements, and all costs and expenses incident to 1 o t 882/015610-0052 353901.02 AM03 -� taking and retaining possession of the Property, and the management and operation thereof, and keeping the same properly insured; (b) all taxes, charges, claims, assessments, and any other liens which may be prior in lien or payment of the Hotel Parcel Note, and premiums for insurance, with interest on all such items; and (c) the indebtedness secured hereby, together with all costs and attorney's fees, in such order or priority as to any of such items as Beneficiary in its sole discretion may determine, any statute, law, custom or use to the contrary notwithstanding. Any amounts received by Beneficiary or its agents in the performance of any acts prohibited by the terms of this assignment, including, but not limited to, any amounts received in connection with any cancellation, modification or amendment of any lease prohibited by the terms of this assignment and any rents and profits received by Trustor after the occurrence of a default shall be held by Trustor as trustee for Beneficiary and all such amounts shall be accounted for to Beneficiary and shall not be commingled with other funds of the Trustor. Any person receiving any portion of such trust funds shall receive the same in trust for Beneficiary as if such person had actual or constructive notice that such funds were impressed with a trust in accordance therewith. 9. Receiver. In addition to any and all other remedies of Beneficiary set forth under this Deed of Trust or permitted at law or in equity, if a default shall have occurred and not have been cured within any applicable cure period, Beneficiary, to the extent permitted by law and without regard to the value, adequacy or occupancy of the security for the Hotel Parcel Note and other sums secured hereby, shall be entitled as a matter of right if it so elects to the appointment of a receiver to enter upon and take possession of the Property and to collect all rents and profits and apply the same as the court may direct, and such receiver may be appointed by any court of competent jurisdiction by ex parte application and without notice, notice of hearing being hereby expressly waived. The expenses, including receiver's fees, attorneys' fees, costs and agent's compensation, incurred pursuant to the power herein contained shall be secured by this Deed of Trust. 10. Security Agreement. This Deed of Trust also constitutes a Security Agreement with respect to all personal property in which Beneficiary is granted a security interest hereunder, and Beneficiary shall have all of the rights and remedies of a secured party under the Uniform Commercial Code as enacted in California (the "California Uniform Commercial Code") as well as all other rights and remedies available at law or in equity. Trustor hereby agrees to execute and deliver on demand and hereby irrevocably constitutes and appoints Beneficiary the attorney -in -fact of Trustor, to execute, deliver and, if appropriate, to file with the appropriate filing officer or office such security agreements, financing statements, continuation statements or other instruments as Beneficiary may request or require in order to impose, perfect or continue the perfection of, the lien or security interest created hereby. Trustor and Beneficiary agree that the filing of a financing statement in the record normally having to do with personal property shall never be construed as in any way derogating from or impairing the lien of this Deed of Trust and the intention of Trustor and Beneficiary that everything used in connection with the operation or occupancy of the Property is and at all times and for all purposes and in all proceedings, both legal and equitable, shall be regarded as real property or goods which are or are to become fixtures, irrespective of whether (i) any such item is physically attached to the buildings and improvements on the Property; (ii) serial numbers are used for the better identification of certain equipment items capable of being filed by the Beneficiary; or (iii) any �n 882/015610-0052 353901.02 AM03 -3 such item is referred to or reflected in any such financing statement so filed at any time. Such mention in the financing statements is declared to be for the protection of the Beneficiary in the event any court or judge shall at any time hold that notice of Beneficiary's priority of interest must be filed in the California Commercial Code records to be effective against a particular class of persons, including, but not limited to, the federal government and any subdivision or entity of the federal government. Trustor covenants and agrees to reimburse Beneficiary for any costs incurred in filing such financing statement and any continuation statements. Upon the occurrence of default hereunder, Beneficiary shall have the right to cause any of the Property which is personal property and subject to the security interest of Beneficiary hereunder to be sold at any one or more public or private sales as permitted by applicable law, and Beneficiary shall further have all other rights and remedies, whether at law, in equity, or by statute, as are available to secured creditors under applicable law, specifically including without limitation the right to proceed as to both the real property and the personal property contained within the Property as permitted by Uniform Commercial Code Section 9501(4), including conducting a unified sale thereof. Any such disposition may be conducted by an employee or agent of Beneficiary or Trustee. Any person, including both Trustee and Beneficiary, shall be eligible to purchase any part or all of such property at any such disposition. This Deed of Trust constitutes a fixture filing under Sections 9313 and 9402(6) of the California Uniform Commercial Code, as amended or recodified from time to time. 11. Notice to Beneficiary. Notices to Beneficiary shall be sent to Beneficiary addressed to: 882/015610-0052 353901.02 AM03 La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, CA 92263 Attn: Executive Director [SIGNATURE ON NEXT PAGE] In 109 IN WITNESS WHEREOF, Trustor has executed this Rider on the date of Trustor's acknowledgment hereinbelow, to be effective for all purposes as of the day and year first set forth above. STATE OF CALIFORNIA ) ss COUNTY OF ) On personally appeared TRUSTOR: BISON HOTEL GROUP LLC, a California limited liability company Its: before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] Irl 882/015610-0052 353901.02 AM03 _5_ ATTACHMENT NO. "1" TO RIDER TO DEED OF TRUST FIXTURE FILING Pursuant to the security agreement contained in the Rider to the Deed of Trust ("Security Agreement"), and California Uniform Commercial Code ("UCC") Sections 9402 and 9313, as amended or recodified from time to time, this Deed of Trust shall constitute a Fixture Filing. References herein to the Property shall refer to the real property described in the Deed of Trust. 1. Description of Fixtures. "Fixtures" shall include all articles of personal property now or hereafter attached to, placed upon for an indefinite term or used in connection with said real property, appurtenances and improvements together with all goods and other property which are or at any time become so related to the Property that an interest in them arises under real estate law. 2. Description of Collateral. The Collateral is defined Attachment No. 3. and shall include, without limitation, the following items and types of Collateral as well as certain other items and types of Collateral: All equipment, fixtures, goods, inventory and all present and future accessions and products thereof and thereto as defined in the California Commercial Code, now or at any time acquired, located at, used, or to be used for or in connection with the construction, use or enjoyment of the Property by Trustor, whether in the possession of Trustor, warehousemen, bailees or any other person and whether located at the Property or elsewhere, including without limitation: (a) All building, maintenance or service equipment; building, maintenance or raw materials or supplies; component parts or work in process; appliances; equipment; furnishings; furniture; machinery; and tools located at, used or to be used in connection with any or all of the Property or Collateral; (b) All goods and property covered by any warehouse receipts, bills of lading and other documents evidencing any goods or other tangible personal property of any kind (including any Collateral) in which Trustor now or at any time hereafter has any interest in connection with any or all of the Property or Collateral; and (c) Any and all products of and accessions to any such Collateral which may exist at any time. Parts of the Collateral are or may become Fixtures on the Property. As used in this Attachment No. 1 to qualify the scope of Beneficiary's security interest in any of the Collateral, the phrase "in connection with any or all of the Property or Collateral" shall be used in its broadest and most comprehensive sense and shall include without limitation property used or acquired (or to be used or acquired) in connection with the improvement, development, construction, repair or remodeling of any or all of the Property, property arising from or in connection with the operation, use, maintenance, occupancy, sale, lease or disposition of any or all of the Property or Collateral, property used or acquired (or to be used or acquired) in 882/015610-0052 G 110 353901.02 AM03 _6 connection with Trustor's performance of any of its obligations to Beneficiary under the Hotel Parcel Note or Deed of Trust (collectively, the "Documents"), or any of the obligations secured thereby, or any other contract or instrument executed at any time pursuant to or as provided in any of the Documents, and property acquired with any proceeds or the Hotel Parcel Note or pursuant to any of the Documents. If any property is used (or to be used) for multiple or different purposes, and one such purpose relates to any aspect of the Property or Collateral, such property shall constitute Collateral hereunder, unless Beneficiary shall release such property from this Fixture Filing and Beneficiary's security interest in a duly executed written instrument. This Deed of Trust is filed as a Fixture Filing and/or covers goods which are, or are to become, fixtures. 3. Relation of Fixture Filing to Deed of Trust. Some or all of the Collateral described in Paragraph 2 above or in Attachment No. 3 may be or become Fixtures in which Beneficiary has a security interest under the security agreement contained in the Deed of Trust. However, nothing herein shall be deemed to create any lien or interest in favor of the Trustee under this Deed of Trust in any such Collateral which is not a fixture, and the purpose of this Attachment No. 1 is to create a fixture filing under UCC Section 9313, as amended or recodified from time to time. The rights, remedies and interests of Beneficiary under this Deed of Trust and the security agreement are independent and cumulative, and there shall be no merger of any lien hereunder with any security interest created by the security agreement. Beneficiary may elect to exercise or enforce any of its rights, remedies, or interests under either or both this Deed of Trust or the security agreement as Beneficiary may from time to time deem appropriate. 4. Name and Address of Trustor (and Debtor): Bison Hotel Group LLC 5. Name and Address of Beneficiary: The La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, CA 92253 Attn: Executive Director 6. Other Fixture Financing and Removal of Fixtures. Except as otherwise clearly and expressly provided in the Deed of Trust: (a) Beneficiary has not consented to any other security interest of any other person in any Fixtures and has not disclaimed any interest in any Fixtures; and (b) Beneficiary has not agreed or consented to the removal of any Fixtures from the Property, and any such consent by Trustor shall not be binding on Beneficiary. Notwithstanding any other provisions of this Deed of Trust or any other contract between Trustor and Beneficiary to the contrary, Beneficiary reserves the right to prohibit the removal of any Fixtures by any person with the legal right to remove any Fixtures from the Property unless and until he makes arrangements with (and satisfactory to) Beneficiary for the payment to Beneficiary of all costs of repairing any physical injury to the Property which may be caused by the removal of such 882/015610-0052 353901.02 AM03 -7- 1 n �� Fixtures. Any such payment shall be made directly to Beneficiary, and Beneficiary may hold such payment as additional collateral under this Deed of Trust or the security agreement or may apply such payment to any indebtedness secured by the security agreement pursuant to Section 9502 of the UCC, as amended or recodified from time to time, or otherwise. Failure by Trustor to cause the delivery to Beneficiary of any such payment shall constitute both: (a) waste under (and a breach of) this Deed of Trust; and (b) conversion of Collateral under (and a breach of) the security agreement. 882/015610-0052 353901.02 AM03 in ATTACHMENT NO. " 3 " DESCRIPTION OF COLLATERAL The terms used in this Attachment No. "3" shall have the same meanings given to them in the Deed of Trust (including the Rider thereto) unless otherwise defined herein. 1. Real Property Description The "Property" referred to herein is described on Exhibit "A" to the Deed of Trust which is attached hereto and incorporated by reference herein. 2. Collateral Description The Collateral shall mean and include all accounts, chattel paper, contracts for sale, deposit accounts, documents, documents of title, equipment, fixtures, general intangibles, goods, instruments, inventory, money and all present and future accessions, products and cash and noncash proceeds thereof and thereto as defined in the California Commercial Code, now or at any time acquired, located at, used or to be used for or in connection with the construction, use or enjoyment of the Property by or for the account of Trustor, whether in the possession of Trustor, warehousemen, bailees or any other person and whether located at the Property or elsewhere, including without limitation: (a) All present and future inventory and equipment, as those terms are defined in the California Commercial Code, and all other present and future personal property of any kind or nature whatsoever, now or hereafter located at, upon or about the Property or used or to be used in connection with or relating or arising with respect to the Property and/or the use thereof or any improvements thereto, including without limitation all present and future furniture, furnishings, fixtures, goods, tools, machinery, plumbing and plumbing material and supplies, concrete, lumber, hardware, electrical wiring and electrical material and supplies, heating and air conditioning material and supplies, roofing material and supplies, window material and supplies, doors, paint, drywall, insulation, cabinets, ceramic material and supplies, flooring, carpeting, appliances, fencing, landscaping and all other materials, supplies and property of every kind and nature. (b) All present and future accounts, general intangibles, chattel paper, contract rights, deposit accounts, instruments and documents as those terms are defined in the California Commercial Code, now or hereafter relating or arising with respect to the Property and/or the use thereof or any improvements thereto, including without limitation: (i) all rights to the payment of money, including escrow proceeds arising out of the sale or other disposition of all or any portion of the Property; (ii) all architectural, engineering, design and other plans, specifications and drawings relating to the development of the Property and/or any construction thereon; (iii) all use permits, occupancy permits, construction and building permits, and all other 882/015610-0052 353901.02 AM03 ^� �� permits and approvals required by any governmental or quasi -governmental authority in connection with the development, construction, use, occupancy or operation of the Property; (iv) any and all agreements relating to the development, construction, use, occupancy and/or operation of the Property between Trustor and any contractor, subcontractor, project manager or supervisor, architect, engineer, laborer or supplier of materials; (v) all lease, rental or occupancy agreements and payments received thereunder; (vi) all names under which the Property is now or hereafter known and all rights to carry on business under any such names or any variant thereof; (vii) all trademarks relating to the Property and/or the development, construction, use, occupancy or operation thereof, (viii) all goodwill relating to the Property and/or the development, construction, use, occupancy or operation thereof; (ix) all insurance proceeds and condemnation awards arising out of or incidental to the ownership, development, construction, use, occupancy or operation of the Property; (x) all reserves, deferred payments, deposits, refunds, cost savings, bonds, insurance policies and payments of any kind relating to the Property; (xi) all loan commitments issued to Trustor in connection with any sale or financing of the Property; (xii) all water stock, if any, relating to any Property and all shares of stock or other evidence of ownership of any part of or interest in any Property that is owned by Trustor in common with others; and (xiii) all supplements, modifications and amendments to the foregoing. (c) All fixtures located upon or within the Property or now or hereafter attached to, installed in, or used or intended for use in connection with the Property, including without limitation any and all partitions, generators, screens, awnings, boilers, furnaces, pipes, plumbing, elevators, cleaning, call and sprinkler systems, fire extinguishing apparatus and equipment, water tanks, heating ventilating, air conditioning and air cooling equipment, and gas and electric machinery and equipment. (d) All present and future accessories, additions, attachments, replacements and substitutions of or to any or all of the foregoing. (e) All cash and noncash proceeds and products of any and all of the foregoing, including without limitation all monies, deposit accounts, insurance proceeds and other tangible or intangible property received upon a sale or other disposition of any of the foregoing. 882/015610.0052 353901.02 AM03 -2 STATE OF CALIFORNIA COUNTY OF RIVERSIDE On personally appeared ss before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] STATE OF CALIFORNIA ) ) ss COUNTY OF RIVERSIDE ) On , before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 11� 882/015610-0052 353901.02 AM03 -3- STATE OF CALIFORNIA COUNTY OF RIVERSIDE On personally appeared ss before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 882/015610-0052 353901.02 AM03 -4- DRAFT ATTACHMENT NO. 6 SCOPE OF DEVELOPMENT Hotel/Spa/Conference Facilities L GENERAL SUMMARY This document outlines the general requirements for the improvements to be constructed on the Hotel Parcel. Specific details are addressed in the Santa Rosa Specific Plan SP2000-050 ("Specific Plan"), and in the construction plans that will be prepared for the development. The Hotel Parcel is Parcel 8 as identified in the land use plan of the Specific Plan, and is 324,958 square feet in size. The Specific Plan provides for the development of a 4-story, hotel/spa/conference facility of approximately 141,947 square feet in size (the "Hotel Facility"). The Hotel Facility is proposed to be an Embassy Suites hotel, containing approximately 146 guest rooms. The final room count will be determined when the construction plans are completed. H. DEVELOPMENT CONCEPT The Hotel Parcel shall be improved by the Developer in accordance with the provisions of this Agreement, the Specific Plan, and all applicable codes, ordinances, and statutes including requirements and procedures set forth in the La Quinta Municipal Code, and the Redevelopment Plan regulations adopted in conjunction with or subsequent to execution of this Agreement. III. ON -SITE DEVELOPMENT AND IMPROVEMENTS Developer shall prepare such plans, reports, and studies, and obtain such permits and approvals as required, including, but not limited to, grading plans for construction of the Hotel Facility. Plans shall be prepared by a licensed civil engineer in good standing and subject to the approval of the Director of Public Works. Developer shall grant and permit all necessary and appropriate utility easements and rights for the development of the Hotel Facility, including but not limited to sanitary sewers, storm drains, water, electrical power, telecommunications, natural gas, cable television, etc. IV. LANDSCAPING Developer shall be responsible to fully landscape the Hotel Facility in accordance with the Specific Plan and landscape plans approved by the City. V. PUBLIC IMPROVEMENTS Developer shall be responsible for the construction of those public improvements that may be identified per the Specific Plan for the Hotel Facility. With respect thereto, Developer shall be responsible for obtaining and delivering to the City such bonds or other improvement security as 882/015610-0052 ' 292872.02 PM03 DRAFT City may require in accordance with applicable law, including but not limited to payment and performance bonds. VI. DEVELOPMENT STANDARDS All development on the Hotel Parcel shall conform to the development standards set forth in the Specific Plan, and other applicable City codes and development standards. its 882/015610-0052 292872.02 PM03 -2- DRAFT ATTACHMENT NO. 7 RELEASE OF CONSTRUCTION COVENANTS [See Following Pages] t19 CIO 882/015610-0052 292872.02 PM03 DRAFT RECORDING REQUESTED BY, AND WHEN RECORDED MAIL TO: BISON HOTEL GROUP LLC Attn: This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383 RELEASE OF CONSTRUCTION COVENANTS THIS RELEASE OF CONSTRUCTION COVENANTS (the "Release") is made by the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"), in favor of BISON HOTEL GROUP LLC, a California limited liability company (the "Developer"), as of RECITALS A. The Agency and the Developer have entered into that certain Disposition and Development Agreement (the "DDA") dated , 2003 concerning the redevelopment of certain real property situated in the City of La Quinta, California as more fully described in Exhibit "A" attached hereto and made a part hereof. B. As referenced in Section 310 of the DDA, the Agency is required to furnish the Developer or its successors with a Release of Construction Covenants upon completion of construction of the Hotel Facility (as defined in Section 100 of the DDA), which Release is required to be in such form as to permit it to be recorded in the Recorder's office of Riverside County. This Release is conclusive determination of satisfactory completion of the construction and development required by the DDA. C. The Agency has conclusively determined that such construction and development has been satisfactorily completed. NOW, THEREFORE, the Agency hereby certifies as follows: 1. The Hotel Facility to be constructed by the Developer has been fully and satisfactorily completed in conformance with the DDA. Any operating requirements and all use, maintenance or nondiscrimination covenants contained in the DDA and other documents executed and recorded pursuant to the DDA shall remain in effect and enforceable according to their terms. 2. This Release of Construction Covenants does not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any holder of a mortgage or any insurer of a mortgage security money loaned to finance the work of construction if improvements and development of the real property described in Exhibit "A," or any part hereof. 1^0 882/015610-0052 292872.02 PM03 DRAFT 3. This Release of Construction Covenants does not denote completion of any work required to be completed, other than on the real property described in Exhibit "A." 4. This Release of Construction Covenants is not a notice of completion as referred to in Section 3093 of the California Civil Code. 5. Nothing contained in this instrument shall modify in any other way any other provisions of the DDA. IN WITNESS WHEREOF, the Agency has executed this Release as of the date set forth above. LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic Its: ATTEST: Agency Secretary APPROVED BY DEVELOPER: BISON HOTEL GROUP LLC, a California limited liability company LI-A Its: 1?1 882/015610-0052 292872.02 PM03 -2- 1: EXHIBIT "A" HOTEL PARCEL DESCRIPTION [TO BE ATTACHED] 12^ 882/015610-0052 292872.02 PM03 -3- DRAFT STATE OF CALIFORNIA ) ) ss COUNTY OF On personally appeared before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. [SEAL] STATE OF CALIFORNIA ) ) ss COUNTY OF On personally appeared Notary Public before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 1?� 882/015610-0052 292872.02 PM03 -4- DRAFT ATTACHMENT NO. 8 COMMERCIAL PARCELS LEGAL DESCRIPTION 1''4 882/015610.0052 292872.02 PM03 ATTACHMENT NO. 9 COMMERCIAL PARCELS SITE MAP Y?s 882/015610-0052 292872.02 PM03 DRAFT ATTACHMENT NO. 10 COMMERCIAL PARCELS GRANT DEED 882/015610-0052 s } 292872.02 PM03 DRAFT RECORDING REQUESTED BY, MAIL TAX STATEMENTS TO AND WHEN RECORDED MAIL TO: Bison Hotel Group LLC Attn: This document is exempt from payment of a recording fee pursuant to Government Code Section 27383 GRANT DEED (COMMERCIAL PARCELS) For valuable consideration, receipt of which is hereby acknowledged, The LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"), acting to carry out the Redevelopment Plan ("Redevelopment Plan") for the La Quinta Redevelopment Project No. 1 (the "Project Area"), under the Community Redevelopment Law of California, hereby grants to BISON HOTEL GROUP LLC, a California limited liability company ("Developer"), the real property hereinafter referred to as the "Commercial Parcels," described in Exhibit A attached hereto and incorporated herein, subject to the existing easements, restrictions and covenants of record described there. 1. Reservation of Mineral Rights. Agency excepts and reserves from the conveyance herein described all interest of the Agency in oil, gas, hydrocarbon substances and minerals of every kind and character lying more than five hundred (500) feet below the surface, together with the right to drill into, through, and to use and occupy all parts of the Commercial Parcels lying more than five hundred (500) feet below the surface thereof for any and all purposes incidental to the exploration for and production of oil, gas, hydrocarbon substances or minerals from said Commercial Parcels or other lands, but without, however, any right to use either the surface of the Commercial Parcels or any portion thereof within five hundred (500) feet of the surface for any purpose or purposes whatsoever, or to use the Commercial Parcels in such a manner as to create a disturbance to the use or enjoyment of the Commercial Parcels. 2. Commercial Parcels Conveyance in Accordance With Redevelopment Plan, Disposition and Development Agreement. The Commercial Parcels is conveyed in accordance with and subject to the Redevelopment Plan for the La Quinta Redevelopment Project No. 1 ("Redevelopment Plan") which was approved and adopted by Ordinance No. 43, on November 29, 1983, and amended by Ordinance No. 258, on December 20, 1994, of the City Council of the City of La Quinta, and a Disposition and Development Agreement entered into between Agency and Developer dated , 2003 (the "DDA"),a copy of which is on file with the Agency at its offices as a public record and which is incorporated herein by reference. The DDA generally requires the Developer to develop and use the Commercial Parcels for commercial uses consistent with the Redevelopment Plan, and other requirements as set forth therein. All terms used herein shall have the same meaning as those used in the DDA. 882/015610-0052 .a- 292872.02 PM03 er. DRAFT 3. Permitted Uses. The Developer covenants and agrees for itself, its successors, its assigns, and every successor in interest to the Commercial Parcels or any part thereof, that upon the date of this Grant Deed (Commercial Parcels) ("Grant Deed") and during construction through completion of development and thereafter, the Developer shall devote the Commercial Parcels to the uses specified in the Redevelopment Plan for the periods of time specified therein. All uses conducted on the Commercial Parcels, including, without limitation, all activities undertaken by the Developer pursuant to the DDA, shall conform to the DDA, the Redevelopment Plan, and all applicable provisions of the City Municipal Code. The foregoing covenants shall run with the land. 4. Restrictions on Transfer. The Developer further agrees that for the period commencing upon the date of this Grant Deed and until the date Developer has paid to Agency all sums then -owed under the Commercial Parcels Promissory Note and the Hotel Parcel Promissory Note ("Operating Covenant Termination Date"), no voluntary or involuntary successor in interest of the Developer shall acquire any rights or powers under the DDA or this Grant Deed, nor shall the Developer make any total or partial sale, transfer, conveyance, assignment, subdivision, refinancing or lease of the whole or any part of the Commercial Parcels or any improvements located thereon, except as permitted or approved by the Agency pursuant to Section 703 of the DDA. 5. Binding on Successors. All of the terms, covenants and conditions of this Grant Deed shall be binding upon the Developer and the permitted successors and assigns of the Developer. Whenever the term "Developer" is used in this Grant Deed, such term shall include any other successors and assigns as herein provided. 6. Nondiscrimination. The Developer herein covenants by and for itself, its heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the Developer itself or any person claiming under or through Developer, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land. The Developer shall refrain from restricting the rental, sale or lease of the Commercial Parcels on the basis of race, color, religion, sex, marital status, ancestry or national origin of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the f 7� 882/015610-0052 1 292872.02 PM03 -2- selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin, or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased." (c) In contracts relating to the disposition of the realty: "There shall be no discrimination against or segregation of, any person, or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the premises." 7. Violations Do Not Impair Liens. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Grant Deed shall defeat or render invalid or in any way impair the lien or charge of any mortgage or deed of trust or security interest permitted by Section 703 of the DDA. 8. Covenants Run With Land. All covenants contained in this Grant Deed shall be covenants running with the land. All of Developer's obligations hereunder, except as otherwise provided hereunder, shall terminate and shall become null and void upon the expiration of the effectiveness of the Redevelopment Plan. Every covenant contained in this Grant Deed against discrimination contained in paragraph 6 of this Grant Deed shall remain in effect in perpetuity. 9. Covenants For Benefit of Agency. All covenants without regard to technical . classification or designation shall be binding for the benefit of the Agency, and such covenants shall run in favor of the Agency for the entire period during which such covenants shall be in force and effect, without regard to whether the Agency is or remains an owner of any land or interest therein to which such covenants relate. The Agency, in the event of any breach of any such covenants, shall have the right to exercise all the rights and remedies and to maintain any actions at law or suits in equity or other proper proceedings to enforce the curing of such breach. 10. Revisions to Grant Deed. Both Agency, its successors and assigns, and Developer and the successors and assigns of Developer in and to all or any part of the fee title to the Commercial Parcels shall have the right with the mutual consent of the Agency to consent and agree to changes in, or to eliminate in whole or in part, any of the covenants, easements or 882/015610-0052 3_ II 292872.02 PM03 _�' restrictions contained in this Grant Deed without the consent of any tenant, lessee, easement holder, licensee, mortgagee, trustee, beneficiary under a deed of trust or any other person or entity having any interest less than a fee in the Commercial Parcels. However, Developer and Agency are obligated to give written notice to and obtain the consent of any first mortgagee prior to consent or agreement between the parties concerning such changes to this Grant Deed. The covenants contained in this Grant Deed, without regard to technical classification, shall not benefit or be enforceable by any owner of any other real property within or outside the Project Area, or any person or entity having any interest in any other such realty. No amendment to the Redevelopment Plan shall require the consent of the Developer, but no such amendment shall diminish or restrict the Developer's rights or expand the Developer's obligations hereunder or under the DDA without the Developer's consent. AGENCY: LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic Executive Director ATTEST: Secretary of the Agency APPROVED AS TO FORM: RUTAN & TUCKER, LLP M. Katherine Jenson Agency Counsel DEVELOPER: BISON HOTEL GROUP LLC, a California limited liability company By: Its: 1,'3� 882/015610-0052 292872.02 PM03 -4- M : a] III I' STATE OF CALIFORNIA ) ) ss COUNTY OF On personally appeared before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. [SEAL] STATE OF CALIFORNIA ) ss COUNTY OF ) On personally appeared Notary Public before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 131 882/015610-0052 292872.02 PM03 -5- DRAFT EXHIBIT A LEGAL DESCRIPTION OF COMMERCIAL PARCELS [TO BE INSERTED] .p ON 882/015610-0052 292872.02 PM03 DRAFT ATTACHMENT NO. 11 COMMERCIAL PARCELS PROMISSORY NOTE 882/015610-0052 292872.02 PM03 DRAFT COMMERCIAL PARCELS PROMISSORY NOTE 2003 ("Commercial Parcels Note Date") $1,840,000 ("Principal Amount") FOR VALUE RECEIVED, the undersigned (herein, the "Maker") hereby promises to pay to the order of the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic ("Holder" or "Agency"), at a place designated by Holder, the principal sum of ONE MILLION EIGHT HUNDRED FORTY THOUSAND DOLLARS ($1,840,000) ("Principal Amount"), plus accrued interest, or such lesser amount which shall from time to time be owing hereunder pursuant to the terms hereof. The principal sum hereof is Maker's purchase price for certain real property (the "Commercial Parcels") that Maker purchased from Holder for purposes of redeveloping the same pursuant to that certain Disposition and Development Agreement by and between Maker and Holder, dated , 2003 ("DDA"), all as further set forth therein. Reference is also made to the following additional agreements and documents, involving Maker and Holder and/or pertaining to the Commercial Parcels: (i) Deed of Trust (Commercial Parcels) with Assignment of Rents and Rider Attached Hereto entered into on even date herewith by and among Maker as borrower, Holder as beneficiary, and as Trustee, and recorded in the Office of the Riverside County Recorder ("Commercial Parcels Deed of Trust"). The Commercial Parcels Deed of Trust partially secures repayment of this Commercial Parcels Note. (ii) Hotel Parcel Promissory Note entered into by and between Maker and Holder on , 2003, which Hotel Parcel Promissory Note describes the payment terms for Maker's payment to Holder of the Hotel Parcel Purchase Price. At or prior to the time Maker executes this Commercial Parcels Note an executed copy of the Hotel Parcel Note shall be attached hereto as Exhibit "A". (iii) Deed of Trust (Hotel Parcel) with Assignment of Rents Hereto Containing Terms Including Security Agreement entered into by and among Maker as borrower, Holder as Trustee, on and recorded in the Office of the Riverside Co , 2003, as Instrument No. and Rider Attached and Fixture Filing as beneficiary, and 12003, inty Recorder, on ("Hotel Parcel Deed of Trust"). The Hotel Parcel Deed of Trust partially secures repayment of the Hotel Parcel Promissory Note. (iv) Operating Covenant by and between Maker and Holder, for the benefit of Holder, and recorded in the Office of the Riverside County Recorder ("Operating Covenant"). The DDA, Commercial Parcels Deed of Trust, Hotel Parcel Promissory Note, Hotel Parcel Deed of Trust, and Operating Covenant are referred to herein collectively as the "Agency Agreements." The Agency Agreements are incorporated herein as though fully set forth. Except 882/015610-0052 353659.02 PM03 -I- 134 DRAFT as otherwise provided herein, the defined terms used in this Commercial Parcels Note shall have the same meaning as set forth in the DDA. 1. Principal Amount. The principal amount of this payment obligation shall be ONE MILLION EIGHT HUNDRED FORTY THOUSAND DOLLARS ($1,840,000) ("Principal Amount'). Interest shall accrue on the outstanding balance of the Principal Amount at two percent (2%) over the prime rate then being charged by Bank of America, N.A., compounded monthly, and adjusted annually on July 1st of each year during the term of this Commercial Parcels Note. Interest shall accrue as set forth in Section 3 in the event of a Maker default. 2. Term of Commercial Parcels Note, Payment. Payment of the Principal Amount shall be through monthly installment payment amounts. 2.1 Subject to the provisions of Section 3 herein, which provide for acceleration of the then outstanding principal and accrued interest and immediate payment thereof in the event of a default by Maker: (A) Maker shall commence payments of principal and interest on this Commercial Parcels Note on the first day of the first month following the Commercial Parcels Note Date. (B) Maker shall pay to Holder the Principal Amount and interest thereon (at the rate specified in Paragraph 1) in accordance with the "Amortization Schedule" (as that term is defined below). 2.2 At the time of execution hereof, Holder shall provide Maker with an amortization schedule showing repayment of the Principal Amount and interest thereon (at the rate specified in Paragraph 1) in a number of payments that equals the number of months remaining under the term of the Hotel Parcel Note. The amount of each monthly payment shall be based upon a fifteen (15) year amortization schedule, with all but the last payment in equal amounts and the last payment a "balloon" payment in the amount of the then -remaining balance of the Principal Amount plus all accrued and unpaid interest thereon ("Amortization Schedule"). For example, if, at the time this Commercial Parcels Note is executed, thirty monthly payments are remaining under the Hotel Parcel Note, Maker's Amortization Schedule shall reflect a thirty -month repayment term, calculated at the then applicable rate of interest (as described in Paragraph 1), and based upon a fifteen year amortization schedule, with the first twenty-nine payments in equal amounts and the last payment the balloon payment in the amount required to repay in full the then remaining balance of the Principal Amount plus all accrued and unpaid interest thereon. 2.3 Notwithstanding the foregoing, this Commercial Parcels Note shall be deemed paid in full when Maker, through monthly payments, has repaid the Holder an amount equal to the Principal Amount plus interest, as set forth in this Commercial Parcels Note. 2.4 Maker shall have the right to prepay all or any portion of this Commercial Parcels Note at any time without penalty, and upon such repayment the Commercial Parcels Deed of Trust shall be reconveyed. Prepayment shall not affect the Operating Covenant or the term of the Operating Covenant, except as set forth in the DDA and the Operating Covenant. 882/015610-0052 353659.02 PM03 -2- DRAFT 2.5 Any payments made by Maker in payment of this Commercial Parcels Note shall be applied in the following order: (i) first to the interest then accrued and due on the unpaid principal balance under this Commercial Parcels Note, (ii) second to reduction of the principal balance of this Commercial Parcels Note. 3. Default; Acceleration; Cross -Default. In the event: 3.1 Maker fails to timely make a payment required by this Commercial Parcels Note within ten (10) days following the due date of any payment due hereunder; or 3.1 Maker fails to timely make any other payment due hereunder within ten (10) days after notice thereof from Holder; or 3.2 Maker is in material default of any of the covenants, terms, or provisions of this Commercial Parcels Note, or any of the Agency Agreements, and Maker fails to timely cure such default under the terms of the applicable agreement, it being understood and agreed by Maker that a default of this Commercial Parcels Note, or of any of the Agency Agreements shall be a default of all of the foregoing listed documents; then Maker shall be in default of this Commercial Parcels Note, and the remaining balance of the Principal Amount and all accrued interest thereon shall become immediately due and payable. The rate of interest applicable to periods of default for the defaults set forth in this Section 3 shall be calculated at the lesser of ten percent (10%) per annum or the maximum legal rate, and shall accrue as of the date such payment was originally due. 4. Collection Costs; Attorneys' Fees. If, because of any event of default under this Commercial Parcels Note or any of the Agency Agreements, any attorney is engaged by Holder to enforce or defend any provision of this instrument, whether or not suit is filed hereon, then Maker shall pay upon demand reasonable attorneys' fees, expert witness fees and all costs so incurred by Holder together with interest thereon until paid at the applicable rate of interest payable hereunder, as if such fees and costs had been added to the principal owing hereunder. 5. Waivers by Maker. Maker and all endorsers, guarantors and persons liable or to become liable on this Commercial Parcels Note waive presentment, protest and demand, notice of protest, demand and dishonor and nonpayment of this Commercial Parcels Note and any and all other notices or matters of a like nature, and consent to any and all renewals and extensions near the time of payment hereof and agree further that at any time and from time to time without notice, the terms of payment herein may be modified or the security described in any documents securing this Commercial Parcels Note released in whole or in part, or increased, changed or exchanged by agreement between Holder and any owner of the premises affected by said documents securing this Commercial Parcels Note, without in any way affecting the liability of any party to this Commercial Parcels Note or any persons liable or to become liable with respect to any indebtedness evidenced hereby. 6. Severability. The unenforceability or invalidity of any provision or provisions of this Commercial Parcels Note as to any persons or circumstances shall not render that provision or those provisions unenforceable or invalid as to any other provisions or circumstances, and all provisions hereof, in all other respects, shall remain valid and enforceable. 136 882/015610-0052 353659.02 PM03 -3- r.. 1', 7. Modifications. Neither this Commercial Parcels Note nor any term hereof may be waived, amended, discharged, modified, changed or terminated orally; nor shall any waiver of any provision hereof be effective except by an instrument in writing signed by Maker and Holder. No delay or omission on the part of Holder in exercising any right hereunder shall operate as a waiver of such right or of any other right under this Commercial Parcels Note. 8. No Waiver by Holder. No waiver of any breach, default or failure of condition under the terms of this Commercial Parcels Note shall be implied from any failure of the Holder of this Commercial Parcels Note to take, or any delay be implied from any failure by the Holder in taking action with respect to such breach, default or failure from any prior waiver of any similar or unrelated breach, default or failure. 9. Usury. Notwithstanding any provision in this Commercial Parcels Note, the total liability for payment in the nature of interest shall not exceed the limit imposed by applicable laws of the State of California. 10. Nonassignability. Maker may only Transfer (as that term is defined in the DDA) this Commercial Parcels Note in accordance with provisions and restrictions pertaining to a transfer of the DDA as set forth in the DDA. Holder may freely Transfer Holder's interest in this Commercial Parcels Note in any manner, at Holder's sole discretion. 11. Governin) LLaw. This Commercial Parcels Note has been executed and delivered by Maker in the State of California and is to be governed and construed in accordance with the laws thereof. 12. Time of Essence. Time is of the essence in the performance of the obligations and provisions set forth in this Commercial Parcels Note. IN WITNESS WHEREOF, Maker has executed this Commercial Parcels Note as of the Commercial Parcels Note Date. "MAKER" BISON HOTEL GROUP LLC, a California limited liability company Its: 882/015610.0052 1 �. 353659.02 PM03 -4 EXHIBIT "A" HOTEL PARCEL PROMISSORY NOTE [Executed copy of Hotel Parcel Promissory Note to be attached] 882/015610-0052 353659.02 PM03 -5- DRAFT ATTACHMENT NO. 12 COMMERCIAL PARCELS DEED OF TRUST 882/015610-0052 292872.02 PM03 Recording Requested By And When Recorded Return to: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, CA 92253 Attn: Executive Director SPACE ABOVE THIS LINE FOR RECORDER'S USE EXEMPT FROM RECORDING FEE PER GOV. CODE § 6103 DEED OF TRUST (COMMERCIAL PARCELS) WITH ASSIGNMENT OF RENTS AND RIDER ATTACHED HERETO NOTE: RIDER ATTACHED TO THIS DEED OF TRUST This DEED OF TRUST (COMMERCIAL PARCELS) WITH ASSIGNMENT OF RENTS AND RIDER ATTACHED HERETO ("Deed of Trust"), is made , between BISON HOTEL GROUP LLC, a California limited liability company, herein called TRUSTOR, whose address is a California corporation, herein called TRUSTEE, and LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic, herein called BENEFICIARY. WITNESSETH: That Trustor grants to Trustee in trust, with power of sale, Trustor's estate, dated on or about the date hereof, in that property in the City of La Quinta, County of Riverside, State of California, described as: together with the rents, issues and profits thereof, subject, however, to the right, power and authority hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues and profits for the purpose of securing (1) payment of the sum of ONE MILLION EIGHT HUNDRED FORTY THOUSAND DOLLARS ($1,840,000), with interest thereon according to the terms of a promissory note or notes of even date herewith made by Trustor, payable to order of Beneficiary, and extensions or renewals thereof, (2) the performance of each agreement of Trustor incorporated by reference or contained herein; and (3) payment of additional sums and interest thereon which may hereafter be loaned to Trustor, or his successors or assigns, when evidenced by a promissory note or notes reciting that they are secured by this Deed of Trust. To protect the security of this Deed of Trust, and with respect to the Property above described, Trustor expressly makes each and all of the agreements, and adopts and agrees to perform and be bound by each and all of the terms and provisions set forth in subdivision A, and it is mutually agreed that each and all of the terms and provisions set forth in subdivision B of the fictitious deed of trust recorded in Orange County August 17, 1964, and in all other counties August 18, 1964, in the book and at the page of Official Records in the office of the county recorder of the county where said property is located, noted below opposite the name of such county, namely: COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE Alameda 1288 556 Kings 858 713 Placer 1028 379 Sierra 38 187 Alpine 3 130-31 Lake 437 110 Plumas 166 1307 Siskiyou 506 762 Amador 133 438 Lassen 192 367 Riverside 3778 347 Solano 1287 621 Butte 1330 513 Los Angeles T-3878 874 Sacramento 5039 124 Sonoma 2067 427 Calaveras 185 338 Madera 911 136 San Benito 300 405 Stanislaus 1970 56 Colusa 323 391 Marin 1849 122 San Bernardino 6213 768 Sutter 655 585 Contra Costa 4684 1 Mariposa 90 453 San Francisco A-804 596 Tehama 457 183 Del Norte 101 549 Mendocino 667 99 San Joaquin 2855 283 Trinity 108 595 El Dorado 704 635 Merced 1660 753 San Luis Obispo 1311 137 Tulare 2530 108 Fresno 5052 623 Modoc 191 93 San Mateo 4778 175 Tuolumne 177 160 Glenn 469 76 Mono 69 302 Santa Barbara 2065 881 Ventura 2607 237 Humboldt 801 83 Monterey 357 239 Santa Clara 6626 664 Yolo 769 16 Imperial 1189 701 Napa 704 742 Santa Cruz 1638 607 Yuba 398 693 140 882/015610-0052' 353910.01 PM02 JJSLLL COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE Inyo 165 672 Nevada 363 94 Shasta 800 633 Kern 3756 690 Orange 7182 18 San Diego SERIES 5 Book 1964, Page 149774 shall inure to and bind the parties hereto, with respect to the property above described. Said agreements, terms and provisions contained in said subdivisions A and B (identical in all counties, and printed on pages 3 and 4 hereof) are by the within reference thereto, incorporated herein and made a part of this Deed of Trust for all purposes as fully as if set forth at length herein, and Beneficiary may charge for a statement regarding the obligation secured hereby, provided the charge therefor does not exceed the maximum allowed by law. The undersigned Trustor, requests that a copy of any notice of default and any notice of sale hereunder be mailed to him at his address hereinbefore set forth. SEE RIDER ATTACHED TO THIS DEED OF TRUST STATE OF CALIFORNIA COUNTY OF Signature of Trustor } } BISON HOTEL GROUP LLC, a California limited liability company On before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signatures(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature (This area for official notarial seal) Its: 882/015610-0052 353910.01 PM02 -2 DO NOT RECORD The following is a copy of Subdivisions A and B of the fictitious Deed of Trust recorded in each county in California as stated in the foregoing Deed of Trust and incorporated by reference in said Deed of Trust as being a part thereof as if set forth at length therein. A. To protect the security of this Deed of Trust, Trustor agrees: 1) To keep said property in good condition and repair, not to remove or demolish any building thereon; to complete or restore promptly and in a good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor, to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property may be reasonably necessary, the specific enumerations herein not excluding the general. 2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary. The amount collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured hereby and in such order as Beneficiary may determine, or at the option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. 3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed. 4) To pay: at least ten (10) days before delinquency all taxes and assessments affecting said property, including assessments on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on said property or any part thereof, which appear to be prior or superior hereto; all costs, fees and expenses of this Trust. Should Truster fail to make any payment or to do any act as herein provided, then Beneficiary of Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Truster from any obligation hereof, may: make or do the same is such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees. 5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from the date of expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof regarding the obligation secured hereby any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time when said statement is demanded. B. It is mutually agreed 1) That any award in connection with any condemnation for public use of or injury to said property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such moneys received by him in the same manner and with the same effect as above provided for disposition of proceeds of fire or other insurance. 2) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive his right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay. 3) That at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed and said note for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of said property; consent to the making of any map or plat thereof, join in granting any easement thereon, or join in any extension agreement or any agreement subordinating the lien or charge hereof. 4) That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed and said note to Trustee for cancellation and retention or other disposition as Trustee in its sole discretion may choose and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The Grantee in such reconveyance may be described as "the person or persons legally entitled thereto." 5) That as additional security, Truster hereby gives to and confers upon Beneficiary the right, power and authority, during the continuance of these Trusts, to collect the rents, issues and profits of said property, reserving unto Trustor the right, prior to any default by Trustor in payment of any indebtedness secured hereby or in the performance of any agreement hereunder, to collect and retain such rents, issues and profits as they become due and payable. Upon any such default (beyond any applicable cure period), Beneficiary may at any time without notice, either in person, by agent, or be a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured, enter upon and take possession of said property or any part thereof, in his own name sue for or otherwise collect 882/015610-0052 ' 353910.01 PM02 such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorney's fees, upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking possession of said property, the collecting of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. 6) That upon default by Truster in payment of any indebtedness secured hereby or in the performance of any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and of election to cause to be sold said property, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed, said note and all documents evidencing expenditures secured hereby. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Truster, shall sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Truster, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale. After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof, all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. 7) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed by the Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where said property is situated shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties. Said instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed is recorded and the name and address of the new Trustee. 8) That this Deed applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of the note secured hereby, whether or not named as Beneficiary herein. In this Deed, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. 9) That Trustee accepts this Trust when this Deed, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee. DO NOT RECORD REQUEST FOR FULL RECONVEYANCE TO TRUSTEE: The undersigned is the legal owner and holder of the note or notes and of all indebtedness secured by the foregoing Deed of Trust. Said note or notes, together with all other indebtedness secured by said Deed of Trust, have been fully paid and satisfied; and you are hereby requested and directed, on payment to you of any sums owing to you under the terms of said Deed of Trust, to cancel said note or notes above mentioned, an all other evidences of indebtedness secured by said Deed of Trust delivered to you herewith, together with the said Deed of Trust, and to reconvey, without warranty, to the parties designated by the terms of said Deed of Trust, all the estate now held by you under the same. Dated Please mail Deed of Trust, Note and Reconveyance to Do Not lose or destroy this Deed of Trust OR THE NOTE which it secures. Both must be delivered to the Trustee for cancellation before reconveyance will be made. 143 882/015610-0052 353910.01 PM02 _2_ RIDER TO DEED OF TRUST WITH ASSIGNMENT OF RENTS THIS RIDER TO DEED OF TRUST WITH ASSIGNMENT OF RENTS ("Rider") is executed this day of , by BISON HOTEL GROUP LLC, a California limited liability company, herein "Trustor," in favor of the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic, herein "Beneficiary," the same parties to that certain form Deed of Trust With Assignment of Rents, of even date hereto, to which this Rider is attached. This Rider is made a part of and is incorporated into said Deed of Trust. This Rider shall supersede any conflicting term or provision of the form Deed of Trust to which it is attached. Reference is made to (i) that certain Commercial Parcels Promissory Note by and between Trustor and Beneficiary, dated on or about the date set forth above, the payment of which by Trustor is secured by this Deed of Trust ("Commercial Parcels Promissory Note"), and (ii) to the Agency Agreements which are described in the Commercial Parcels Note. The parties hereto agree: 1. Property. The estate subject to this Deed of Trust is Trustor's fee estate in the real property legally described in the foregoing Deed of Trust to which this Rider is attached (the "Property"). 2. Obligations Secured. Trustor makes this grant and assignment for the purpose of securing the following obligations ("Secured Obligations"): a. Payment to Beneficiary of all indebtedness at any time owing under the terms of the Commercial Parcels Note; b. Payment and performance of all obligations of Trustor under this Deed of Trust; C. Payment and performance of all obligations of Trustor under the Agency Agreements. d. Payment and performance of all future advances and other obligations of Trustor or any other person, firm, or entity with the approval of Trustor, may agree to pay and/or perform (whether as principal, surety or guarantor) for the benefit of Beneficiary, when the obligation is evidenced by a writing which recites that it is secured by this Deed of Trust; and e. All modifications, extensions and renewals of any of the obligations secured hereby, however evidenced. 3. Obligations. The term "obligations" is used herein in its broadest and most comprehensive sense and shall be deemed to include, without limitation, all interest and charges, prepayment charges, late charges and fees at any time accruing or assessed on any of the Secured Obligations. 114 882/015610-0052 s' 353910.01 PM02 AAA " 4. Incorporation. All terms of the Commercial Parcels Note, Agency Agreements, and the Secured Obligations are incorporated herein by this reference. All persons who may have or acquire an interest in the Property shall be deemed to have notice of the terms of all of the foregoing documents. 5. Mortgagee -in -Possession. Neither the assignment of rents set forth in the Deed of Trust nor the exercise by Beneficiary of any of its rights or remedies hereunder shall be deemed to make Beneficiary a "mortgagee -in -possession" or otherwise liable in any manner with respect to the Property, unless Beneficiary, in person or by agent, assumes actual possession thereof. Nor shall appointment of a receiver for the Property by any court at the request of Beneficiary or by agreement with Trustor, or the entering into possession of the Property by such receiver, be deemed to make Beneficiary a "mortgagee -in -possession" or otherwise liable in any manner with respect to the Property. 6. No Cure. In the event Beneficiary collects and receives any rents under the Deed of Trust upon any default hereof, such collection or receipt shall in no way constitute a curing of the default. 7. Possession Upon Default. Upon the occurrence of and during the continuation of a default, Beneficiary, after having given notice and the applicable cure periods having expired with the default having not been cured (hereinafter, a "default"), may, at its option, without any action on its part being required and without in any way waiving such default, take possession of the Property in accordance with applicable law and have, hold, manage, lease and operate the same, on such terms and for such period of time as Beneficiary may deem proper, and may collect and receive all rents and profits, with full power to make, from time to time, all commercially reasonable alterations, renovations, repairs or replacements thereto as may seem proper to Beneficiary, and to apply such rents and profits to the payment of (a) the cost of all such alterations, renovations, repairs and replacements, and all costs and expenses incident to taking and retaining possession of the Property, and the management and operation thereof, and keeping the same properly insured; (b) all taxes, charges, claims, assessments, and any other liens which may be prior in lien or payment of the Commercial Parcels Note, and premiums for insurance, with interest on all such items; and (c) the indebtedness secured hereby, together with all costs and attorney's fees, in such order or priority as to any of such items as Beneficiary in its sole discretion may determine, any statute, law, custom or use to the contrary notwithstanding. Any amounts received by Beneficiary or its agents in the performance of any acts prohibited by the terms of this assignment, including, but not limited to, any amounts received in connection with any cancellation, modification or amendment of any lease prohibited by the terms of this assignment and any rents and profits received by Trustor after the occurrence of a default shall be held by Trustor as trustee for Beneficiary and all such amounts shall be accounted for to Beneficiary and shall not be commingled with other funds of the Trustor. Any person receiving any portion of such trust funds shall receive the same in trust for Beneficiary as if such person had actual or constructive notice that such funds were impressed with a trust in accordance therewith. 8. Receiver. In addition to any and all other remedies of Beneficiary set forth under this Deed of Trust or permitted at law or in equity, if a default shall have occurred and not have been cured within any applicable cure period, Beneficiary, to the extent permitted by law and ,14 882/015610-0052 n, 353910.01 PM02 -2- F without regard to the value, adequacy or occupancy of the security for the Commercial Parcels Note and other sums secured hereby, shall be entitled as a matter of right if it so elects to the appointment of a receiver to enter upon and take possession of the Property and to collect all rents and profits and apply the same as the court may direct, and such receiver may be appointed by any court of competent jurisdiction by ex parte application and without notice, notice of hearing being hereby expressly waived. The expenses, including receiver's fees, attorneys' fees, costs and agent's compensation, incurred pursuant to the power herein contained shall be secured by this Deed of Trust. 9. Security Agreement. This Deed of Trust also constitutes a Security Agreement with respect to all personal property in which Beneficiary is granted a security interest hereunder, and Beneficiary shall have all of the rights and remedies of a secured party under the Uniform Commercial Code as enacted in California (the "California Uniform Commercial Code") as well as all other rights and remedies available at law or in equity. Trustor hereby agrees to execute and deliver on demand and hereby irrevocably constitutes and appoints Beneficiary the attorney -in -fact of Trustor, to execute, deliver and, if appropriate, to file with the appropriate filing officer or office such security agreements, financing statements, continuation statements or other instruments as Beneficiary may request or require in order to impose, perfect or continue the perfection of, the lien or security interest created hereby. Trustor and Beneficiary agree that the filing of a financing statement in the record normally having to do with personal property shall never be construed as in any way derogating from or impairing the lien of this Deed of Trust and the intention of Trustor and Beneficiary that everything used in connection with the operation or occupancy of the Property is and at all times and for all purposes and in all proceedings, both legal and equitable, shall be regarded as real property or goods which are or are to become fixtures, irrespective of whether (i) any such item is physically attached to the buildings and improvements on the Property; (ii) serial numbers are used for the better identification of certain equipment items capable of being filed by the Beneficiary; or (iii) any such item is referred to or reflected in any such financing statement so filed at any time. Such mention in the financing statements is declared to be for the protection of the Beneficiary in the event any court or judge shall at any time hold that notice of Beneficiary's priority of interest must be filed in the California Commercial Code records to be effective against a particular class of persons, including, but not limited to, the federal government and any subdivision or entity of the federal government. Trustor covenants and agrees to reimburse Beneficiary for any costs incurred in filing such financing statement and any continuation statements. Upon the occurrence of default hereunder, Beneficiary shall have the right to cause any of the Property which is personal property and subject to the security interest of Beneficiary hereunder to be sold at any one or more public or private sales as permitted by applicable law, and Beneficiary shall further have all other rights and remedies, whether at law, in equity, or by statute, as are available to secured creditors under applicable law, specifically including without limitation the right to proceed as to both the real property and the personal property contained within the Property as permitted by Uniform Commercial Code Section 9501(4), including conducting a unified sale thereof. Any such disposition may be conducted by an employee or agent of Beneficiary or Trustee. Any person, including both Trustee and Beneficiary, shall be eligible to purchase any part or all of such property at any such disposition. 149 882/015610-0052 353910.01 PM02 -3 This Deed of Trust constitutes a fixture filing under Sections 9313 and 9402(6) of the California Uniform Commercial Code, as amended or recodified from time to time. 10. Notice to Beneficiary. Notices to Beneficiary shall be sent to Beneficiary addressed to: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, CA 92263 Attn: Executive Director [SIGNATURE ON NEXT PAGE] 147 882/015610-0052 353910.01 PM02 -4 IN WITNESS WHEREOF, Trustor has executed this Rider on the date of Trustor's acknowledgment hereinbelow, to be effective for all purposes as of the day and year first set forth above. STATE OF CALIFORNIA ) ss COUNTY OF ) On personally appeared TRUSTOR: BISON HOTEL GROUP LLC, a California limited liability company Its: before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 118 882/015610-0052 353910.01 PM02 DRAFT ATTACHMENT NO. 13 SCHEDULE OF PERFORMANCE' Item of Performance Time for Completion 1. Submission of Disposition and On or before January 7, 2003. Development Agreement. Developer shall submit to the Agency a copy of the Disposition and Development Agreement duly executed by the Developer. 2. Agency Consideration of Disposition and January 7, 2003. Development Agreement. Agency shall approve or disapprove the Disposition and Development Agreement. 3. Submission of Required Development Within 10 days of Agency approval of DDA. Application. Developer shall submit the Design Development Application to the City. 4. Developer and City Response. Developer Developer will respond to any request within shall respond to all requests by the City for 14 days. City will respond to any submission additional information and/or revisions to within 14 days. Tans. 5. City Council Hearing on Design Within 60 days of a determination by Development Drawings. The City Development Services of a complete Council will consider the proposed Design application. Development Application. 6. Submission of Construction Drawings Within 120 days after City Council approval of for Hotel Facility. Developer shall submit the proposed Design Development to the Development Services and Safety Application. Services departments complete revised Construction Drawings for Hotel Facility. 7. Development Services Review of Within 30 days after submittal. Construction Drawings. The Development Services department shall approve or disapprove the revised Construction Drawings for Hotel Facility. 1 All days are calendar days in this Schedule of Performance. 1 4'� 882/015610-0052 292872.02 PM03 Item of Performance Time for Revisions of Construction Drawings By Within 7 days after receipt of Development the Developer. Developer shall prepare Services' comments. revised Construction Drawings for the Hotel Facility as necessary, and resubmit them to the Development Services department for review. 9. Final Review of Complete Construction Drawings. The Development Services department shall approve or disapprove the revisions submitted by Developer for the Hotel Facility, and the Developer shall be ready to obtain grading and building permits, provided that the revisions necessary to accommodate the Department's comments have been made. Within 30 days after submittal by the Developer. 10. Opening of Hotel Parcel Escrow. The Developer to notify Agency 75 days prior to Agency shall open the Hotel Parcel Escrow the lender funding the Construction Loan. with Escrow Agent. 11. Conditions Precedent to Hotel Parcel Not later than 30 days prior to scheduled date Closing. Developer and Agency shall of Hotel Parcel Escrow Closing. satisfy (or waive) all of their respective Conditions Precedent to the Hotel Parcel Closing. 12. Close of Hotel Parcel Escrow. Agency shall convey the Hotel Parcel to the Developer. As soon as possible after the satisfaction of all Conditions Precedent to the Hotel Parcel Closing has occurred (within 30 days thereafter), not later than 90 days after the Effective Date (Subject to extension pursuant to Section 202.4 of the Agreement). 13. Commencement of Construction of Within 30 days following the Hotel Parcel Hotel Facility. Developer shall commence Closing. construction of the Hotel Facility by commencing grading of the Hotel Parcel. 14. Completion of Construction of Hotel Within 12 months following commencement of Facility. Developer shall complete construction of the Hotel Facility. construction of the Hotel Facility. 15. Opening of Commercial Parcels Escrow. I Within five (5) days after the Substantial 1 �© 882/015610-0052 292872.02 PM03 -2- �� j DRAFT Item of Performance Time for Completion The Agency shall open the Commercial Completion Date. Parcels Escrow with Escrow Agent. 16. Conditions Precedent to Commercial Not later than 30 days prior to scheduled date Parcels Closing. Developer and Agency of Commercial Parcels Escrow Closing. shall satisfy (or waive) all of their respective Conditions Precedent to the Commercial Parcels Closing. 17. Close of Commercial Parcels Escrow. As soon as possible after the satisfaction of all Agency shall convey the Commercial Conditions Precedent to the Commercial Parcels to the Developer. Parcels Closing has occurred (within 30 days thereafter), not later than 14 months after the Hotel Parcel Closing (Subject to extension ursuant to Section 402.4 of the Agreement). 151 882,015610.0052.E 292872.02 PM03 _3_ DRAFT ATTACHMENT NO. 14 PRELIMINARY DEVELOPMENT BUDGET Total Development Costs 882/015610-0052 '} 292872.02PM03 �'� DRAFT ATTACHMENT NO. 15 OPERATING COVENANT [See Following Pages] 153 882/015610-0052 292872.02 PM03 DRAFT RECORDING REQUESTED BY AND When Recorded Mail to: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, CA 92253 Attn: Executive Director This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383. OPERATING COVENANT THIS OPERATING COVENANT is made this day of , 2003, by and between the LA QUINTA REDEVELOPMENT AGENCY, a public body corporate and politic (the "Agency"), and BISON HOTEL GROUP LLC, a California limited liability company (the "Developer"), with reference to the following: A. The Agency and the Developer have executed a Disposition and Development Agreement (the "Agreement"), dated as of , 2003, which provides for the development of certain real property located in the City of La Quinta, County of Riverside, State of California, more fully described in Exhibit "A" attached hereto and incorporated herein by this reference (the "Hotel Parcel"). The Agreement is available for public inspection and copying at the office of the City Clerk, La Quinta City Hall, 78-495 Calle Tampico, La Quinta, California 92253. Capitalized terms used herein and not otherwise defined shall have the same meaning as set forth in Section 100 of the Agreement. B. The Agreement provides for, among other things, the Developer's execution and recordation of an operating covenant with respect to the improvements on the Hotel Parcel (the "Hotel Facility"). NOW, THEREFORE, the Developer hereby covenants as follows: 1. Operating Covenant. For a term commencing upon the date hereof and ending on the date Developer has fully repaid all sums then -owed on the Hotel Parcel Promissory Note and the Commercial Parcels Promissory Note ("Operating Covenant Termination Date"), the Developer hereby covenants and agrees to devote the Hotel Facility on the Hotel Parcel to hotel uses only and such use shall qualify as a transient occupancy use under Section 3.24 of the City Municipal Code. The Hotel Facility shall at all times be operated pursuant to a franchise, management or lease arrangement with a lessee, franchisee, manager or licensee operating under the "flag" name of Embassy Suites hotels. The foregoing covenants shall run with the land for the term of this Operating Covenant. Except with the prior written consent of the Agency for each instance, which consent may be granted or withheld in the Agency's reasonable discretion, the failure of the Developer to operate the Hotel Facility on the Hotel Parcel as required herein for thirty (30) or more consecutive days shall, at the Agency's option, constitute a default hereunder; provided, however, that the Developer shall for purposes of this Section 1 be deemed to be operating the Hotel Facility during any period that the Developer is prevented from operating the Hotel Facility due to (i) required or necessary rehabilitation of the Hotel Facility on the Hotel Parcel (provided that the period during which the Hotel Facility is not operated as a 154 882/015610-0052 f 292872.02 PM03 DRAFT result of the rehabilitation shall in no event exceed thirty (30) days), or (ii) events of force majeure as set forth in Section 602 of the Agreement. Developer shall exercise commercially reasonable efforts to operate the Hotel Facility on the Hotel Parcel in such a manner as to produce the maximum amount of transient occupancy taxes to be received by the City. In no event shall the Hotel Facility be used for residential purposes during the term of the Operating Covenant Term. 2. Performance of Maintenance. (a) Developer shall maintain the Hotel Parcel and the Hotel Facility in accordance with the Maintenance Standards, as hereinafter defined. Said improvements shall include, but not be limited to, buildings, sidewalks, pedestrian lighting, landscaping, irrigation of landscaping, architectural elements identifying the Hotel Parcel and any and all other improvements on the Hotel Parcel. (b) To accomplish the maintenance, Developer shall either staff or contract with and hire licensed and qualified personnel to perform the maintenance work, including the provision of labor, equipment, materials, support facilities, and any and all other items necessary to comply with the requirements of this Operating Covenant. (c) The following standards ("Maintenance Standards") shall be complied with by Developer and its maintenance staff, contractors or subcontractors: 1. Landscape maintenance shall include, but not be limited to: watering/irrigation; fertilization; mowing; edging; trimming of grass; tree and shrub pruning; trimming and shaping of trees and shrubs to maintain a healthy, natural appearance and safe road conditions and visibility, and irrigation coverage; replacement, as needed, of all plant materials; control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas; and staking for support of trees. 2. Clean-up maintenance shall include, but not be limited to: maintenance of all sidewalks, paths and other paved areas in clean and weed -free condition; maintenance of all such areas clear of dirt, mud, trash, debris or other matter which is unsafe or unsightly; removal of all trash, litter and other debris from improvements and landscaping prior to mowing; clearance and cleaning of all areas maintained prior to the end of the day on which the maintenance operations are performed to ensure that all cuttings, weeds, leaves and other debris are properly disposed of by maintenance workers. 3. All maintenance work shall conform to all applicable federal and state Occupational Safety and Health Act standards and regulations for the performance of maintenance. 4. Any and all chemicals, unhealthful substances, and pesticides used in and during maintenance shall be applied in strict accordance with all governing regulations. Precautionary measures shall be employed recognizing that all areas are open to public access. 5. The Hotel Parcel and Hotel Facility shall be maintained in conformance and in compliance with the approved Hotel Parcel construction and architectural 15� 882/015610-0052 -�- 292872.02 PM03 DRAFT plans and design scheme, as the same may be amended from time to time with the approval of the City, and reasonable commercial development maintenance standards for similar projects, including but not limited to: painting and cleaning of all exterior surfaces and other exterior facades comprising all private improvements and public improvements to the curbline. 6. The Hotel Parcel and Hotel Facility shall be maintained as required by this Section in good condition and in accordance with the custom and practice generally applicable to comparable business hotels located in Riverside County. 3. Failure to Maintain Hotel Parcel and Hotel Facility. In the event Developer does not maintain the Hotel Parcel or the Hotel Facility in the manner set forth herein and in accordance with the Maintenance Standards, Agency and/or City shall have the right to maintain such private and/or public improvements, or to contract for the correction of such deficiencies, after written notice to Developer. However, prior to taking any such action, Agency agrees to notify Developer in writing if the condition of said improvements do not meet with the Maintenance Standards and to specify the deficiencies and the actions required to be taken by Developer to cure the deficiencies. Upon notification of any maintenance deficiency, Developer shall have thirty (30) days within which to correct, remedy or cure the deficiency. If the written notification states the problem is urgent relating to the public health and safety of the City or the Agency, then Developer shall have forty-eight (48) hours to rectify the problem. In the event Developer fails to correct, remedy, or cure or has not commenced correcting, remedying or curing such maintenance deficiency after notification and after the period of correction has lapsed, then City and/or Agency shall have the right to maintain such improvements. Developer agrees to pay Agency such charges and costs. Until so paid, the Agency shall have a lien on the Hotel Parcel for the amount of such charges or costs, which lien shall be perfected by the recordation of a "Notice of Claim of Lien" against the Hotel Parcel. Upon recordation of a Notice of a Claim of Lien against the Hotel Parcel, such lien shall constitute a lien on the fee estate in and to the Hotel Parcel prior and superior to all other monetary liens except: (i) all taxes, bonds, assessments, and other levies which, by law, would be superior thereto; (ii) the lien or charge of any mortgage, deed of trust, or other security interest then of record made in good faith and for value, it being understood that the priority of any such lien for costs incurred to comply with this Agreement shall date from the date of the recordation of the Notice of Claim of Lien. Any such lien shall be subject and subordinate to any lease or sublease of the interest of Developer in the Hotel Parcel or any portion thereof and to any easement affecting the Hotel Parcel or any portion thereof entered into at any time (either before or after) the date of recordation of such a Notice. Any lien in favor of the Agency created or claimed hereunder is expressly made subject and subordinate to any mortgage or deed of trust made in good faith and for value, recorded as of the date of the recordation of the Notice of Claim of Lien describing such lien as aforesaid, and no such lien shall in any way defeat, invalidate, or impair the obligation or priority of any such mortgage or deed of trust, unless the mortgage or beneficiary thereunder expressly subordinates his interest, of record, to such lien. No lien in favor of the Agency created or claimed hereunder shall in any way defeat, invalidate, or impair the obligation or priority of any lease, sublease or easement unless such instrument is expressly subordinated to such lien. Upon foreclosure of any mortgage or deed of trust made in good faith and for value and recorded prior to the recordation of any unsatisfied Notice of Claim of Lien, the foreclosure -purchaser shall take title to the Hotel Parcel free of any lien imposed by 1 J� 882/015610-0052 292872.02 PM03 -3- DRAFT the Agency that has accrued up to the time of the foreclosure sale, and upon taking title to the Hotel Parcel, such foreclosure -purchaser shall only be obligated to pay costs associated with this Agreement accruing after the foreclosure -purchaser acquires title to the Hotel Parcel. If the Hotel Parcel is ever legally divided with the written approval of the Agency and fee title to various portions of the Hotel Parcel is held under separate ownerships, then the burdens of the maintenance obligations set forth herein and in this Agreement and the charges levied by the Agency to reimburse the Agency for the cost of undertaking such maintenance obligations of Developer and its successors and the lien for such charges shall be apportioned among the fee owners of the various portions of the Hotel Parcel under different ownerships according to the square footage of the land contained in the respective portions of the Hotel Parcel owned by them. Upon apportionment, no separate owner of a portion of the Hotel Parcel shall have any liability for the apportioned liabilities of any other separate owner of another portion of the Hotel Parcel, and the lien shall be similarly apportioned and shall only constitute a lien against the portion of the Hotel Parcel owned in fee by the owner who is liable for the apportioned charges levied by the Agency and secured by the apportioned lien and against no other portion of the Hotel Parcel. Developer acknowledges and agrees City and Agency may also pursue any and all other remedies available in law or equity. Developer shall be liable for any and all attorneys' fees, and other legal costs or fees incurred in collecting said maintenance costs. 4. Compliance with Law. Developer shall comply with all local, state and federal laws relating to the uses of or condition of the Hotel Parcel and the Hotel Facility. The operation of the Hotel Facility shall be in compliance with the requirements of the Conditional Use Permit issued by the City for the Hotel Facility. 5. Defaults. (a) Subject to the extensions of time set forth in Section 602 of the Agreement, failure or delay by either party to perform any term or provision of this Operating Covenant constitutes a default under this Operating Covenant. A party claiming a default shall give written notice of default to the other party, specifying the default complained of and the actions required to correct such default. (b) The claimant shall not institute proceedings against the other party if the other party within thirty (30) days from receipt of such notice immediately, with due diligence, commences to cure, correct or remedy such failure or delay and completes such cure, correction or remedy as soon as reasonably practicable after receipt of such notice. 6. Legal Actions. (a) In addition to any other rights or remedies and subject to the restrictions in Section 5, either party may institute legal action to seek specific performance of the terms of this Operating Covenant, or to cure, correct or remedy any default, or to obtain any other legal or equitable remedy consistent with the purpose of this Operating Covenant. Agency shall also have the right to pursue damages for Developer's defaults but in no event shall Developer be entitled to damages of any kind from Agency, including damages for economic loss, lost profits, or any other economic or consequential damages of any kind. Such legal actions must be instituted in the Superior Court of the County of Riverside, State of California, in an appropriate 157 F'fj y.« "1 . 882/015610-0052 292872.02 PM03 -4- DRAFT municipal court in that county, or in the Federal District Court in the Central District of California. In the event of any litigation between the parties hereto, the prevailing party shall be entitled to receive, in addition to the relief granted, its reasonable attorney's fees and costs and such other costs incurred in investigating the action and prosecuting the same, including costs for expert witnesses, costs on appeal, and for discovery. (b) The laws of the State of California shall govern the interpretation and enforcement of this Operating Covenant. (c) In the event that any legal action is commenced by the Developer against the Agency, service of process on the Agency shall be made by personal service upon the Executive Director or in such other manner as may be provided by law. (d) In the event that any legal action is commenced by the Agency against the Developer, service of process on the Developer shall be made by personal service upon any officer or director of the Developer and shall be valid whether made within or without the State of California or in such other manner as may be provided by law. (e) Except as otherwise expressly stated in this Operating Covenant, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. (f) Any failures or delays by either party in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies, or deprive either such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 7. Effect of Violation of the Terms and Provisions of this Operating Covenant. The covenants established in this Operating Covenant and the deeds shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency, its successors and assigns, as to those covenants which are for its benefit. The covenants contained in this Operating Covenant shall remain in effect for the periods of time specified therein. The Agency is deemed the beneficiary of the terms and provisions of this Operating Covenant and of the covenants running with the land, for and in its own rights and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Operating Covenant and the covenants running with the land have been provided. The Operating Covenant and the covenants shall run in favor of the Agency, without regard to whether the Agency has been, remains or is an owner of any land or interest therein in the Hotel Parcel or in the Project Area. The Agency shall have the right, if the Operating Covenant or covenants are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Operating Covenant and covenants may be entitled; provided, however, that notwithstanding the foregoing, in no event shall the City or Agency be entitled to foregone past or future tax revenues as a remedy for Developer's default of this Operating Covenant. 882/015610-0052 292872.02 PM03 -5- DRAFT 8. Miscellaneous Provisions. (a) If any provision of this Operating Covenant or portion thereof, or the application to any person or circumstances, shall to any extent be held invalid, inoperative or unenforceable, the remainder of this Operating Covenant, or the application of such provision or portion thereof to any other persons or circumstances, shall not be affected thereby; it shall not be deemed that any such invalid provision affects the consideration for this Operating Covenant; and each provision of this Operating Covenant shall be valid and enforceable to the fullest extent permitted by law. (b) This Operating Covenant shall be construed in accordance with the laws of the State of California. (c) This Operating Covenant shall be binding upon and inure to the benefit of the successors and assigns of the Developer. 9. Effect of Operating Covenant. The covenants and agreements established in this Operating Covenant shall, without regard to technical classification and designation, run with the land and be binding on each owner of the Hotel Parcel and any successor in interest to the Hotel Parcel, or any part thereof (including each parcel thereof), for the benefit of and in favor of the Agency, its successor and assigns, and the City of La Quinta. 10. Addendum. Upon the request of either party, the parties hereto shall record an addendum to this Operating Covenant which specifies the date of issuance of the certificate of occupancy for the Hotel Facility, as set forth in Section 1 hereof. [END — SIGNATURE PAGE FOLLOWS] 882/015610-0052 292872.02 PM03 -6- IN WITNESS WHEREOF, the parties hereto has executed this instrument the day and year first hereinabove written. AGENCY: LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic an Chairman ATTEST: Agency Secretary APPROVED AS TO FORM: RUTAN & TUCKER, LLP M. Katherine Jenson Agency Counsel DEVELOPER: BISON HOTEL GROUP LLC, a California limited liability company 882/015610-0052 292872.02 PM03 -7- DRAFT EXHIBIT "A" TO ATTACHMENT NO. 15 LEGAL DESCRIPTION OF HOTEL PARCEL [TO BE PROVIDED] 882/015610-0052 p 292872.02 PM03 -o DRAFT STATE OF CALIFORNIA ) ) ss COUNTY OF On , before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. [SEAL] STATE OF CALIFORNIA ) ) ss COUNTY OF On personally appeared Notary Public before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 882/015610-0052 292872.02 PM03 -9- DRAFT STATE OF CALIFORNIA ) ) ss COUNTY OF On personally appeared before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 16? 882/015610-0052 292872.02 PM03 -1 Q- ATTACHMENT #3 AGREEMENT FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS (HOTEL PARCEL) BY AND BETWEEN SANTA ROSA PLAZA, LLC ("SELLER") AND LA QUINTA REDEVELOPMENT AGENCY ("BUYER") 164 882/015610-0052 k W 292873.02 AM03 1 2 3. H 5 on 7. 8. 9. 10 TABLE OF CONTENTS Page PURCHASEPRICE......................................................................................................... l 1.1 Amount.................................................................................................................1 1.2 Payment of Purchase Price.................................................................................... I ESCROW..........................................................................................................................1 2.1 Opening of Escrow...............................................................................................1 2.2 Escrow Instructions...............................................................................................2 DUEDILIGENCE............................................................................................................2 3.1 Due Diligence.......................................................................................................2 3.1.1 Title/Survey...............................................................................................2 3.1.2 Environmental Condition..........................................................................3 3.2 Confidentiality...................................................................................................... 5 CLOSEOF ESCROW......................................................................................................5 4.1 Close of Escrow; Closing Date............................................................................. 5 4.2 Recordation; Release of Funds and Documents ................................................... 6 DELIVERY OF DOCUMENTS REQUIRED FROM BUYER AND SELLER.............6 5.1 Buyer's Obligations.............................................................................................. 6 5.2 Seller's Obligations...............................................................................................6 TITLEINSURANCE POLICY........................................................................................6 6.1 Title Policy............................................................................................................6 6.2 Payment for Title Policy....................................................................................... 7 REALPROPERTY TAXES.............................................................................................7 DISPOSITION AND DEVELOPMENT AGREEMENT................................................7 PROJECTENTITLEMENTS...........................................................................................7 CONDITIONS PRECEDENT TO CLOSING................................................................. 8 10.1 Conditions Precedent to Buyer's Obligations.......................................................8 10.2 Conditions Precedent to Seller's Obligations....................................................... 8 POSSESSION.................................................................................................................. 9 ALLOCATIONOF COSTS.............................................................................................9 12.1 Buyer's Costs........................................................................................................ 9 12.2 Seller's Costs......................................................................................................10 882/015610-0052 292873.02 AM03 Page 13 . INDEMNIFICATION.....................................................................................................10 14. CONDEMNATION........................................................................................................11 15. MISCELLANEOUS.......................................................................................................11 15.1 Assignment.........................................................................................................11 15.2 Attorney's Fees...................................................................................................11 15.3 Notices................................................................................................................11 15.4 Fair Meaning.......................................................................................................12 15.5 Headings.............................................................................................................12 15.6 Choice of Laws; Litigation Matters....................................................................12 15.7 Nonliability of Seller Officials............................................................................12 15.8 Gender; Number..................................................................................................12 15.9 Survival...............................................................................................................12 15.10 Time of Essence..................................................................................................12 15.11 Waiver or Modification.......................................................................................12 15.12 Broker's Fees......................................................................................................13 15.13 Duplicate Originals.............................................................................................13 15.14 Severability.........................................................................................................13 15.15 Exhibits...............................................................................................................13 15.16 Covenants of Seller.............................................................................................13 15.17 Corporate Authority............................................................................................13 15.18 Covenant Against Discrimination.......................................................................14 15.19 Entire Agreement; Amendment..........................................................................14 EXHIBITS Exhibit A Legal Description of the Property Exhibit B Form of Grant Deed Exhibit C Form of Affidavit of Non -Foreign Entity 882/015610-0052 292873.02 AM03 DRAFT AGREEMENT FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS THIS AGREEMENT FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS ("Agreement") is made and entered into as of , 2003 ("Effective Date") by and between SANTA ROSA PLAZA, LLC, a California limited liability company ("Seller"), and the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic ("Buyer"). As hereinafter used in this Agreement, the term "Buyer" shall mean Buyer and/or Buyer's nominee. RECITALS: A. Seller is the owner of that certain real property located in the City of La Quinta ("City"), County of Riverside, State of California, more particularly described in the legal description attached hereto as Exhibit "A" ("Property"). B. Buyer desires to purchase the Property from Seller and Seller desires to sell the Property to Buyer, on the terms and conditions set forth herein. AGREEMENT: NOW, THEREFORE, in consideration of the foregoing recitals and mutual covenants herein contained, the parties hereto agree as follows: 1. PURCHASE PRICE. 1.1 Amount. Subject to the terms of this Agreement, Buyer hereby agrees to purchase the Property from Seller and Seller agrees to sell the Property to Buyer, for the purchase price of One Million Six Hundred Thousand Dollars ($1,600,000.00) ("Purchase Price"). 1.2 Payment of Purchase Price. On or before 5:00 p.m. on the business day preceding the "Closing Date" (as that term is defined in Section 4.1) or such earlier time as required by "Escrow Holder" in order to close "Escrow" (as those terms are defined in Section 2.1) on the Closing Date, Buyer shall deposit with Escrow Holder in Good Funds (as used in this Agreement, the term "Good Funds" shall mean a confirmed wire transfer of immediately available funds, cashier's or certified check drawn on or issued by the office of a financial institution located in Riverside County, or cash) the Purchase Price, and such additional funds as may be required to meet Buyer's portion of the closing costs as hereinafter provided. 2. ESCROW. 2.1 Opening of Escrow. Closing of the sale of the Property shall take place through an escrow ("Escrow") to be established within three (3) business days after the execution of this Agreement by the parties hereto, with First American Title Company ("Escrow Holder") at its �y 882/015610-0052 167 292873.02 AM03 -1- " ~� DRAFT office located at 3625 Fourteenth Street, Riverside, CA 92502-0986. The opening of the Escrow (the "Opening of Escrow") shall be deemed to be the date that a fully executed copy of this Agreement is delivered to the Escrow Holder. Escrow Holder is instructed to notify Buyer and Seller in writing of the date of the Opening of Escrow. 2.2 Escrow Instructions. This Agreement, once deposited in Escrow, shall constitute the joint escrow instructions of Buyer and Seller to Escrow Holder. Additionally, if Escrow Holder so requires, Buyer and Seller agree to execute the form of escrow instructions that Escrow Holder customarily requires in real property escrows administered by it. In the event of any conflict or inconsistency between Escrow Holder's standard instructions and the provisions of this Agreement, the provisions of this Agreement shall supersede and be controlling. 3. DUE DILIGENCE. 3.1 Due Dili eg nce. As used herein, the term "Due Diligence Period" shall refer to a period of time to expire upon the date that is sixty (60) days after the Opening of Escrow. Buyer's obligation to consummate the transactions contemplated by this Agreement is subject to and conditioned upon Buyer's approval, deemed approval or waiver of the right to approve of the following contingencies set forth in this Section 3.1 (collectively, the "Contingencies"): 3.1.1 Title/Survey. Seller shall deliver to Buyer, within five (5) days after the Effective Date of this Agreement, a preliminary title report prepared by First American Title Company ("Title Company") describing the state of title of the Property together with copies of all underlying documents (collectively the "Preliminary Title Report"). Buyer may, at its sole cost and expense, obtain a current survey of the Property (the "Survey") provided it does so within thirty (30) days of the Effective Date. Notwithstanding anything herein to the contrary, Seller shall be obligated to remove all monetary encumbrances against the Property excluding non -delinquent real property taxes and assessments. Buyer shall notify Seller in writing of any objections Buyer may have to title exceptions contained in the Preliminary Title Report or matters shown on the Survey (if Buyer has obtained) no later than the date which is thirty (30) days after the later of (i) its receipt of the Preliminary Title Report or (ii) its receipt of the Survey within the time period set forth above ("Buyer's Objection Notice"). Buyer's approval or disapproval of the matters set forth in the Preliminary Title Report (and the Survey, if applicable) may be granted or withheld in Buyer's sole and absolute discretion. Buyer's failure to provide Seller with a Buyer's Objection Notice within said period shall constitute Buyer's approval of all exceptions to title shown on the Preliminary Title Report and all matters shown on the Survey (if Buyer has obtained). Seller shall have a period of fifteen (15) days after receipt of Buyer's Objection Notice in which to deliver written notice to Buyer ("Seller's Notice") of Seller's election to either (i) agree to remove the objectionable items on the Preliminary Title Report or Survey prior to the Close of Escrow, or (ii) decline to remove any such title exceptions or Survey matters and terminate Escrow and the obligations of Buyer and Seller to purchase and sell the Property under this Agreement. Seller's failure to provide Buyer with Seller's Notice within said period shall constitute Seller's election to remove the objectionable items on the Preliminary Title Report. If Seller notifies Buyer of its election to terminate rather than remove the objectionable items on the Preliminary Title Report or Survey, Buyer shall have the right, by written notice delivered to Seller within five (5) days after Buyer's receipt of Seller's Notice, to agree to accept the Property subject to the objectionable items, in which event Seller's election to 168 882/015610-0052 292873.02 AM03 -2- DRAFT terminate shall be of no effect, and Buyer shall take title at the Close of Escrow subject to such objectionable items without any adjustment to or credit against the Purchase Price. All exceptions to title shown on the Preliminary Title Report, other than those which Seller may agree to remove pursuant to this Section 3.1.1, shall be deemed to have been approved by Buyer unless Seller is notified otherwise in writing. Upon the issuance of any amendment or supplement to the Preliminary Title Report which adds additional exceptions, including any survey exceptions, the foregoing right of review and approval shall also apply to said amendment or supplement; provided, however, that Buyer's initial period of review and approval or disapproval of any such additional exceptions shall be limited to fifteen (15) days following receipt of notice of such additional exceptions. The process set forth above for Buyer's review and Seller's response shall apply to any review and response with respect to any amendment or supplement to the Preliminary Title Report, and the Closing shall be extended for such period as is necessary to allow for that review and response process to be completed. 3.1.2 Environmental Condition. Buyer shall have access to the Property, as described in this Section 3.1.2, in order to permit Buyer or its directors, engineers, analysts, officers, employees, agents, contractors, representatives, attorneys or advisors (collectively, the "Buyer Representatives") to investigate the Property. (a) During the Due Diligence Period, Seller shall permit Buyer and Buyer Representatives, at the sole cost and expense of Buyer, to conduct physical inspections of the Property, including the site work, soil, subsurface soils, drainage, seismic and other geological and topographical matters, location of asbestos, toxic substances, hazardous materials or wastes, if any, and any other investigations as Buyer deems prudent with respect to the physical condition of the Property in order to determine the Property's suitability for Buyer's intended development. In no event shall Buyer conduct any intrusive testing procedures on the Property without the prior written consent of Seller, which consent shall not be unreasonably withheld. Such investigations may be made by Buyer and/or Buyer Representatives during any normal business hours. Buyer shall also have the right to investigate all matters relating to the zoning, use and compliance with other applicable laws, codes, and ordinances which relate to the use and occupancy of the Property. Seller shall cooperate to assist Buyer in completing such inspections and special investigations at no cost or expense to Seller. Such inspections and investigations shall be conducted only upon no less than twenty-four (24) hours' notice to Seller and shall be conducted at such times and in such a manner as to minimize any disruption to the Property. Seller shall have the right, but not the obligation, to accompany Buyer during such investigations and/or inspections. (b) As a condition to any such entry, Buyer shall (i) conduct all work or studies in a diligent, expeditious and safe manner and not allow any dangerous or hazardous conditions to occur on the Property during or after such investigation; (ii) comply with all applicable laws and governmental regulations; (iii) keep the Property free and clear of all materialmen's liens, lis pendens and other liens arising out of the entry and work performed under this paragraph; (iv) maintain or assure maintenance of workers' compensation insurance (or state approved self-insurance) on all persons entering the property in the amounts required by the State of California; (v) provide to Seller prior to initial entry a certificate of insurance 882/015610-0052 292873.02 AM03 -3- DRAFT evidencing that Buyer and/or the persons entering the Property have procured and has in effect an all-risk public liability insurance policy meeting the following requirements: (1) the insurance shall be written on a per occurrence and not claims -made basis; (2) the amount of insurance shall be a combined single limit of not less than Two Million Dollars ($2,000,000.00) with a deductible or self -insured retention amount of not more than One Hundred Thousand Dollars ($100,000); (3) the policy shall name or be endorsed to Seller and Seller's officers, employees, agents, and representatives (collectively, "Seller & Seller Personnel") as additional insureds; (4) the insurance shall not contain any special limitations on the scope of protection afforded to Seller & Seller Personnel; (5) the policy shall not be canceled by the insurer or Buyer unless there is a minimum of thirty (30) days prior written notice to Seller; (6) the insurer shall waive subrogation rights against the Seller & Seller Personnel; and (7) the insurance shall be primary insurance and not contributory with any insurance Seller or Seller Personnel may have; and (8) the insurance shall apply separately to each insured against whom a claim is made or suit is brought, except with respect to the limits of the insurer's liability; and (vi) following Buyer's entry, repair any and all damage to the Property caused by such inspections or investigations in a timely manner. (c) Buyer shall promptly pay and discharge all demands for payment relating to Buyer's entry on and investigation of the Property and take all other steps to avoid the assertion of claims of lien against the Property. In the event a claim of lien is recorded by reason of Buyer's entry on the Property, Buyer, within twenty (20) days of such recordation, shall either (i) record or deliver a surety bond sufficient to release such claim or lien in accordance with applicable law; or (ii) provide Seller with such other assurance as Seller may require for the payment of the claim or lien. Seller may elect to record and post notices of non -responsibility from time to time on and about the Property. (d) Prior to expiration of the Due Diligence Period, Buyer shall notify Seller in writing ("Buyer's Property Objection Notice") of any objections Buyer may have to any physical or environmental conditions of the Property (the "Disapproved Property Matters"). Buyer's approval or disapproval of the physical and environmental conditions of the Property may be granted or withheld in Buyer's sole and absolute discretion. Buyer's failure to provide Seller with a Buyer's Property Objection Notice shall constitute Buyer's approval of the condition of the Property. Seller shall have a period of fifteen (15) days after receipt of Buyer's Property Objection Notice in which to deliver written notice to Buyer ("Seller's Response") of Seller's election to either (i) agree to remove the objectionable items prior to the Close of Escrow, or (ii) decline to remove the objectionable items and terminate Escrow and the obligations of Buyer and Seller to purchase and sell the Property under this Agreement. Seller's failure to provide Buyer with Seller's Response within said period shall constitute Seller's election to remove the objectionable items prior to the Close of Escrow. If Seller notifies Buyer of its election to terminate rather than remove the objectionable items, Buyer shall have the right, by written notice delivered to Seller within five (5) days after Buyer's receipt of Seller's Response, to agree to accept the Property subject to the objectionable items, in which event Seller's election to terminate shall be of no effect, and Buyer shall take title at the Close of Escrow subject to such objectionable items without any adjustment to or credit against the Purchase Price. Buyer's inspections and investigations of the Property shall be conducted upon the terms and conditions set forth in this Agreement. 882/015610-0052 292873.02 AM03 -4- "^� DRAFT In the event Buyer's inspections and investigations reveal the presence of "Hazardous Materials" (as that term is defined in Section 13 herein) that require remediation, Seller shall have the right but not the obligation to hire its own independent soils consultants to confirm the presence of such Hazardous Materials and the necessity of such remediation. The retention of, and confirmation by, such soils consultants shall occur, if at all, within thirty (30) days after the date on which Buyer has notified Seller of the presence of Hazardous Materials on the Property. If remediation is necessary the following shall apply: If the estimate of Buyer (or Buyer's consultants), as may be confirmed by Seller pursuant to its right, but not its obligation, to hire its own independent soils consultants, of the cost of remediation is not more than Twenty -Five Thousand Dollars ($25,000) ("Maximum Amount"), Seller, at no expense to Buyer, shall cause the remediation work to be performed and completed subject to all applicable laws and regulations. If the estimated cost for the remediation is greater than the Maximum Amount, Seller shall have the option to cause the remediation work to be performed and completed, subject to all applicable laws and regulations, or to terminate this Agreement. Any remediation work performed hereunder shall be completed prior to the Close of Escrow. 3.2 Confidentiality. Any and all information made available to Buyer under this Agreement or discovered by Buyer during its investigation of the Property shall be treated as confidential by Buyer and such information shall not be disclosed prior to the Close of Escrow without the prior written consent of Seller; provided, however, that Buyer may disclose said information (i) to any attorney, accountant, engineer or consultant providing services to Buyer in the normal and ordinary course of business, (ii) to a court or any other official body if said confidential information is subpoenaed by that court or official body; provided that Buyer notifies Seller, in writing, of the receipt of such subpoena, and (iii) if required to disclose such information pursuant to the California Public Records Act or other applicable law. Seller shall be permitted to pursue, at Seller's cost, such confidentiality order with or without Buyer. Additionally, if this Agreement terminates for any reason whatsoever, Buyer shall return to Seller all written information delivered by Seller to Buyer pursuant hereto, and all copies of such information made by Buyer, within ten (10) days after termination hereof. The provisions of this Section 3.2 shall survive any termination of this Agreement. 4. CLOSE OF ESCROW. 4.1 Close of Escrow; Closing Date. Provided that all of the conditions of this Agreement precedent to the "Close of Escrow" (as hereinafter defined) have been satisfied (or waived by the appropriate party) prior to or on the Closing Date, the Closing of this transaction for the sale and purchase of the Property shall take place on the date which is five (5) days after the date on which all of "Buyer's Conditions to Closing" and all of "Seller's Conditions to Closing" (as those terms are defined in Section 10) have been satisfied (or waived by the appropriate party); provided, however, in no event shall the Closing occur, if at all, later than the date which is one hundred fifty (150) days after the expiration of the Due Diligence Period ("Closing Date"). The terms "Close of Escrow" and the "Closing" are used herein to mean the time Seller's grant deed conveying fee title to the Property to Buyer is recorded in the Official Records of the Office of the County Recorder of Riverside ("Official Records"). If Escrow is not in a condition to close by the Closing Date, either party not then in default hereunder may, upon five (5) days advance written notice to the other party and Escrow Holder, elect to terminate this Agreement and the Escrow. No such termination shall release either party then in 882/015610-0052 292873.02 AM03 -5- DRAFT default from liability for such default. If neither party so elects to terminate this Agreement and the Escrow, Escrow Holder shall close the Escrow as soon as possible. 4.2 Recordation: Release of Funds and Documents. 4.2.1 Escrow Holder is directed, on the Closing Date, to record in the Official Records, the following documents in the order listed: (i) the grant deed in the form of the attached Exhibit `B" transferring title to the Property to Buyer ("Grant Deed"); (ii) any subdivision map required for the development of the Project; and (iii) such other and further documents as may be directed jointly by Buyer and Seller. 4.2.2 Upon the Closing, Escrow Holder shall deliver (i) the Purchase Price, less any of Seller's closing costs, to Seller, and (ii) conformed copies of all recorded documents to both Buyer and Seller. 5. DELIVERY OF DOCUMENTS REQUIRED FROM BUYER AND SELLER. 5.1 Buyer's Obligations. Buyer agrees that on or before 5:00 p.m. of the last business day immediately preceding the Closing Date, Buyer shall deposit or cause to be deposited with Escrow Holder the following: (a) the Purchase Price; and (b) any and all additional funds, instruments or other documents required from Buyer (executed and acknowledged where appropriate) as may be reasonably necessary in order for the Escrow Holder to comply with the terms of this Agreement. 5.2 Seller's Obligations._ Seller agrees that on or before 5:00 p.m. of the last business day immediately preceding the Closing Date, Seller shall deposit or cause to be deposited with Escrow Holder each of the following: (a) the executed and acknowledged Grant Deed; (b) a Certificate of Non -Foreign Status (the "Non -Foreign Affidavit") executed and acknowledged by Seller in the form attached hereto as Exhibit "C' ; and (c) all other funds, items, and instruments required from Seller (executed and acknowledged where appropriate) as may be reasonably necessary in order for Escrow Holder to comply with the provisions of this Agreement. 6. TITLE INSURANCE POLICY. 6.1 Title Policy. At the Closing Date, the Title Company, as insurer, shall issue an ALTA owner's standard coverage policy of title insurance ("Title Policy"), in favor of Buyer, as insured, with liability in the amount of the Purchase Price, subject to the following: (a) non -delinquent real property taxes and assessments; 882/015610-0052 -6- -' 292873.02 AM03 DRAFT (b) title exceptions approved or deemed approved by Buyer pursuant to Section 3.1.1 above; (c) title exceptions, if any, resulting from Buyer's entry onto the Property pursuant to the provisions of Section 3.1.2 above; (d) any other exceptions approved by Buyer; and (e) the standard printed conditions and exceptions contained in the ALTA standard owner's policy of title insurance regularly issued by the Title Company. 6.2 Payment for Title Policy. Seller shall be responsible for the charges for the Title Policy with coverage up to the amount of the Purchase Price. Buyer shall pay any additional coverage or endorsements it requests. Buyer may, at its election, request an ALTA extended policy of title insurance. Buyer shall pay the difference for the charges between the premium for the extended coverage title policy and the premium for the standard coverage title policy that Seller is responsible for hereunder. Buyer shall also pay for the ALTA survey, if applicable. 7. REAL PROPERTY TAXES. Upon Buyer's acquisition of fee title to the Property, the Property will be exempt from the payment of property taxes and assessments due to Seller's status as a public agency. Seller shall be responsible for paying for all property taxes or assessments assessed against the Property after the Closing for any period prior to the Closing. 8. DISPOSITION AND DEVELOPMENT AGREEMENT. Prior to either party's obligation to Close the Escrow, all of the following shall have occurred, within the time specified therefor: (i) Buyer and Bison Hotel Group LLC, a California limited liability company ("Developer"), shall have entered into that certain disposition and development agreement (the "DDA") pursuant to which Buyer shall agree to sell the Property to Developer and Developer shall agree to purchase the Property from Buyer and thereafter develop an Embassy Suites hotel on the Property (the "Project"), not later than thirty (30) days prior to the Closing; (ii) Buyer shall have approved Developer's financing for the Project, and such financing shall close and be available to Developer at the Closing; and (iii) Developer shall be prepared to purchase from Buyer, and Buyer shall be prepared to sell to Developer, the Property at the Closing. The failure of Developer and Buyer to satisfy any or all of the conditions set forth in clauses (i)-(iii) above shall not be a default of Seller or Buyer hereunder but shall constitute a failure of a condition precedent to Closing. Buyer and Seller further acknowledge that Section 205.1 of the DDA contains conditions that Developer will need to satisfy prior to the Closing ("DDA Predevelopment Conditions") and that Developer's satisfaction of the DDA Predevelopment Conditions (or Buyer's waiver thereof in Buyer's sole and absolute discretion) is thus a Buyer Condition to Closing as set forth in Section 10. 9. PROJECT ENTITLEMENTS. Prior to, and as both one of Seller's Conditions to Closing and one of Buyer's Conditions to Closing as set forth in Section 10, Developer shall have obtained from the City of La Quinta all permits and entitlements necessary for the development on the Property of a hotel, as further described in the DDA (the "Project") as required in this Agreement, the DDA, by applicable State law, by City code, and all other applicable law, including but not limited to any subdivision map required for the Project, any amendment to the 882/015610-0052 292873.02 AM03 -7- r DRAFT City's General Plan, any Specific Plan, any conditional use permit, any zone change, any variance, any vacation of public rights of way, and any approvals or certifications as required by the California Environmental Quality Act (California Public Resources Code § 21000 et seq.), the approval of which by the City is subject to the City's legislative discretion (all of the foregoing, the "Project Entitlements"). 1.0. CONDITIONS PRECEDENT TO CLOSING. 10.1 Conditions Precedent to Buyer's Obligations. The obligations of Buyer under this Agreement to purchase the Property and close the Escrow shall be subject to the satisfaction or signed written waiver by Buyer of each and all of the following conditions precedent (collectively "Buyer's Conditions to Closing"): (a) on the Closing Date, the Title Company shall be irrevocably committed to issue the Title Policy pursuant to Section 6 above insuring fee title to the Property as being vested in Buyer; (b) Escrow Holder holds all instruments and funds required for the Closing and will deliver to Buyer the instruments and funds, if any, accruing to Buyer pursuant to this Agreement; (c) except as otherwise permitted by this Agreement, all representations and warranties by the Seller in this Agreement shall be true on and as of the Closing Date as though made at that time and all covenants of Seller pursuant to this Agreement shall have been fulfilled by the Closing Date; (d) Buyer and the Developer have executed the DDA within the time set forth in Section 8, Developer has closed its construction loan, and Buyer is prepared to sell to Developer, and Developer is prepared to purchase from Buyer, the Property at the Closing; (e) Developer has obtained the Project Entitlements from the City of La Quinta, and any of the Project Entitlements that are required to be recorded in the Official Records are ready to and shall record concurrently with the Grant Deed in accordance with Section 4.2.1; (f) All of the DDA Predevelopment Conditions have been satisfied (or waived by Buyer in its sole and absolute discretion); (g) Seller is not in material default of any term or condition of this Agreement. In the event that any of Buyer's Conditions to Closing are not satisfied, deemed satisfied, or waived in a writing signed by Buyer prior to the expiration of the applicable period for satisfaction or waiver, Buyer may terminate this Agreement. 10.2 Conditions Precedent to Seller's Obligations. The obligations of Seller under this Agreement shall be subject to the satisfaction or signed written waiver by Seller of each and all of the following conditions precedent ("Seller's Conditions to Closing"): 1 "7 4 882/015610-0052 292873.02 AM03 -�- 5"' 4.1 DRAFT (a) Escrow Holder holds the Purchase Price and all other instruments and funds required for the Closing and will deliver to Seller the instruments and funds, including but not limited to the Purchase Price (less Seller's closing costs) accruing to Seller pursuant to this Agreement; (b) except as otherwise permitted by this Agreement, all representations and warranties by the Buyer in this Agreement shall be true on and as of the Closing Date as though made at that time and all covenants of Buyer pursuant to this Agreement shall have been fulfilled by the Closing Date; (c) Buyer and the Developer have executed the DDA within the time set forth in Section 8, Developer has closed its construction loan, and Buyer is prepared to sell to Developer and Developer is prepared to purchase from Buyer, the Property, at the Closing; (d) Developer has obtained the Project Entitlements from the City of La Quinta, and any of the Project Entitlements that are required to be recorded in the Official Records are ready to and shall record concurrently with the Grant Deed in accordance with Section 4.2.1; (e) Buyer is not in material default of any term or condition of this Agreement. In the event that any of Seller's Conditions to Closing are not satisfied, deemed satisfied, or waived in a writing signed by Seller prior to the expiration of the applicable period for satisfaction or waiver, Seller may terminate this Agreement. 11. POSSESSION. Possession of the Property shall be delivered by Seller to Buyer on the Closing Date. 12. ALLOCATION OF COSTS. 12.1 Buyer's Costs. Buyer shall pay the following costs: (a) fifty percent (50%) of Escrow Holder's escrow fee; (b) Buyer's own attorney's fees incurred in connection with this Agreement and the transactions contemplated hereby; (c) fifty percent (50%) of all the charges for recording the Grant Deed, if any; (d) the premium difference between the ALTA extended policy of title insurance and the ALTA standard coverage policy of title insurance if Buyer requests an extended policy; and (e) any additional title insurance coverages Seller is not required to pay for plus any title endorsements requested by Buyer. 882/015610-0052 292873.02 AM03 -9- w-•- DRAFT 12.2 Seller's Costs. Seller shall pay: (a) fifty percent (50%) of the Escrow Holder's escrow fee; (b) Seller's own attorney's fees in connection with this Agreement and the transactions contemplated hereby; (c) (d) and (e) this Agreement. Any documentary transfer taxes associated with the conveyance; fifty percent (50%) of all the charges for recording the Grant Deed, if any; the premium for the Title Policy that Seller is required to pay pursuant to 13. INDEMNIFICATION. Seller agrees to indemnify, defend and hold Buyer harmless from and against any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without limitation, attorneys' fees), resulting from, arising out of, or based upon (i) the presence, release, use, generation, discharge, storage or disposal of any "Hazardous Materials" (as that term is defined below) on, under, in or about, or the transportation of any such Hazardous Materials to or from, the Property which occurred prior to the Closing, or (ii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous Materials on, under, in or about to or from, the Property which occurred prior to the Closing. This indemnity shall include, without limitation, any damage, liability, fine, penalty, cost or expense arising from or out of any claim, action, suit or proceeding for personal injury (including sickness, disease or death), tangible or intangible property damage, compensation for lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, contamination, leak, spill, release or other adverse effect on the environment. At the request of the Seller, the Buyer shall cooperate with and assist the Seller in its defense of any such claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense; provided that the Buyer shall not be obligated to incur any expense in connection with such cooperation or assistance. For purposes of this Agreement, the term "Hazardous Materials" means any substance, material, or waste which is, or becomes, regulated by any local governmental authority, the State of California, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95. (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, 882/015610-0052 292873.02 AM03 -10- 17G) ♦ � r DRAFT (vi) friable asbestos, (vii) polychlorinated byphenyls, (viii) methyl tertiary butyl ether, (ix) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 20, (x) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. §1317), (xi) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq.(42 U.S.C. §6903) or (xii) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §9601 et seq. 14. CONDEMNATION. In the event that, prior to the Close of Escrow, any governmental entity shall commence any proceedings of or leading to eminent domain or similar type proceedings to take all or any portion of the Property, Buyer or Seller shall promptly meet and confer in good faith to evaluate the effect of such action on the purposes of this Agreement and following such meeting either Buyer or Seller may terminate this Agreement. 15. MISCELLANEOUS. 15.1 Assignment. This Agreement shall be binding upon and shall inure to the benefit of Buyer and Seller and their respective heirs, personal representatives, successors and assigns. Neither party to this Agreement may assign this Agreement or any interest or right hereunder or under the Escrow without the prior written consent and approval of the other party, which consent and approval may be withheld in the sole and absolute discretion of either party; provided, however, that Buyer may assign this Agreement to the City of La Quinta without Seller's consent. No provision of this Agreement is intended nor shall in any way be construed to benefit any party not a signatory hereto or to create a third party beneficiary relationship; provided, however, that notwithstanding the foregoing, the City shall be an express third party beneficiary with respect to the indemnities and other matters set forth in this Agreement which specifically and expressly run to the City's benefit. 15.2 Attorney's Fees. In the event of any action between Buyer and Seller seeking enforcement of any of the terms and conditions to this Agreement or the Escrow or otherwise in connection with the Property, the prevailing party in such action shall be awarded, in addition to damages, injunctive or other relief, its reasonable costs and expenses, including without limitation its expert witness fees and reasonable attorney's fees. 15.3 Notices. All notices under this Agreement shall be effective upon personal delivery, via facsimile so long as the sender receives confirmation of successful transmission from the sending machine, or three (3) business days after deposit in the United States mail, registered, certified, postage fully prepaid and addressed to the respective parties as set forth below or as to such other address as the parties may from time to time designate in writing: To Seller: Santa Rosa Plaza, LLC P.O. Box 1503 La Quinta, CA 92253 Attn: Daniel Brown Facsimile No.: (760) 882/015610-0052 292873.02 AM03 -1 1- DRAFT To Buyer: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, CA 92253 Attn: Executive Director Facsimile No.: (760) Copy to: Rutan & Tucker, LLP 611 Anton Boulevard, Suite 1400 Costa Mesa, California 92628-1950 Attn: Dan Slater, Esq. Facsimile No.: (714) 546-9035 15.4 Fair Meaning. This Agreement shall be construed according to its fair meaning and as if prepared by both parties hereto. 15.5 Headings. The headings at the beginning of each numbered Section of this Agreement are solely for the convenience of the parties hereto and are not a part of this Agreement. 15.6 Choice of Laws-, Litigation Matters. This Agreement shall be governed by the internal laws of the State of California and any question arising hereunder shall be construed or determined according to such law. The Municipal and Superior Courts of the State of California in and for the County of Riverside, or such other appropriate court in such county, shall have exclusive jurisdiction of any litigation between the parties concerning this Agreement. Service of process on Buyer shall be made in accordance with California law. Service of process on Seller shall be made in any manner permitted by California law and shall be effective whether served inside or outside California. 15.7 Nonliabilit of f Buyer Officials. No officer, official, member, employee, agent, or representatives of Buyer shall be liable for any amounts due hereunder, and no judgment or execution thereon entered in any action hereon shall be personally enforced against any such officer, official, member, employee, agent, or representative. 15.8 Gender-, Number. As used in this Agreement, masculine, feminine, and neuter gender and the singular or plural number shall be deemed to include the others wherever and whenever the context so dictates. 15.9 Survival. This Agreement and all covenants to be performed after the Closing, and, except as otherwise set forth herein, all representations and warranties contained herein, shall survive the Closing Date and shall remain a binding contract between the parties hereto. 15.10 Time of Essence. Time is of the essence of this Agreement and of each and every term and provision hereof, it being understood that the parties hereto have specifically negotiated the dates for the completion of each obligation herein. 15.11 Waiver or Modification. A waiver of a provision hereof, or modification of any provision herein contained, shall be effective only if said waiver or modification is in writing, and signed by both Buyer and Seller. No waiver of any breach or default by any party hereto 178 882/015610-0052 292873.02 AM03 -12- DRAFT shall be considered to be a waiver of any breach or default unless expressly provided herein or in the waiver. 15.12 Broker's Fees. Seller and Buyer represent and warrant to the other that neither Buyer nor Seller has employed any broker and/or finder to represent its interest in this transaction. Each party agrees to indemnify and hold the other free and harmless from and against any and all liability, loss, cost, or expense (including court costs and reasonable attorney's fees) in any manner connected with a claim asserted by any individual or entity for any commission or finder's fee in connection with the conveyance of the Property arising out of agreements by the indemnifying party to pay any commission or finder's fee. 15.13 Duplicate Originals. This Agreement may be executed in any number of duplicate originals, all of which shall be of equal legal force and effect. 15.14 Severability. If any term, covenant or condition of this Agreement or the application thereof to any person, entity, or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term, covenant, or condition to persons, entities, or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant or condition of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 15.15 Exhibits. The following exhibits are attached hereto and incorporated herein by this reference: Exhibit "A" Legal Description of Property Exhibit `B" Grant Deed Exhibit "C" Non -Foreign Affidavit 15.16 Covenants of Seller. Seller agrees that during the period between the Effective Date of this Agreement and the Closing Date: (a) Seller shall maintain the Property in not less than the state of repair as that existing on the Effective Date (excepting ordinary wear and tear and the demolition and removal required to be performed by Seller pursuant to this Agreement); (b) Seller shall not convey, grant, lease, assign, mortgage, hypothecate, encumber, or otherwise transfer (on or off record) the Property or any interest therein; (c) Seller shall not alter the physical condition of the Property or introduce or release, or permit the introduction or release, of any Hazardous Material in, from, under, or on the Property; (d) Prior to Closing, Seller shall maintain Seller's existing insurance on the Property. 15.17 Corporate Authority. The person(s) executing this Agreement on behalf of each of the parties hereto represent and warrant that (i) such party is duly organized and existing, (ii) they are duly authorized to execute and deliver this Agreement on behalf of said party, (iii) by so 882/015610.0052 1 " 292873.02 AM03 —13- a� DRAFT executing this Agreement such party is formally bound to the provisions of this Agreement, and (iv) the entering into this Agreement does not violate any provision of any other agreement to which such party is bound. 15.18 Covenant Against Discrimination. Seller covenants that in its performance of this Agreement it shall not discriminate against any person or group of persons on account of any impermissible classification including but not limited to race, color, creed, gender, religion, marital status, national origin, or ancestry. 15.19 Entire Agreement; Amendment. Except as set forth above, this Agreement and the exhibits incorporated herein contain the entire agreement of Buyer and Seller with respect to the matters contained herein, and no prior agreement or understanding pertaining to any such matter shall be effective for any purpose. No provisions of this Agreement may be amended or modified in any manner whatsoever except by an agreement in writing signed by duly authorized officers or representatives of each of the parties hereto. 882/015610-0052 292873.02 AM03 [END -- SIGNATURE PAGE FOLLOWS] -14- 10 DRAFT IN WITNESS WHEREOF, Buyer and Seller each hereby represents that it has read this Agreement, understands it, and hereby executes this Agreement to be effective as of the day and year first written above. ATTEST: June Greek, Agency Secretary APPROVED AS TO FORM: RUTAN & TUCKER, LLP M. Katherine Jenson, Agency Counsel 882/015610-0052 292873.02 AM03 "Seller" SANTA ROSA PLAZA, LLC, a California limited liability company By: Its: By: Its: "Buyer" LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic -15- Agency Chair DRAFT First American Title Company agrees to act as Escrow Holder in accordance with the terms of this Agreement. FIRST AMERICAN TITLE COMPANY By: _ Name: Its: 882/015610-0052 292873.02 AM03 -16- { f EXHIBIT "A" LEGAL DESCRIPTION OF PROPERTY The land referred to is situated in the State of California, County of Riverside, City of La Quinta, and is described as follows: [TO BE INSERTED] 882/015610_0052 181 292873.02 AM03 DRAFT EXHIBIT "B" FORM OF GRANT DEED [SEE FOLLOWING PAGES] 882/015610-0052 292873.02 AM03 18.4 RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: LA QUINTA REDEVELOPMENT AGENCY 78-495 Calle Tampico La Quinta, CA 92253 Attn: Executive Director SPACE ABOVE THIS LINE FOR RECORDER'S USE (Exempt from Recordation Fee per Gov. Code § 6103) GRANT DEED FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, SANTA ROSA PLAZA, LLC, a California limited liability company (the "Grantor"), hereby grants to the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic, organized and existing under the California Community Redevelopment Law (Health & Safety Code Section 33000 et seq.) ("Grantee"), that certain real property ("Property") located in the City of La Quinta, County of Riverside, State of California, described in the legal description attached hereto as Attachment No. 1 and incorporated herein by this reference, subject to all matters of record, and further subject to the following: A. Conveyance in Accordance With Redevelopment Plan. The Property is conveyed in accordance with and subject to the Redevelopment Plan for Project Area Number 1 ("Redevelopment Plan"), a copy of which is on file with the City Clerk of the City of La Quinta, California. All uses on the Property shall conform to the uses permitted by the Redevelopment Plan. The foregoing shall remain in effect until the expiration of the Redevelopment Plan. [end — signature page follows] 882/015610-0052 292873.02 AM03 "Seller" SANTA ROSA PLAZA, LLC, a California limited liability company By: Its: By: Its: ATTEST: June Greek, Agency Secretary APPROVED AS TO FORM: RUTAN & TUCKER, LLP M. Katherine Jenson, Agency Counsel "Buyer" LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic LISA 882/015610-0052 292873.02 AM03 Agency Chair Ist DRAFT STATE OF CALIFORNIA ) ss COUNTY OF ) On , before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. [SEAL] STATE OF CALIFORNIA COUNTY OF On personally appeared Notary Public ss before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 197 882/015610-0052 292873.02 AM03 -3- k t, DRAFT STATE OF CALIFORNIA ) ) ss COUNTY OF On personally appeared before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 198 882/015610-0052 292873.02 AM03 -4- DRAFT ATTACHMENT NO. 1 LEGAL DESCRIPTION OF PROPERTY The land referred to is situated in the State of California, County of Riverside, City of La Quinta, and is described as follows: [TO BE INSERTED] ISO 882/015610-0052 292873.02 AM03 Attachment 1 to Grant Deed EXHIBIT "C" AFFIDAVIT OF NON -FOREIGN ENTITY TO: LA QUINTA REDEVELOPMENT AGENCY ("Buyer") The Internal Revenue Code of 1954 ("Code") (26 U.S.C. Sections 1445, 7701) provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. To inform the transferee that withholding of tax is not required upon transfer of that certain U.S. real property interest described in Exhibit "A" to the Agreement for Purchase and Sale and Escrow Instructions dated , 2003, and incorporated herein by reference ("Property"), that the undersigned ("Seller") hereby certifies the following: 1. Seller is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations); and 2. The U.S. taxpayer identification number for Seller is ; and 3. The address for mailing purposes of Seller is: and 4. Seller understands that this certification may be disclosed to the Internal Revenue Service by Buyer and that any false statement contained herein could be punished by fine, imprisonment, or both. Under penalties of perjury, I declare that I have examined this Certification and to the best of my knowledge and belief, it is true, correct, and complete, and I further declare that I have authority to sign this document on behalf of Seller. Dated: , 2003 LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic 51A 882/015610-0052 292873.02 AM03 Agency Chair 190 ATTACHMENT #4 AGREEMENT FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS (COMMERCIAL PARCELS) BY AND BETWEEN SANTA ROSA PLAZA, LLC ("SELLER") AND LA QUINTA REDEVELOPMENT AGENCY ("BUYER") 191. 882/015610-0052 352450.02 AM03 TABLE OF CONTENTS Page 1. PURCHASE PRICE.........................................................................................................1 1.1 Amount.................................................................................................................1 1.2 Payment of Purchase Price....................................................................................1 2. DUE DILIGENCE............................................................................................................1 2.1 Due Diligence.......................................................................................................1 2.1.1 Title/Survey...............................................................................................2 2.1.2 Environmental Condition..........................................................................3 2.2 Confidentiality...................................................................................................... 5 3. ESCROW..........................................................................................................................5 3.1 Opening of Escrow............................................................................................... 5 3.2 Escrow Instructions...............................................................................................5 4. SECOND DUE DILIGENCE PERIOD..........................................................................5 4.1 Updated Title Review........................................................................................... 5 4.2 Second Review of Environmental Condition.......................................................6 5. CLOSE OF ESCROW......................................................................................................6 5.1 Close of Escrow; Closing Date............................................................................. 6 5.2 Recordation; Release of Funds and Documents ................................................... 7 6. DELIVERY OF DOCUMENTS REQUIRED FROM BUYER AND SELLER.............7 6.1 Buyer's Obligations.............................................................................................. 7 6.2 Seller's Obligations...............................................................................................7 7. TITLE INSURANCE POLICY........................................................................................7 7.1 Title Policy............................................................................................................7 7.2 Payment for Title Policy....................................................................................... 8 8. REAL PROPERTY TAXES............................................................................................. 8 9. DISPOSITION AND DEVELOPMENT AGREEMENT ................................................ 8 10. CONDITIONS PRECEDENT TO CLOSING.................................................................8 10.1 Conditions Precedent to Buyer's Obligations.......................................................8 10.2 Conditions Precedent to Seller's Obligations.......................................................9 11. POSSESSION................................................................................................................10 12. ALLOCATION OF COSTS...........................................................................................10 12.1 Buyer's Costs......................................................................................................10 12.2 Seller's Costs......................................................................................................10 194. 882/015610-0052 352450.02 AM03 Page 13 . INDEMNIFICATION.....................................................................................................11 14. CONDEMNATION........................................................................................................11 15. MISCELLANEOUS.......................................................................................................12 15.1 Assignment.........................................................................................................12 15.2 Attorney's Fees...................................................................................................12 15.3 Notices................................................................................................................12 15.4 Fair Meaning.......................................................................................................13 15.5 Headings.............................................................................................................13 15.6 Choice of Laws; Litigation Matters....................................................................13 15.7 Nonliability of Seller Officials............................................................................13 15.8 Gender; Number..................................................................................................13 15.9 Survival...............................................................................................................13 15.10 Time of Essence..................................................................................................13 15.11 Waiver or Modification.......................................................................................13 15.12 Broker's Fees......................................................................................................13 15.13 Duplicate Originals.............................................................................................14 15.14 Severability.........................................................................................................14 15.15 Exhibits...............................................................................................................14 15.16 Covenants of Seller.............................................................................................14 15.17 Corporate Authority............................................................................................14 15.18 Covenant Against Discrimination.......................................................................14 15.19 Entire Agreement; Amendment..........................................................................14 EXHIBITS Exhibit A Legal Description of the Property Exhibit B Form of Grant Deed Exhibit C Form of Affidavit of Non -Foreign Entity 193 882/015610-0052 352450.02 AM03 -11- DRAFT AGREEMENT FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS THIS AGREEMENT FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS ("Agreement") is made and entered into as of , 2003 ("Effective Date") by and between SANTA ROSA PLAZA, LLC, a California limited liability company ("Seller"), and the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic ("Buyer"). As hereinafter used in this Agreement, the term "Buyer" shall mean Buyer and/or Buyer's nominee. RECITALS: A. Seller is the owner of that certain real property located in the City of La Quinta ("City"), County of Riverside, State of California, more particularly described in the legal description attached hereto as Exhibit "A" ("Property"). B. Buyer desires to purchase the Property from Seller and Seller desires to sell the Property to Buyer, on the terms and conditions set forth herein. AGREEMENT: NOW, THEREFORE, in consideration of the foregoing recitals and mutual covenants herein contained, the parties hereto agree as follows: I. PURCHASE PRICE. 1.1 Amount. Subject to the terms of this Agreement, Buyer hereby agrees to purchase the Property from Seller and Seller agrees to sell the Property to Buyer, for the purchase price of One Million Eight Hundred Forty Thousand Dollars ($1,840,000.00) ("Purchase Price"). 1.2 Payment of Purchase Price. On or before 5:00 p.m. on the business day preceding the "Closing Date" (as that term is defined in Section 5.1) or such earlier time as required by "Escrow Holder" in order to close "Escrow" (as those terms are defined in Section 3.1) on the Closing Date, Buyer shall deposit with Escrow Holder in Good Funds (as used in this Agreement, the term "Good Funds" shall mean a confirmed wire transfer of immediately available funds, cashier's or certified check drawn on or issued by the office of a financial institution located in Riverside County, or cash) the Purchase Price, and such additional funds as may be required to meet Buyer's portion of the closing costs as hereinafter provided. 2. DUE DILIGENCE. 2.1 Due Diligence. As used herein, the term "Initial Due Diligence Period" shall refer to a period of time to expire upon the date that is sixty (60) days after the Effective Date. Buyer's obligation to consummate the transactions contemplated by this Agreement is subject to 194 882/015610-0052 352450.02 AM03 _ 1 _ and conditioned upon Buyer's approval, deemed approval or waiver of the right to approve of the following contingencies set forth in this Section 2.1 (collectively, the "Contingencies"): 2.1.1 Title/Survey. Seller shall deliver to Buyer, within five (5) days after the Effective Date of this Agreement, a preliminary title report prepared by First American Title Company ("Title Company") describing the state of title of the Property together with copies of all underlying documents (collectively the "Preliminary Title Report"). Buyer may, at its sole cost and expense, obtain a current survey of the Property (the "Survey") provided it does so within thirty (30) days of the Effective Date. Notwithstanding anything herein to the contrary, Seller shall be obligated to remove all monetary encumbrances against the Property excluding non -delinquent real property taxes and assessments. Buyer shall notify Seller in writing of any objections Buyer may have to title exceptions contained in the Preliminary Title Report or matters shown on the Survey (if Buyer has obtained) no later than the date which is thirty (30) days after the later of (1) its receipt of the Preliminary Title Report or (ii) its receipt of the Survey within the time period set forth above ("Buyer's Objection Notice"). Buyer's approval or disapproval of the matters set forth in the Preliminary Title Report (and the Survey, if applicable) may be granted or withheld in Buyer's sole and absolute discretion. Buyer's failure to provide Seller with a Buyer's Objection Notice within said period shall constitute Buyer's approval of all exceptions to title shown on the Preliminary Title Report and all matters shown on the Survey (if Buyer has obtained). Seller shall have a period of fifteen (15) days after receipt of Buyer's Objection Notice in which to deliver written notice to Buyer ("Seller's Notice") of Seller's election to either (i) agree to remove the objectionable items on the Preliminary Title Report or Survey prior to the Close of Escrow, or (ii) decline to remove any such title exceptions or Survey matters and terminate Escrow and the obligations of Buyer and Seller to purchase and sell the Property under this Agreement. Seller's failure to provide Buyer with Seller's Notice within said period shall constitute Seller's election to remove the objectionable items on the Preliminary Title Report. If Seller notifies Buyer of its election to terminate rather than remove the objectionable items on the Preliminary Title Report or Survey, Buyer shall have the right, by written notice delivered to Seller within five (5) days after Buyer's receipt of Seller's Notice, to agree to accept the Property subject to the objectionable items, in which event Seller's election to terminate shall be of no effect, and Buyer shall take title at the Close of Escrow subject to such objectionable items without any adjustment to or credit against the Purchase Price. All exceptions to title shown on the Preliminary Title Report, other than those which Seller may agree to remove pursuant to this Section 2.1.1, shall be deemed to have been approved by Buyer unless Seller is notified otherwise in writing. Upon the issuance of any amendment or supplement to the Preliminary Title Report which adds additional exceptions, including any survey exceptions, the foregoing right of review and approval shall also apply to said amendment or supplement; provided, however, that Buyer's initial period of review and approval or disapproval of any such additional exceptions shall be limited to fifteen (15) days following receipt of notice of such additional exceptions. The process set forth above for Buyer's review and Seller's response shall apply to any review and response with respect to any amendment or supplement to the Preliminary Title Report, and the Closing shall be extended for such period as is necessary to allow for that review and response process to be completed. 882/015610-0052 , 352450.02 AM03 -2- DRAFT 2.1.2 Environmental Condition. Buyer shall have access to the Property, as described in this Section 2.1.2, in order to permit Buyer or its directors, engineers, analysts, officers, employees, agents, contractors, representatives, attorneys or advisors (collectively, the "Buyer Representatives") to investigate the Property. (a) During the Initial Due Diligence Period, Seller shall permit Buyer and Buyer Representatives, at the sole cost and expense of Buyer, to conduct physical inspections of the Property, including the site work, soil, subsurface soils, drainage, seismic and other geological and topographical matters, location of asbestos, toxic substances, hazardous materials or wastes, if any, and any other investigations as Buyer deems prudent with respect to the physical condition of the Property in order to determine the Property's suitability for Buyer's intended development. In no event shall Buyer conduct any intrusive testing procedures on the Property without the prior written consent of Seller, which consent shall not be unreasonably withheld. Such investigations may be made by Buyer and/or Buyer Representatives during any normal business hours. Buyer shall also have the right to investigate all matters relating to the zoning, use and compliance with other applicable laws, codes, and ordinances which relate to the use and occupancy of the Property. Seller shall cooperate to assist Buyer in completing such inspections and special investigations at no cost or expense to Seller. Such inspections and investigations shall be conducted only upon no less than twenty-four (24) hours' notice to Seller and shall be conducted at such times and in such a manner as to minimize any disruption to the Property. Seller shall have the right, but not the obligation, to accompany Buyer during such investigations and/or inspections. (b) As a condition to any such entry, Buyer shall (i) conduct all work or studies in a diligent, expeditious and safe manner and not allow any dangerous or hazardous conditions to occur on the Property during or after such investigation; (ii) comply with all applicable laws and governmental regulations; (iii) keep the Property free and clear of all materialmen's liens, lis pendens and other liens arising out of the entry and work performed under this paragraph; (iv) maintain or assure maintenance of workers' compensation insurance (or state approved self-insurance) on all persons entering the property in the amounts required by the State of California; (v) provide to Seller prior to initial entry a certificate of insurance evidencing that Buyer and/or the persons entering the Property have procured and has in effect an all-risk public liability insurance policy meeting the following requirements: (1) the insurance shall be written on a per occurrence and not claims -made basis; (2) the amount of insurance shall be a combined single limit of not less than Two Million Dollars ($2,000,000.00) with a deductible or self -insured retention amount of not more than One Hundred Thousand Dollars ($100,000); (3) the policy shall name or be endorsed to Seller and Seller's officers, employees, agents, and representatives (collectively, "Seller & Seller Personnel") as additional insureds; (4) the insurance shall not contain any special limitations on the scope of protection afforded to Seller & Seller Personnel; (5) the policy shall not be canceled by the insurer or Buyer unless there is a minimum of thirty (30) days prior written notice to Seller; (6) the insurer shall waive subrogation rights against the Seller & Seller Personnel; and (7) the insurance shall be primary insurance and not contributory with any insurance Seller or Seller Personnel may have; and (8) the insurance shall apply separately to each insured against whom a claim is made or suit is brought, except with respect to the limits of the insurer's liability; and (vi) following Buyer's entry, repair any and all damage to the Property caused by such inspections or i 9 investigations in a timely manner. 882/015610-0052 352450.02 AM03 -3- re. r'1 DRAFT (c) Buyer shall promptly pay and discharge all demands for payment relating to Buyer's entry on and investigation of the Property and take all other steps to avoid the assertion of claims of lien against the Property. In the event a claim of lien is recorded by reason of Buyer's entry on the Property, Buyer, within twenty (20) days of such recordation, shall either (i) record or deliver a surety bond sufficient to release such claim or lien in accordance with applicable law; or (ii) provide Seller with such other assurance as Seller may require for the payment of the claim or lien. Seller may elect to record and post notices of non -responsibility from time to time on and about the Property. (d) Prior to expiration of the Initial Due Diligence Period, Buyer shall notify Seller in writing ("Buyer's Property Objection Notice") of any objections Buyer may have to any physical or environmental conditions of the Property (the "Disapproved Property Matters"). Buyer's approval or disapproval of the physical and environmental conditions of the Property may be granted or withheld in Buyer's sole and absolute discretion. Buyer's failure to provide Seller with a Buyer's Property Objection Notice shall constitute Buyer's approval of the condition of the Property. Seller shall have a period of fifteen (15) days after receipt of Buyer's Property Objection Notice in which to deliver written notice to Buyer ("Seller's Response") of Seller's election to either (i) agree to remove the objectionable items prior to the Close of Escrow, or (ii) decline to remove the objectionable items and terminate Escrow and the obligations of Buyer and Seller to purchase and sell the Property under this Agreement. Seller's failure to provide Buyer with Seller's Response within said period shall constitute Seller's election to remove the objectionable items prior to the Close of Escrow. If Seller notifies Buyer of its election to terminate rather than remove the objectionable items, Buyer shall have the right, by written notice delivered to Seller within five (5) days after Buyer's receipt of Seller's Response, to agree to accept the Property subject to the objectionable items, in which event Seller's election to terminate shall be of no effect, and Buyer shall take title at the Close of Escrow subject to such objectionable items without any adjustment to or credit against the Purchase Price. Buyer's inspections and investigations of the Property shall be conducted upon the terms and conditions set forth in this Agreement. In the event Buyer's inspections and investigations reveal the presence of "Hazardous Materials" (as that term is defined in Section 13 herein) that require remediation, Seller shall have the right but not the obligation to hire its own independent soils consultants to confirm the presence of such Hazardous Materials and the necessity of such remediation. The retention of, and confirmation by, such soils consultants shall occur, if at all, within thirty (30) days after the date on which Buyer has notified Seller of the presence of Hazardous Materials on the Property. If remediation is necessary the following shall apply: If the estimate of Buyer (or Buyer's consultants), as may be confirmed by Seller pursuant to its right, but not its obligation, to hire its own independent soils consultants, of the cost of remediation is not more than Twenty -Five Thousand Dollars ($25,000) ("Maximum Amount"), Seller, at no expense to Buyer, shall cause the remediation work to be performed and completed subject to all applicable laws and regulations. If the estimated cost for the remediation is greater than the Maximum Amount, Seller shall have the option to cause the remediation work to be performed and completed, subject to all applicable laws and regulations, or to terminate this Agreement. Any remediation work performed hereunder shall be completed prior to the Close of Escrow. 882/015610-0052 352450.02 AM03 -4- DRAFT 2.2 Confidentiality. Any and all information made available to Buyer under this Agreement or discovered by Buyer during its investigation of the Property shall be treated as confidential by Buyer and such information shall not be disclosed prior to the Close of Escrow without the prior written consent of Seller; provided, however, that Buyer may disclose said information (i) to any attorney, accountant, engineer or consultant providing services to Buyer in the normal and ordinary course of business, (ii) to a court or any other official body if said confidential information is subpoenaed by that court or official body; provided that Buyer notifies Seller, in writing, of the receipt of such subpoena, and (ill) if required to disclose such information pursuant to the California Public Records Act or other applicable law. Seller shall be permitted to pursue, at Seller's cost, such confidentiality order with or without Buyer. Additionally, if this Agreement terminates for any reason whatsoever, Buyer shall return to Seller all written information delivered by Seller to Buyer pursuant hereto, and all copies of such information made by Buyer, within ten (10) days after termination hereof. The provisions of this Section 2.2 shall survive any termination of this Agreement. 3. ESCROW. 3.1 Opening of Escrow. Closing of the sale of the Property shall take place through an escrow ("Escrow") to be established within three (3) business days after the "Substantial Completion Date" (as that term is defined in Section 9), with First American Title Company ("Escrow Holder") at its office located at 3625 Fourteenth Street, Riverside, CA 92502-0986. The opening of the Escrow (the "Opening of Escrow") shall be deemed to be the date that a fully executed copy of this Agreement, accompanied by the "Architect Certification of Substantial Completion" (as that term is defined in Section 9), is delivered to the Escrow Holder. Escrow Holder is instructed to notify Buyer and Seller in writing of the date of the Opening of Escrow. 3.2 Escrow Instructions. This Agreement, once deposited in Escrow, shall constitute the joint escrow instructions of Buyer and Seller to Escrow Holder. Additionally, if Escrow Holder so requires, Buyer and Seller agree to execute the form of escrow instructions that Escrow Holder customarily requires in real property escrows administered by it. In the event of any conflict or inconsistency between Escrow Holder's standard instructions and the provisions of this Agreement, the provisions of this Agreement shall supersede and be controlling. 4. SECOND DUE DILIGENCE PERIOD. Notwithstanding anything in Section 2 to the contrary, during the period commencing on the date the Escrow is opened, Buyer shall have a second sixty (60) day due diligence period ("Second Due Diligence Period") to investigate the title to, and the environmental condition of, the Property, as described herein. 4.1 Updated Title Review. Within five (5) days after the Opening of Escrow, Seller shall deliver to Buyer, an updated preliminary title report ("Updated Title Report"), describing the state of title of the Property, together with copies of all underlying documents for any title exceptions that did not appear on the Preliminary Title Report issued pursuant to Section 2.1.1 ("New Title Exceptions"). Buyer may, at its sole cost and expense, obtain a current survey of the Property (the "Updated Survey") provided it does so within thirty (30) days after the Opening of Escrow. Notwithstanding anything herein to the contrary, Seller shall be obligated to 198 remove all monetary encumbrances against the Property excluding non -delinquent real property 882/015610-0052 352450.02 AM03 -5- �1 DRAFT taxes and assessments. Buyer shall notify Seller in writing of any objections Buyer may have to any of the New Title Exceptions no later than the date which is fifteen (15) days after the later of (i) its receipt of the Updated Title Report or (ii) its receipt of the Survey within the time period set forth above ("Buyer's Objection Notice to Updated Title Report"). Buyer's approval or disapproval of the matters set forth in the Updated Title Report (and the Updated Survey, if applicable) may be granted or withheld in Buyer's sole and absolute discretion. Buyer's failure to provide Seller with a Buyer's Objection Notice to Updated Title Report within said period shall constitute Buyer's approval of all of the New Title Exceptions shown on the Updated Title Report and all matters shown on the Updated Survey (if Buyer has obtained). Seller shall have a period of ten (10) days after receipt of Buyer's Objection Notice to Updated Title Report in which to deliver written notice to Buyer ("Seller's Notice Regarding Updated Title Report") of Seller's election to either (i) agree to remove the objectionable items on the Updated Title Report or Updated Survey prior to the Close of Escrow, or (ii) decline to remove any such title exceptions or Survey matters and terminate Escrow and the obligations of Buyer and Seller to purchase and sell the Property under this Agreement. Seller's failure to provide Buyer with Seller's Notice Regarding Updated Title Report within said period shall constitute Seller's election to remove the objectionable items on the Updated Title Report. If Seller notifies Buyer of its election to terminate rather than remove the objectionable items on the Updated Title Report or Updated Survey, Buyer shall have the right, by written notice delivered to Seller within five (5) days after Buyer's receipt of Seller's Notice Regarding Updated Title Report, to agree to accept the Property subject to the objectionable items, in which event Seller's election to terminate shall be of no effect, and Buyer shall take title at the Close of Escrow subject to such objectionable items without any adjustment to or credit against the Purchase Price. All exceptions to title shown on the Updated Title Report, other than those which Seller may agree to remove pursuant to this Section 4 shall be deemed to have been approved by Buyer unless Seller is notified otherwise in writing. 4.2 Second Review of Environmental Condition. During the Second Due Diligence Period, Buyer shall have access to the Property, pursuant to the terms described in Section 2.1.2, to investigate the Property; provided, however, Buyer may only object to physical or environmental conditions of the Property that differ from those conditions existing during the Initial Due Diligence Period. 5. CLOSE OF ESCROW. 5.1 Close of Escrow: Closing Date. Provided that all of the conditions of this Agreement precedent to the "Close of Escrow" (as hereinafter defined) have been satisfied (or waived by the appropriate party) prior to or on the Closing Date, the Closing of this transaction for the sale and purchase of the Property shall take place on the date which is five (5) days after the date on which all of "Buyer's Conditions to Closing" and all of "Seller's Conditions to Closing" (as those terms are defined in Section 10) have been satisfied (or waived by the appropriate party); provided, however, in no event shall the Closing occur, if at all, later than the date which is one hundred fifty (150) days after the expiration of the Due Diligence Period ("Closing Date"). The terms "Close of Escrow" and the "Closing" are used herein to mean the time Seller's grant deed conveying fee title to the Property to Buyer is recorded in the Official Records of the Office of the County Recorder of Riverside ("Official Records"). If Escrow is not in a condition to close by the Closing Date, either party not then in default hereunder may, 1919 882/015610-0052 352450.02 AM03 -6- DRAFT upon five (5) days advance written notice to the other party and Escrow Holder, elect to terminate this Agreement and the Escrow. No such termination shall release either party then in default from liability for such default. If neither party so elects to terminate this Agreement and the Escrow, Escrow Holder shall close the Escrow as soon as possible. 5.2 Recordation: Release of Funds and Documents. 5.2.1 Escrow Holder is directed, on the Closing Date, to record in the Official Records, the following documents in the order listed: (i) the grant deed in the form of the attached Exhibit `B" transferring title to the Property to Buyer ("Grant Deed"); and (ii) such other and further documents as may be directed jointly by Buyer and Seller. 5.2.2 Upon the Closing, Escrow Holder shall deliver (i) the Purchase Price, less any of Seller's closing costs, to Seller, and (ii) conformed copies of all recorded documents to both Buyer and Seller. 6. DELIVERY OF DOCUMENTS REQUIRED FROM BUYER AND SELLER. 6.1 Buyer's Obligations. Buyer agrees that on or before 5:00 p.m. of the last business day immediately preceding the Closing Date, Buyer shall deposit or cause to be deposited with Escrow Holder the following: (a) the Purchase Price; and (b) any and all additional funds, instruments or other documents required from Buyer (executed and acknowledged where appropriate) as may be reasonably necessary in order for the Escrow Holder to comply with the terms of this Agreement. 6.2 Seller's Obligations._ Seller agrees that on or before 5:00 p.m. of the last business day immediately preceding the Closing Date, Seller shall deposit or cause to be deposited with Escrow Holder each of the following: (a) the executed and acknowledged Grant Deed; (b) a Certificate of Non -Foreign Status (the "Non -Foreign Affidavit") executed and acknowledged by Seller in the form attached hereto as Exhibit "C"; and (c) all other funds, items, and instruments required from Seller (executed and acknowledged where appropriate) as may be reasonably necessary in order for Escrow Holder to comply with the provisions of this Agreement. TITLE INSURANCE POLICY. 7.1 Title Policy. At the Closing Date, the Title Company, as insurer, shall issue an ALTA owner's standard coverage policy of title insurance ("Title Policy"), in favor of Buyer, as insured, with liability in the amount of the Purchase Price, subject to the following: (a) non -delinquent real property taxes and assessments; 4. (� 0 882/015610-0052 352450.02 AM03 —7— ♦ d", ; DRAFT (b) title exceptions approved or deemed approved by Buyer pursuant to Section 2.1.1 and Section 4.1 above; (c) title exceptions, if any, resulting from Buyer's entry onto the Property pursuant to the provisions of Section 2.1.2 or Section 4.2 above; (d) any other exceptions approved by Buyer; and (e) the standard printed conditions and exceptions contained in the ALTA standard owner's policy of title insurance regularly issued by the Title Company. 7.2 Payment for Title Policy. Seller shall be responsible for the charges for the Title Policy with coverage up to the amount of the Purchase Price. Buyer shall pay any additional coverage or endorsements it requests. Buyer may, at its election, request an ALTA extended policy of title insurance. Buyer shall pay the difference for the charges between the premium for the extended coverage title policy and the premium for the standard coverage title policy that Seller is responsible for hereunder. Buyer shall also pay for the ALTA survey, if applicable. 8. REAL PROPERTY TAXES. Upon Buyer's acquisition of fee title to the Property, the Property will be exempt from the payment of property taxes and assessments due to Seller's status as a public agency. Seller shall be responsible for paying for all property taxes or assessments assessed against the Property after the Closing for any period prior to the Closing. 9. DISPOSITION AND DEVELOPMENT AGREEMENT. At the time of execution of this Agreement Agency contemplates entering into a disposition and development agreement (the "DDA") with Bison Hotel Group LLC, a California limited liability company ("Developer"), pursuant to which Buyer shall agree to sell certain real Property to Developer and Developer shall agree to purchase said property from Buyer and thereafter develop an Embassy Suites hotel thereon (the "Project"). The time when Developer has completed ninety percent (90%) of the Project, as certified in writing by the Project Architect, shall be referred to herein as the "Substantial Completion Date." Prior to either party's obligation to Close the Escrow, all of the following shall have occurred, within the time specified therefor: (i) Buyer and Developer shall have entered into the DDA, not later than thirty (30) days prior to the Closing (ii) Developer shall have completed the Project, as evidenced by Buyer's issuance to Developer of a Release of Construction Covenants; and (iii) Developer shall be prepared to purchase from Buyer, and Buyer shall be prepared to sell to Developer, the Property, at the Closing. The failure of any of the conditions set forth in clauses (i) through (iii) above shall not be a default of Seller or Buyer hereunder but shall constitute a failure of a condition precedent to Closing. Buyer and Seller further acknowledge that Section 405.1 of the DDA contains conditions that Developer will need to satisfy prior to the Closing ("DDA Predevelopment Conditions") and that Developer's satisfaction of the DDA Predevelopment Conditions (or Buyer's waiver thereof in Buyer's sole and absolute discretion) is thus a Buyer Condition to Closing as set forth in Section 10. 10. CONDITIONS PRECEDENT TO CLOSING. 10.1 Conditions Precedent to Buyer's Obligations. The obligations of Buyer under this Agreement to purchase the Property and close the Escrow shall be subject to the satisfaction or 2 Q l 882/015610-0052 352450.02 AM03 _8_ DRAFT signed written waiver by Buyer of each and all of the following conditions precedent (collectively "Buyer's Conditions to Closing"): (a) on the Closing Date, the Title Company shall be irrevocably committed to issue the Title Policy pursuant to Section 6 above insuring fee title to the Property as being vested in Buyer; (b) Escrow Holder holds all instruments and funds required for the Closing and will deliver to Buyer the instruments and funds, if any, accruing to Buyer pursuant to this Agreement; (c) except as otherwise permitted by this Agreement, all representations and warranties by the Seller in this Agreement shall be true on and as of the Closing Date as though made at that time and all covenants of Seller pursuant to this Agreement shall have been fulfilled by the Closing Date; (d) Buyer and the Developer have executed the DDA within the time set forth in Section 8, and Developer has completed construction of the Project, as evidenced by Buyer's issuance to Developer of a Release of Construction Covenants. (e) Buyer is prepared to sell to Developer, and Developer is prepared to purchase from Buyer, the Property at the Closing; (f) All of the DDA Predevelopment Conditions have been satisfied (or waived by Buyer in its sole and absolute discretion); (g) Seller is not in material default of any term or condition of this Agreement. In the event that any of Buyer's Conditions to Closing are not satisfied, deemed satisfied, or waived in a writing signed by Buyer prior to the expiration of the applicable period for satisfaction or waiver, Buyer may terminate this Agreement. 10.2 Conditions Precedent to Seller's Obligations. The obligations of Seller under this Agreement shall be subject to the satisfaction or signed written waiver by Seller of each and all of the following conditions precedent ("Seller's Conditions to Closing"): (a) Escrow Holder holds the Purchase Price and all other instruments and funds required for the Closing and will deliver to Seller the instruments and funds, including but not limited to the Purchase Price (less Seller's closing costs) accruing to Seller pursuant to this Agreement; (b) except as otherwise permitted by this Agreement, all representations and warranties by the Buyer in this Agreement shall be true on and as of the Closing Date as though made at that time and all covenants of Buyer pursuant to this Agreement shall have been fulfilled by the Closing Date; 882/015610-0052 352450.02 AM03 M DRAFT (c) Buyer and the Developer have executed the DDA within the time set forth in Section 8, and Developer has completed construction of the Project, as evidenced by Buyer's issuance of a Release of Construction Covenants. (d) Buyer is prepared to sell to Developer and Developer is prepared to purchase from Buyer, the Property, at the Closing; (e) All of the DDA Predevelopment Conditions have been satisfied (or waived) by Developer; (f) Buyer is not in material default of any term or condition of this Agreement. In the event that any of Seller's Conditions to Closing are not satisfied, deemed satisfied, or waived in a writing signed by Seller prior to the expiration of the applicable period for satisfaction or waiver, Seller may terminate this Agreement. 11. POSSESSION. Possession of the Property shall be delivered by Seller to Buyer on the Closing Date. 12. ALLOCATION OF COSTS. 12.1 Buyer's Costs. Buyer shall pay the following costs: (a) fifty percent (50%) of Escrow Holder's escrow fee; (b) Buyer's own attorney's fees incurred in connection with this Agreement and the transactions contemplated hereby; (c) fifty percent (50%) of all the charges for recording the Grant Deed, if any; (d) the premium difference between the ALTA extended policy of title insurance and the ALTA standard coverage policy of title insurance if Buyer requests an extended policy; and (e) any additional title insurance coverages Seller is not required to pay for plus any title endorsements requested by Buyer. 12.2 Seller's Costs. Seller shall pay: (a) fifty percent (50%) of the Escrow Holder's escrow fee; (b) Seller's own attorney's fees in connection with this Agreement and the transactions contemplated hereby; (c) Any documentary transfer taxes associated with the conveyance; (d) fifty percent (50%) of all the charges for recording the Grant Deed, if any; 2 and 3 882/015610-0052 352450.02 AM03 -10- DRAFT (e) the premium for the Title Policy that Seller is required to pay pursuant to this Agreement. 13. INDEMNIFICATION. Seller agrees to indemnify, defend and hold Buyer harmless from and against any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without limitation, attorneys' fees), resulting from, arising out of, or based upon (i) the presence, release, use, generation, discharge, storage or disposal of any "Hazardous Materials" (as that term is defined below) on, under, in or about, or the transportation of any such Hazardous Materials to or from, the Property which occurred prior to the Closing, or (ii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous Materials on, under, in or about to or from, the Property which occurred prior to the Closing. This indemnity shall include, without limitation, any damage, liability, fine, penalty, cost or expense arising from or out of any claim, action, suit or proceeding for personal injury (including sickness, disease or death), tangible or intangible property damage, compensation for lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, contamination, leak, spill, release or other adverse effect on the environment. At the request of the Seller, the Buyer shall cooperate with and assist the Seller in its defense of any such claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense; provided that the Buyer shall not be obligated to incur any expense in connection with such cooperation or assistance. For purposes of this Agreement, the term "Hazardous Materials" means any substance, material, or waste which is, or becomes, regulated by any local governmental authority, the State of California, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated byphenyls, (viii) methyl tertiary butyl ether, (ix) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 20, (x) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. §1317), (xi) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq.(42 U.S.C. §6903) or (xii) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §9601 et seq. 14. CONDEMNATION. In the event that, prior to the Close of Escrow, any governmental entity shall commence any proceedings of or leading to eminent domain or similar type proceedings to take all or any portion of the Property, Buyer or Seller shall promptly meet and 2 0 882/015610-0052 352450.02 AM03 -1 1- •q ,r1 DRAFT confer in good faith to evaluate the effect of such action on the purposes of this Agreement and following such meeting either Buyer or Seller may terminate this Agreement. 15. MISCELLANEOUS. 15.1 Assignment. This Agreement shall be binding upon and shall inure to the benefit of Buyer and Seller and their respective heirs, personal representatives, successors and assigns. Neither party to this Agreement may assign this Agreement or any interest or right hereunder or under the Escrow without the prior written consent and approval of the other party, which consent and approval may be withheld in the sole and absolute discretion of either party; provided, however, that Buyer may assign this Agreement to the City of La Quinta without Seller's consent. No provision of this Agreement is intended nor shall in any way be construed to benefit any party not a signatory hereto or to create a third party beneficiary relationship; provided, however, that notwithstanding the foregoing, the City shall be an express third party beneficiary with respect to the indemnities and other matters set forth in this Agreement which specifically and expressly run to the City's benefit. 15.2 Attorney's Fees. In the event of any action between Buyer and Seller seeking enforcement of any of the terms and conditions to this Agreement or the Escrow or otherwise in connection with the Property, the prevailing party in such action shall be awarded, in addition to damages, injunctive or other relief, its reasonable costs and expenses, including without limitation its expert witness fees and reasonable attorney's fees. 15.3 Notices. All notices under this Agreement shall be effective upon personal delivery, via facsimile so long as the sender receives confirmation of successful transmission from the sending machine, or three (3) business days after deposit in the United States mail, registered, certified, postage fully prepaid and addressed to the respective parties as set forth below or as to such other address as the parties may from time to time designate in writing: 882/015610-0052 352450.02 AM03 To Seller: Santa Rosa Plaza, LLC P.O. Box 1503 La Quinta, CA 92253 Attn: Daniel Brown Facsimile No.: (760) To Buyer: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, CA 92253 Attn: Executive Director Facsimile No.: (760) Copy to: Rutan & Tucker, LLP 611 Anton Boulevard, Suite 1400 Costa Mesa, California 92628-1950 Attn: Dan Slater, Esq. Facsimile No.: (714) 546-9035 -12- 2 {fir DRAFT 15.4 Fair Meaning. This Agreement shall be construed according to its fair meaning and as if prepared by both parties hereto. 15.5 Headim4s. The headings at the beginning of each numbered Section of this Agreement are solely for the convenience of the parties hereto and are not a part of this Agreement. 15.6 Choice of Laws, Litigation Matters. This Agreement shall be governed by the internal laws of the State of California and any question arising hereunder shall be construed or determined according to such law. The Municipal and Superior Courts of the State of California in and for the County of Riverside, or such other appropriate court in such county, shall have exclusive jurisdiction of any litigation between the parties concerning this Agreement. Service of process on Buyer shall be made in accordance with California law. Service of process on Seller shall be made in any manner permitted by California law and shall be effective whether served inside or outside California. 15.7 Nonliability of Buyer Officials. No officer, official, member, employee, agent, or representatives of Buyer shall be liable for any amounts due hereunder, and no judgment or execution thereon entered in any action hereon shall be personally enforced against any such officer, official, member, employee, agent, or representative. 15.8 Gender: Number. As used in this Agreement, masculine, feminine, and neuter gender and the singular or plural number shall be deemed to include the others wherever and whenever the context so dictates. 15.9 Survival. This Agreement and all covenants to be performed after the Closing, and, except as otherwise set forth herein, all representations and warranties contained herein, shall survive the Closing Date and shall remain a binding contract between the parties hereto. 15.10 Time of Essence. Time is of the essence of this Agreement and of each and every term and provision hereof, it being understood that the parties hereto have specifically negotiated the dates for the completion of each obligation herein. 15.11 Waiver or Modification. A waiver of a provision hereof, or modification of any provision herein contained, shall be effective only if said waiver or modification is in writing, and signed by both Buyer and Seller. No waiver of any breach or default by any party hereto shall be considered to be a waiver of any breach or default unless expressly provided herein or in the waiver. 15.12 Broker's Fees. Seller and Buyer represent and warrant to the other that neither Buyer nor Seller has employed any broker and/or finder to represent its interest in this transaction. Each party agrees to indemnify and hold the other free and harmless from and against any and all liability, loss, cost, or expense (including court costs and reasonable attorney's fees) in any manner connected with a claim asserted by any individual or entity for any commission or finder's fee in connection with the conveyance of the Property arising out of agreements by the indemnifying party to pay any commission or finder's fee. 882/015610-0052 352450.02 AM03 -13- .0, •' '�' DRAFT 15.13 Duplicate Originals. This Agreement may be executed in any number of duplicate originals, all of which shall be of equal legal force and effect. 15.14 Severability. If any term, covenant or condition of this Agreement or the application thereof to any person, entity, or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term, covenant, or condition to persons, entities, or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant or condition of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 15.15 Exhibits. The following exhibits are attached hereto and incorporated herein by this reference: Exhibit "A" Legal Description of Property Exhibit `B" Grant Deed Exhibit "C" Non -Foreign Affidavit 15.16 Covenants of Seller. Seller agrees that during the period between the Effective Date of this Agreement and the Closing Date: (a) Seller shall maintain the Property in not less than the state of repair as that existing on the Effective Date (excepting ordinary wear and tear and the demolition and removal required to be performed by Seller pursuant to this Agreement); (b) Seller shall not convey, grant, lease, assign, mortgage, hypothecate, encumber, or otherwise transfer (on or off record) the Property or any interest therein; (c) Seller shall not alter the physical condition of the Property or introduce or release, or permit the introduction or release, of any Hazardous Material in, from, under, or on the Property; (d) Prior to Closing, Seller shall maintain Seller's existing insurance on the Property. 15.17 Corporate Authority. The person(s) executing this Agreement on behalf of each of the parties hereto represent and warrant that (i) such party is duly organized and existing, (ii) they are duly authorized to execute and deliver this Agreement on behalf of said party, (iii) by so executing this Agreement such party is formally bound to the provisions of this Agreement, and (iv) the entering into this Agreement does not violate any provision of any other agreement to which such party is bound. 15.18 Covenant Against Discrimination. Seller covenants that in its performance of this Agreement it shall not discriminate against any person or group of persons on account of any impermissible classification including but not limited to race, color, creed, gender, religion, marital status, national origin, or ancestry. 15.19 Entire Agreement; Amendment. Except as set forth above, this Agreement and 2 0''i the exhibits incorporated herein contain the entire agreement of Buyer and Seller with respect to 882/015610-0052 352450.02 AM03 -14- DRAFT the matters contained herein, and no prior agreement or understanding pertaining to any such matter shall be effective for any purpose. No provisions of this Agreement may be amended or modified in any manner whatsoever except by an agreement in writing signed by duly authorized officers or representatives of each of the parties hereto. 882/015610.0052 352450.02 AM03 [END -- SIGNATURE PAGE FOLLOWS] -15- 2os DRAFT IN WITNESS WHEREOF, Buyer and Seller each hereby represents that it has read this Agreement, understands it, and hereby executes this Agreement to be effective as of the day and year first written above. ATTEST: June Greek, Agency Secretary APPROVED AS TO FORM: RUTAN & TUCKER, LLP M. Katherine Jenson, Agency Counsel "Seller" SANTA ROSA PLAZA, LLC, a California limited liability company By: Its: By: Its: "Buyer" LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic U-In Agency Chair 882/015610-0052 352450.02 AM03 -16- L First American Title Company agrees to act as Escrow Holder in accordance with the terms of this Agreement. 882/015610-0052 352450.02 AM03 FIRST AMERICAN TITLE COMPANY By: _ Name: Its: -17- 210 e) 13 EXHIBIT "A" LEGAL DESCRIPTION OF PROPERTY The land referred to is situated in the State of California, County of Riverside, City of La Quinta, and is described as follows: [TO BE INSERTED] 882/015610-0052 352450.02 AM03 211 DRAFT EXHIBIT "B" FORM OF GRANT DEED [SEE FOLLOWING PAGES] 882/015610-0052 352450.02 AM03 r �: RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: LA QUINTA REDEVELOPMENT AGENCY 78-495 Calle Tampico La Quinta, CA 92253 Attn: Executive Director SPACE ABOVE THIS LINE FOR RECORDER'S USE (Exempt from Recordation Fee per Gov. Code § 6103) GRANT DEED FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, SANTA ROSA PLAZA, LLC, a California limited liability company (the "Grantor"), hereby grants to the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic, organized and existing under the California Community Redevelopment Law (Health & Safety Code Section 33000 et seq.) ("Grantee"), that certain real property ("Property") located in the City of La Quinta, County of Riverside, State of California, described in the legal description attached hereto as Attachment No. I and incorporated herein by this reference, subject to all matters of record, and further subject to the following: A. Conveyance in Accordance With Redevelopment Plan. The Property is conveyed in accordance with and subject to the Redevelopment Plan for Project Area Number I ("Redevelopment Plan'), a copy of which is on file with the City Clerk of the City of La Quinta, California. All uses on the Property shall conform to the uses permitted by the Redevelopment Plan. The foregoing shall remain in effect until the expiration of the Redevelopment Plan. [end — signature page follows] Z1, 882/015610-0052 352450.02 AM03 - "Seller" SANTA ROSA PLAZA, LLC, a California limited liability company By: Its: By: Its: ATTEST: June Greek, Agency Secretary APPROVED AS TO FORM: RUTAN & TUCKER, LLP I0 M. Katherine Jenson, Agency Counsel "Buyer" LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic Agency Chair 882/015610-0052 2 352450.02 AM03 DRAFT STATE OF CALIFORNIA COUNTY OF On personally appeared ss before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. [SEAL] STATE OF CALIFORNIA COUNTY OF On personally appeared Notary Public ss before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 215 882/015610-0052 352450.02 AM03 -�- 17 STATE OF CALIFORNIA ) ss COUNTY OF ) On personally appeared before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 21 �, 882/015610-0052 352450.02 AM03 -4- DRAFT ATTACHMENT NO. 1 LEGAL DESCRIPTION OF PROPERTY The land referred to is situated in the State of California, County of Riverside, City of La Quinta, and is described as follows: [TO BE INSERTED] 21" 882/015610-0052 352450.02 AM03 Attachment I to Grant Deed EXHIBIT "C" AFFIDAVIT OF NON -FOREIGN ENTITY TO: LA QUINTA REDEVELOPMENT AGENCY ("Buyer") The Internal Revenue Code of 1954 ("Code") (26 U.S.C. Sections 1445, 7701) provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. To inform the transferee that withholding of tax is not required upon transfer of that certain U.S. real property interest described in Exhibit "A" to the Agreement for Purchase and Sale and Escrow Instructions dated , 2003, and incorporated herein by reference ("Property"), that the undersigned ("Seller") hereby certifies the following: 1. Seller is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations); and 2. The U.S. taxpayer identification number for Seller is ; and 3. The address for mailing purposes of Seller is: and 4. Seller understands that this certification may be disclosed to the Internal Revenue Service by Buyer and that any false statement contained herein could be punished by fine, imprisonment, or both. Under penalties of perjury, I declare that I have examined this Certification and to the best of my knowledge and belief, it is true, correct, and complete, and I further declare that I have authority to sign this document on behalf of Seller. Dated: 92003 LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic Agency Chair 21n 882/015610-0052 352450.02 AM03 a" r U G� OFO TO: Redevelopment Chair and Board Members of the Redevelopment Agency FROM: Thomas P. Genovese, Executive Director A DATE: January 3, 2003 SUBJECT: Public Hearing Item No. 2 Public Hearing to Certify a Mitigated Negative Declaration of Environmental Impact for EA 2002-466 Regarding the Approval and Construction of 149 Senior Affordable Detached Houses and 36 Single Family Market Rate Dwelling Units on Approximately 32 Acres Located at the Northeast Corner of Avenue 48 and Adams Street This item was placed on the Redevelopment Agency agenda in error. 219 (�&4444" COUNCIL/RDA MEETING DATE: January 7, 2003 ITEM TITLE: Joint Public Hearing for Consideration of an Affordable Housing Agreement by and Between the La Quinta Redevelopment Agency and Santa Rosa Development, Inc., a California Corporation, for the Sale and Development of 20.04 Acres of Agency Property Located Northeast of the Intersection of Avenue 48 and Adams Street in La Quinta Project Area No. 2 AGENDA CATEGORY: BUSINESS SESSION: CONSENT CALENDAR: STUDY SESSION: PUBLIC HEARING: 13 Adopt a Resolution of the Redevelopment Agency approving the Affordable Housing Agreement and authorizes the Agency Chair and Executive Director to execute the necessary documents to fund up to $7,800,000 in expenditures from the Project Area No. 2 Low and Moderate Income Housing Accounts for this project; appropriate $432,332 from the Project Area No. 2 Low and Moderate Income Housing Account 246-000-300-290 fund balances; appropriate $16,964 from the Project Area No. 2 Housing Tax Bond Fund; re -appropriate $350,704 from Project Area No. 2 Low and Moderate Housing Projects Fund 246-906-684-000; and direct the Executive Director to initiate activities that lead to the sale of new housing bonds. FISCAL IMPLICATIONS: The Affordable Housing Agreement ("Agreement") will result in expenditure of $7,800,000 in housing funds; $800,000 will be expended after the Agreement is executed for costs related to securing development entitlements. These expenditures will be made from funds the Agency currently has on hand. The additional $7,000,000 required to fund homebuyer second trust deed loans (anticipated to be needed no earlier than 14 months after the Agreement is executed) will be derived from the sale of housing bonds. The Agency's underwriter indicates a capacity to issue up to $22.0 million in tax-exempt bonds to fund affordable housing activities. The bonds can be structured and sold well in advance of the time second trust deed loans must be funded to facilitate unit sales. In 1995, the Agency purchased an approximately 50.0 acre parcel located northeast of the Avenue 48/Adams Street intersection to reserve property for future affordable housing development. Subsequently, .5 acres was transferred to the Coachella Valley 220 G:\WPDOCS\CC Stf Rpts\48AdamsAFAStfRpt.wpd.doc Water District in 1999, to satisfy well site requirements related to the development of the Miraflores affordable housing development; 14 acres were transferred to the A.G. Spanos Corporation in February 2000, for the development of a 200 unit apartment community that includes 20 affordable units; 11 .9 acres is the subject of a separate agreement for purchase and sale and escrow instructions for the development of 36 market rate units; and the disposition of the remaining 20.04 acres is the subject of this action. Santa Rosa Development, Inc. ("Developer") first contacted the Agency in May 1998, regarding their interest in developing both affordable and market rate housing on the 50-acre parcel. The Agency delayed moving forward with their request until a majority of the dwellings in the Miraflores community (located at Avenue 48 and Jefferson Street) were sold. This occurred in March 2002; the Agency then entered into negotiations with the Developer to determine if a mutually acceptable transaction could be consummated. Negotiations concluded in August 2002, and the Agreement was subsequently drafted. The Agreement facilitates the sale of the 20.04-acre parcel to the Developer and the subsequent development of 149 one and two bedroom single story court homes ranging from 1,175 to 1,300 square feet in size. The average home price will be $177,320. The home sales will be restricted to moderate -income homebuyers (defined as households earning from 81 % to 120% of the Riverside County median income) aged 55 years and older. Approximately 22,500 square feet of the 20.04 acre parcel will be partially improved, and transferred to the Coachella Valley Water District for a well site. This requirement will result in the Developer retaining 19.5 acres of the 20.04-acre Property for the Development. Per the Agreement, the Developer will have up to 180 days after the Agreement is executed to prepare and process the entitlements and tract map required for Property development. The Agency will provide up to $800,000 during this period to underwrite costs associated with these activities. Upon receiving the entitlements, the Agreement provides that the Agency will sell and transfer the Property to the Developer for $1 .00. Once the homes receive a certificate of occupancy from the City of La Quinta, the Agency will provide up to $7,000,000 in assistance to fund homebuyer silent second trust deed loans. The Agreement provides the latitude to fund second trust deed loans that range from $23,000 to $67,000 per homebuyer. This latitude is being provided to afford the greatest number of moderate -income households the opportunity to purchase these units. Agency staff will work with the Developer to qualify prospective homebuyers to insure that homebuyers requiring the largest mortgage amounts are not the only ones funded, thus exhausting the funds allocated for second trust deed loans before all of the units are sold. The second trust deed loans will also feature covenants that require the dwellings to remain affordable to moderate -income households for 45 years. Further, unlike past Agency second trust deed loans, the affordability covenants will not afford the G:\WPDOCS\CC Stf Rpts\48AdamsAFAStfRpt.wpd.doc �Y 71 homeowner the option to sell their dwelling at prevailing market values and release the unit from the affordability covenant. Instead, the homeowner must sell their dwelling to either another qualified buyer (a moderate income households that is 55 years or older), or if a qualified household cannot be found, as a last resort to the Agency. Accompanying the Resolution is a Summary Report that further details this transaction. LP 11TRWIN0 i :" The alternatives available to the Redevelopment Agency include: Adopt a Resolution of the Redevelopment Agency approving the Affordable Housing Agreement and authorizes the Agency Chair and Executive Director to execute the necessary documents to fund up to $7,800,000 in expenditures from the Project Area No. 2 Low and Moderate Income Housing Accounts for this project; appropriate $432,332 from the Project Area No. 2 Low and Moderate Income Housing Account 246-000-300-290 fund balances; appropriate $16,964 from the Project Area No. 2 Housing Tax Bond Fund; re - appropriate $350,704 from Project Area No. 2 Low and Moderate Housing Projects Fund 246-906-684-000; and direct the Executive Director to initiate activities that lead to the sale of new housing bonds; or 2. Do not approve the Resolution of the Redevelopment Agency that approves the Affordable Housing Agreement; or 3. Provide staff with alternative direction. Respectfully submitted, ierinan unity Development Director Approved for submission: Thomas P. Genovese, Executive Director Attachments: 1 . Summary Report 2. Affordable Housing Agreement G:\WPDOCS\CC Stf Rpts\48AdamsAFAStfRpt.wpd.doc RESOLUTION RDA NO. A RESOLUTION OF THE LA QUINTA REDEVELOPMENT AGENCY APPROVING AN AFFORDABLE HOUSING AGREEMENT BETWEEN THE AGENCY AND SANTA ROSA DEVELOPMENT, INC. FOR THE PROPERTY LOCATED AT THE NORTHEAST CORNER OF AVENUE 48 AND ADAMS STREET AFFORDABLE HOUSING AGREEMENT SANTA ROSA DEVELOPMENT, INC. WHEREAS, the La Quinta Redevelopment Agency ("Agency") is a public body, corporate and politic, organized and existing under the California Community Redevelopment Law ("Health & Safety Code § 33000 et seq.) ("CRL"); and WHEREAS, pursuant to the CRL, the City Council of the City of La Quinta ("City" or "City Council," as applicable) approved and adopted the Redevelopment Plan ("Redevelopment Plan") for Project Area No. 2 ("Project Area"), on May 16, 1989, by Ordinance No. 139; and WHEREAS, a fundamental purpose of the CRL is to expand the supply of low- and moderate -income housing (Health & Saf. Code, § 33071); and WHEREAS, the Agency staff has negotiated an Affordable Housing Agreement ("Agreement") with Santa Rosa Development, Inc., a California corporation ("Developer"), pursuant to which (i) the Agency is to convey to the Developer certain real property located within the Project Area ("Property") for One Dollar ($1 .00) for the Developer's subsequent development thereon of One Hundred Forty -Nine (149) single family homes for sale to senior citizens who are at least 55 years of age and who are also "persons and families of moderate income" (i.e., persons and families whose income does not exceed 120% of the median income for Riverside County, adjusted for family size) (the "Project"); (ii) the Agency is to reimburse the Developer, in an amount up to, but not exceeding Eight Hundred Thousand Dollars ($800,000), from the Agency's Low and Moderate Income Housing Tax Increment Fund ("Housing Fund"), for engineering, architectural and planning costs and building permit fees incurred in planning and developing the Project (the "Development Assistance"); and (iii) the Agency is to provide second trust deed assistance to qualified buyers of units in the Project in an amount not to exceed, collectively, Seven Million Dollars ($7,000,000), from the Agency's Housing Fund (the "Homebuyer Assistance"), all as more particular described in the Agreement; and WHEREAS, pursuant to the Agreement, Developer, as a condition to Agency's provision of the Development Assistance and the Homebuyer Assistance, shall record against the Property a Declaration of Covenants, Conditions, and Restrictions for Property that requires each qualified buyer of a home in the Project to execute a complete set of affordable housing documents ("Buyer Affordable Housing Documents") to assure the affordability of the home to qualified buyers for a period of forty-five (45) years from the date the home is first sold (the "Affordability Period"); and 0 ► J? 1 G:\WPDOCS\CCReso-COA\48thAdamsRDA-AFA.doc Resolution RDA No. Affordable Housing Agreement Santa Rosa Development, Inc. Adopted: January 7, 2003 WHEREAS, the Buyer Affordable Housing Documents include a note and a deed of trust, which note shall be cancelled and deed of trust reconveyed at the expiration of the Affordability Period, unless the buyer transfers the home or otherwise commits any act, in violation of the terms and conditions of the Buyer Affordable Housing Documents; and WHEREAS, the Agreement requires the Developer to execute and record against the Property an Option Agreement, which permits the Agency to reacquire the Property in the event the Developer fails to commence or complete construction of the Project within certain specified timeframes, interrupts construction of the Project for a specified period of time, or transfers the Property in violation of the Agreement, all as more particularly described in the Agreement; and WHEREAS, Health and Safety Code Section 33433 requires that the Agency prepare a Summary Report to consider the Agency's proposed financial contribution to the Project as set forth in the Agreement, that the Agency Board and the City Council conduct a noticed joint public hearing with respect to the Agreement, and that the approval of the Agreement be accompanied by certain findings and determinations as set forth herein; and WHEREAS, a Summary Report for the Agreement has been prepared and the joint public hearing has been conducted in accordance with applicable requirements of law; and WHEREAS, the City Council and the Redevelopment Agency have considered all the information and evidence set forth in the Summary Report presented by the City/Agency staff and presented by persons wishing to appear and be heard concerning the impact of the Agreement on the Project Area and the City as a whole; and WHEREAS, the Agreement is in accordance with the Redevelopment Plan and is of benefit to the Project Area and the City of La Quinta; and WHEREAS, the Agency hereby determines that the Agency's financial contribution pursuant to the Agreement is necessary to effectuate the purposes of the Redevelopment Plan; NOW, THEREFORE, BE IT RESOLVED BY THE LA QUINTA REDEVELOPMENT AGENCY AS FOLLOWS: 1 . That the above recitals are true and correct and incorporated herein. 2. That the La Quinta Redevelopment Agency hereby resolves as follows: G:\WPDOCS\CCReso-COA\48thAdamsRDA-AFA.doc Resolution RDA No. Affordable Housing Agreement Santa Rosa Development, Inc. Adopted: January 7, 2003 a. The Agreement effectuates the purposes of the Community Redevelopment Law (Health & Safety Code § 33000 et seq.) and of the Redevelopment Plan and is in the best interests of the citizens of the City of La Quinta. b. The Agency's sale of the real property identified herein will provide housing for moderate income persons and is consistent with the Agency's Five -Year Implementation Plan, based on the findings and conclusions of the Summary Report, which is incorporated herein. C. The consideration the Developer will pay for the real property to be conveyed by the Agency is not less than the fair reuse value at the use and with the covenants and conditions and development costs authorized by the sale, based on the findings and conclusions of the Summary Report. 3. The Agreement, a copy of which is on file with the Agency Secretary, is hereby approved. The Agency Executive Director and Agency Counsel are hereby authorized and directed to make final modifications to the Agreement that are consistent with the substantive terms of the Agreement approved hereby, and the Agency Executive Director is authorized to thereafter sign the Agreement on behalf of the Agency. 4. The Agency Executive Director is authorized and directed, on behalf of the Agency, to (i) sign such other and further documents, including, but not limited to Subordination Agreements and escrow instructions that require the Agency's signature, and (ii) take such other and further actions, as may be necessary and proper to carry out the terms of the Agreement. PASSED, APPROVED, AND ADOPTED at a regular meeting of the La Quinta Redevelopment Agency held this 7th day of January, 2003, by the following vote: AYES: NOES: ABSENT: ABSTAIN: TERRY HENDERSON, Agency Chair City of La Quinta, California G:\WPDOCS\CCReso-COA\48thAdamsRDA-AFA.doc 2^r cos Resolution RDA No. Affordable Housing Agreement Santa Rosa Development, Inc. Adopted: January 7, 2003 ATTEST: JUNE S. GREEK, Agency Secretary City of La Quinta, California APPROVED AS TO FORM: M. KATHERINE JENSON, Agency Counsel City of La Quinta, California G:\WPDOCS\CCReso-COA\48thAdamsRDA-AFA.doc ATTACHMENT #1 SUMMARY REPORT FOR THE AFFORDABLE HOUSING AGREEMENT BETWEEN THE LA QUINTA REDEVELOPMENT AGENCY AND SANTA ROSA DEVELOPMENT, INC December 24, 2002 INTRODUCTION This document is the Summary Report ("Report") for the Affordable Housing Agreement ("Agreement") by and between the La Quinta Redevelopment Agency ("Agency") and Santa Rosa Development, Inc., a development partnership comprised of Desert Cities Development and the RecreActions Group of Companies (RGC) ("Developer"). The Agreement facilitates the sale of a 20.04-acre Agency -owned parcel ("Property") to the Developer who will construct and sell 149 single-family dwellings that will be affordable to moderate -income households aged 55 years and older ("Development"). This Report has been prepared pursuant to Section 33433 of the California Health and Safety Code (the California Community Redevelopment Law or "Law") and addresses the following: • A summary of the proposed Development. • The cost of the Agreement to the Agency. • The estimated value of the interest to be conveyed, determined at the highest and best uses permitted by the Agency's Redevelopment Plan. • The estimated value of the interest to be conveyed determined at the use with the conditions, covenants, and development costs required by the Agreement. • An explanation of why the sale of property pursuant to the Agreement will assist in the elimination of blight. • Conformance with the Agency's Five Year Implementation Plan. THE DEVELOPMENT The Agency purchased the Property in 1995, in order to reserve land for affordable housing development. The Property was part of a larger 50 acre parcel; .5 acres was transferred to the Coachella Valley Water District in 1999, to satisfy well site requirements related to the development of the Miraflores affordable housing development; 14 acres were transferred to the A.G. Spanos Corporation in February 2000, for the development of a 200 unit apartment community that includes 20 affordable units; 11 .9 acres is proposed to be sold to the Developer at market value for the development of 36 market rate single family dwellings; and the disposition of the remaining 20.04 acres is the subject of this Report. G:\WPDOCS\Documents\SumRpt48thAdamsAFA.wpd.doc The Developer first contacted the Agency in May 1998, regarding their interest in developing both affordable and market rate housing on the 50-acre parcel. The Agency delayed moving forward with their request until a majority of the dwellings in the Miraflores community (located east of the Property at Avenue 48 and Jefferson Street) were sold. This occurred in March 2002; the Agency subsequently entered into negotiations with the Developer to determine if a mutually acceptable transaction could be consummated. Negotiations concluded in August 2002, and the Agreement was subsequently drafted. In order to insure compatibility with the surrounding single-family neighborhoods the Developer proposes a development program that locates market rate homes adjacent to the existing single-family neighborhoods located west of Adams Street and south of Avenue 48, and affordable homes on a larger square shaped segment of the Property located east of the market rate homes. The market rate units will be three and four -bedroom 36 single story homes that will be priced from $265,000 to $360,000. The affordable component entails 149 one and two bedroom single story court homes ranging from 1,175 to 1,300 square feet in size. The average home price will be $177,320. The home sales will be restricted to buyers aged 55 years and older who have moderate household incomes (defined as households earning from 81 % to 120% of the Riverside County median income). The Property includes a 22,500 square foot section that will be parcelized, partially improved, and transferred to the Coachella Valley Water District for a well site. This requirement will result in the Developer retaining 19.5 acres of the 20.04-acre Property for the Development. Per the Agreement the Developer will have up to 180 days after the Agreement is executed to prepare and process the entitlements and tract map required for Property development. The Agency will provide up to $800,000 during this period to underwrite costs associated with these activities. Upon receiving the entitlements, the Agreement provides that the Agency will sell and transfer the Property to the Developer for $1 .00. Once the homes receive a certificate of occupancy from the City of La Quinta, the Agency will provide up to $7,000,000 in assistance to fund homebuyer silent second trust deed loans. The Agreement provides the latitude to fund second trust deed loans that range from $23,000 to $67,000 per homebuyer. This latitude is being provided to afford the greatest number of moderate -income households the opportunity to purchase these units. Agency staff will work with the Developer to qualify prospective homebuyers to insure that homebuyers requiring the largest mortgage amounts are not the only ones funded, thus exhausting the funds allocated for second trust deed loans before all of the units are sold. The second trust deed loans will also feature covenants that require the dwellings to remain affordable to moderate -income households for 45 years. Further, unlike past Agency second trust deed loans, the affordability covenants will not afford the homeowner the option to sell their dwelling at prevailing market values and release the G:\WPDOCS\Documents\SumRpt48thAdamsAFA.wpd.doc unit from the affordability covenant. Instead, the homeowner must sell their dwelling to either another qualified buyer (a moderate income households that is 55 years or older), or if a qualified household cannot be found, as a last resort to the Agency. THE COST OF THE AGREEMENT TO THE AGENCY The Agreement obligates the Agency to fund a total of $8,886,138 or $59,638 per unit to obtain 149 affordable for sale housing units. These costs are as follows: • Property Purchase Costs - $1,086,138 • The Property cost the Agency $1,086,139; $764,887 in land acquisition costs and $321,252 in interest carry costs associated with the bond proceeds used to acquire the Property. The Agency purchased the larger 50-acre parcel in 1995 for $1,909,300. The Property's pro rata share of the total purchase cost is $764,887. 1995 Housing Bond proceeds were used to fund this purchase, which feature a blended interest rate of 6%. The interest expense associated with the $764,887 purchase cost is $321,252. Per the Agreement the Developer will purchase the Property for $1.00, leaving $1,086,138 in land acquisition and interest carry costs that the Agency must fund to obtain the affordable units. • Entitlement and Municipal Fee Costs - $800,000 Prior to transferring the Property to the Developer, the Agency will fund the costs associated with planning, engineering and environmental studies, and municipal and building permit fees. The draw schedule for these funds is as follows: • $250,000 upon executing the Agreement to reimburse the Developer for funds they expended to plan and replan this project since 1998 (including preparing a specific plan and paying over $10,000 in application fees) and to fund some of the costs of revising the specific plan to reflect the new development program; • $200,000 upon filing the entitlements to fund the remaining architectural, engineering, planning, environmental costs, and fees associated with submitting a revised specific plan and tract map; • $200,000 upon receipt of entitlements to fund costs associated with preparing construction drawings and some municipal fee costs; and • $150,000 upon receiving building permits to fund the remaining municipal fee expenses. Homebuyer Second Trust Deed Mortgages — Up to $7,000,000 In order sell the units at costs affordable to moderate income households the Agreement provides that the Agency will fund 149 second trust deed mortgages. The mortgages will cover each dwelling's pro rate share of land ($5,133) and 014 G:\WPDOCS\Documents\SumRpt48thAdamsAFA.wpd.doc entitlement/municipal fee ($5,369) costs, and $12,498 to $56,498 of development costs. The total second trust deed mortgage will range from $23,000 to $67,000 per household, with the average per unit mortgage projected to be $50,000. This range will permit households aged 55 years or older who earn from 81 to 120 percent of the Riverside County median income to purchase these homes. The Agency's Redevelopment Consultant has reviewed and verified the costs associated with the Development. Total development costs are projected to be $26,420,593, which includes a developer profit of 4.46% or $1,228,497. This equates to an average per unit cost of $177,320. The Agency second trust deeds combined with the homebuyer down payments of 3% will reduce the first trust deed mortgage to $1 10,320 to $154,320, a level affordable to moderate income households. ESTIMATED VALUE OF INTEREST TO BE CONVEYED The Agency's Redevelopment Consultant reviewed comparable land sales for property designated for single-family development that was not yet entitled. This review identified per acre land values ranging from $38,660 to $75,000. The Agency is selling the Developer an adjoining parcel for market rate residential development at a per acre price of $67,347. Using this value, the 20.04-acre parcel would have a current market value of $1,349,633. ESTIMATED VALUE OF THE INTEREST TO BE CONVEYED, DETERMINED AT THE USE AND WITH THE CONDITIONS, COVENANTS, AND DEVELOPMENT COSTS REQUIRED BY THE AGREEMENT The Agreement requires the Developer to construct 149 dwellings that must be sold at affordable housing costs to moderate -income households. In order achieve affordable housing costs the units must have first trust deed mortgages that range from $1 10,320 to $154,320. Selling the Property for $1.00, plus providing additional financial assistance to reduce overall development costs, will achieve this. EXPLANATION OF WHY THE SALE OF THE PROPERTY PURSUANT TO THE AGREEMENT WILL ASSIST IN THE ELIMINATION OF BLIGHT California Redevelopment Law identifies the provision of affordable housing as a fundamental purpose of redevelopment. The Property conveyance and construction of the Development will eliminate blighted conditions by facilitating the development of dwellings that will increase and improve the supply of affordable housing within La Quinta Redevelopment Project Area No. 2. Per the Second Five Year Implementation Plan, the Agency has an obligation to facilitate the production of over 1,500 affordable units by 2004. In order to accomplish this task the Agency must provide incentives to private developers and non-profit organizations to construct units that will generate less than market value returns. The Property conveyance and the Development will further the Agency's efforts to promote affordable housing development within Project Area No 2. �U G:\WPDOCS\Documents\SumRpt48thAdamsAFA.wpd.doc CONFORMANCE WITH THE AGENCY'S FIVE YEAR IMPLEMENTATION PLAN The Second Five Year Implementation Plan and the Second Amended Housing Affordability Plan identifies a combination of market rate and affordable housing development for the Property. The conveyance of the Property and the subsequent development of affordable housing conform to the provisions of both these Plans. A copy of the proposed Agreement is attached to this Report and is available for review at the Community Development Department located at the La Quinta City Hall. The proposed Agreement will be the subject of a joint public hearing to be conducted by the Agency and City Council on January 7, 2003, at 7:00 p.m. in the Council Chambers, which are located at the La Quinta City Hall, 78-495 Calle Tampico, La Quinta, California. P?3 �3J G:\WPDOCS\Documents\SumRpt48thAdamsAFA.wpd.doc AFFORDABLE HOUSING AGREEMENT BY AND BETWEEN LA QUINTA REDEVELOPMENT AGENCY AND SANTA ROSA DEVELOPMENT, INC. 882/015610-0043 346077.03 PM03 TABLE OF CONTENTS Page I. [100] SUBJECT OF AGREEMENT............................................................................... I A. [101] Purpose of Agreement................................................................................1 B. [102] The Redevelopment Plan...........................................................................1 C. [103] The Project Area.........................................................................................2 D. [104] The Site.......................................................................................................2 E. [105] Parties to the Agreement............................................................................2 1. [ 1061 The Agency.................................................................................... 2 2. [107] The Developer................................................................................2 3. [108] Prohibition Against Change in Ownership, Management and Control of Developer and Prohibition Against Transfer of theSite......................................................................................................3 F. [109] Representations by the Developer..............................................................4 G. [110] Representations by the Agency..................................................................4 II. [200] AGENCY ASSISTANCE......................................................................................5 A. [201 ] Development Assistance............................................................................ 6 B. [202] Homebuyer Assistance...............................................................................6 C. [203] Buyer Affordable Housing Documents......................................................6 D. [204] Conditions Precedent to the Transfer of the Site ........................................ 7 E. [205] Acquisition of the Site; Purchase Price......................................................7 F. [206] Escrow........................................................................................................7 G. [207] Conveyance of Units to Eligible Buyers .................................................... 9 H. [208] Conveyance of Title and Delivery of Possession ....................................... 9 1. [209] Condition of Title....................................................................................... 9 J. [210] Payment of the Purchase Price and Recordation of Deed........................10 K. [211] Title Insurance..........................................................................................10 L. [212] Taxes and Assessments............................................................................10 M. [213] Conveyance Free of Possession............................................................... I I N. [214] Inspections; Condition of Site..................................................................11 1. Inspections..............................................................................................11 2. "As Is".....................................................................................................11 3. Indemnity................................................................................................11 4. Release and Waiver.................................................................................12 5. Definitions...............................................................................................12 6. Materiality...............................................................................................13 O. [215] Preliminary Work by the Developer........................................................13 III. [300] DEVELOPMENT OF THE SITE........................................................................14 A. [301] Development of the Site...........................................................................14 1. [302] Scope of Development.................................................................14 2. [303] Plans, Drawings, and Related Documents...................................14 3. [304] Review and Approval of Plans, Drawings, and Related Documents..............................................................................................14 233 882/015610-0043 346077.03 PM03 _1_ Page 4. [305] Project Entitlements.....................................................................15 5. [306] Cost of Development....................................................................16 6. [307] Construction Schedule..................................................................16 7. [308] Indemnity; Insurance Requirements.............................................16 8. [309] City and Other Governmental Agency Permits ............................17 9. [310] Rights of Access...........................................................................17 10. [311 ] Local, State and Federal Laws ..................................................... IS 11. [312] Anti-Discrimination.....................................................................18 12. [313] Taxes and Assessments................................................................18 13. [314] Right of the Agency to Satisfy Other Liens on the Site AfterTitle Passes....................................................................................18 14. [315] Certificate of Completion.............................................................19 15. [316] No Encumbrances Except Mortgages, Deeds of Trust, Sales and Leases -Back or Other Financing for Development ................20 16. [317] Holder Not Obligated to Construct Improvements ......................20 17. [318] Notice of Default to Mortgage, Deed of Trust or Other Security Interest Holders; Right to Cure.................................................20 18. [319] Failure of Holder to Complete Improvements .............................21 19. [320] Right of Agency to Cure Mortgage, Deed of Trust or Other Security Interest Default............................................................... 21 20. [321 ] Agency Agreement to Cooperate with Construction Lender..................................................................................................... 22 IV. [400] USE OF THE SITE.............................................................................................. 22 A. [401] Affordable Housing..................................................................................22 B. [402] Uses In Accordance with Redevelopment Plan; Nondiscrimination............................................................................................... 23 C. [403] Effect of Violation of the Terms and Provisions of this Agreement After Completion of Construction...................................................24 D. [404] Maintenance of the Site............................................................................24 V. [500] DEFAULTS AND REMEDIES...........................................................................25 A. [501] Defaults -- General...................................................................................25 B. [502] Legal Actions...........................................................................................25 1. [503] Institution of Legal Actions; Attorney's Fees...............................25 2. [504] Applicable Law............................................................................25 3. [505] Acceptance of Service of Process................................................25 C. [506] Rights and Remedies Are Cumulative.....................................................26 D. [507] Inaction Not a Waiver of Default.............................................................26 E. [508] Remedies and Rights of Termination.......................................................26 1. [509] Defaults........................................................................................26 2. [510] Specific Performance...................................................................26 3. [511] Termination by the Developer......................................................26 4. [512] Termination by the Agency..........................................................27 5. [513] Option Agreement........................................................................27 6. [514] Right of Reverter..........................................................................27 234 882/015610-0043 A 346077.03 PM03 7. [515] Agency's Option to Acquire Plans ..... Page .................................... 28 VI. [600] GENERAL PROVISIONS................................................................. A. [601] Notices, Demands and Communications Between Parties..... B. [602] Conflicts of Interest................................................................ C. [603] Enforced Delay; Extension of Times of Performance ........... D. [604] Non -Liability of Officials and Employees of the Agency ..... E. [605] Interpretation; Entire Agreement, Waivers; Counterparts; Attachments...................................................................................... F. [605] No Brokers............................................................................. G. [606] Amendments to this Agreement ............................................. ATTACHMENTS 1 Site Map 2 Legal Description 3 Scope of Development 4 Schedule of Performance 5 Grant Deed 6 Disbursement Schedule 7 Option Agreement 8 Declaration of Covenants, Conditions, and Restrictions For Property 9 Certificate of Completion 10 Form of Buyer Affordable Housing Documents ...............29 ............... 30 ............... 30 I. [100] SUBJECT OF AGREEMENT............................................................................... I A. [ 101 ] Purpose of Agreement................................................................................ I B. [102] The Redevelopment Plan........................................................................... I C. [103] The Project Area.........................................................................................2 D. [104] The Site.......................................................................................................2 E. [105] Parties to the Agreement............................................................................2 1. [106] The Agency.................................................................................... 2 2. [107] The Developer................................................................................2 3. [108] Prohibition Against Change in Ownership, Management and Control of Developer and Prohibition Against Transfer of theSite...................................................................................................... 3 F. [109] Representations by the Developer..............................................................4 G. [110] Representations by the Agency.................................................................. 4 882/015610-0043 346077.03 PM03 -111- Page II. [200] AGENCY ASSISTANCE......................................................................................5 A. [201 ] Development Assistance............................................................................ 6 B. [202] Homebuyer Assistance...............................................................................6 C. [203] Buyer Affordable Housing Documents......................................................6 D. [204] Conditions Precedent to the Transfer of the Site........................................7 E. [205] Acquisition of the Site; Purchase Price......................................................7 F. [206] Escrow........................................................................................................7 G. [207] Conveyance of Units to Eligible Buyers .................................................... 9 H. [208] Conveyance of Title and Delivery of Possession.......................................9 I. [209] Condition of Title....................................................................................... 9 J. [210] Payment of the Purchase Price and Recordation of Deed........................10 K. [211] Title Insurance..........................................................................................10 L. [212] Taxes and Assessments............................................................................10 M. [213] Conveyance Free of Possession............................................................... I I N. [214] Inspections; Condition of Site.................................................................. I I 1. Inspections..............................................................................................11 2. "As Is".....................................................................................................11 3. Indemnity................................................................................................11 4. Release and Waiver.................................................................................12 5. Definitions...............................................................................................12 6. Materiality...............................................................................................13 O. [215] Preliminary Work by the Developer........................................................13 III. [300] DEVELOPMENT OF THE SITE........................................................................14 A. [301] Development of the Site...........................................................................14 1. [302] Scope of Development.................................................................14 2. [303] Plans, Drawings, and Related Documents...................................14 3. [304] Review and Approval of Plans, Drawings, and Related Documents..............................................................................................14 4. [305] Project Entitlements.....................................................................15 5. [306] Cost of Development....................................................................16 6. [307] Construction Schedule..................................................................16 7. [308] Indemnity; Insurance Requirements.............................................16 8. [309] City and Other Governmental Agency Permits ............................17 9. [310] Rights of Access...........................................................................17 10. [311 ] Local, State and Federal Laws.....................................................18 11. [312] Anti-Discrimination.....................................................................18 12. [313] Taxes and Assessments................................................................18 13. [314] Right of the Agency to Satisfy Other Liens on the Site AfterTitle Passes....................................................................................18 14. [315] Certificate of Completion.............................................................19 15. [316] No Encumbrances Except Mortgages, Deeds of Trust, Sales and Leases -Back or Other Financing for Development ................20 16. [317] Holder Not Obligated to Construct Improvements ......................20 17. [318] Notice of Default to Mortgage, Deed of Trust or Other Security Interest Holders; Right to Cure ................................................. 20 236 882/015610-0043 346077.03 PM03 -iv- ' ") I 8 8 Page 18. [319] Failure of Holder to Complete Improvements .............................21 19. [320] Right of Agency to Cure Mortgage, Deed of Trust or Other Security Interest Default............................................................... 21 20. [321 ] Agency Agreement to Cooperate with Construction Lender..................................................................................................... 22 IV. [400] USE OF THE SITE..............................................................................................22 A. [401] Affordable Housing..................................................................................22 B. [402] Uses In Accordance with Redevelopment Plan; Nondiscrimination............................................................................................... 23 C. [403] Effect of Violation of the Terms and Provisions of this Agreement After Completion of Construction...................................................24 D. [404] Maintenance of the Site............................................................................24 V. [500] DEFAULTS AND REMEDIES...........................................................................25 A. [501 ] Defaults -- General...................................................................................25 B. [502] Legal Actions...........................................................................................25 1. [503] Institution of Legal Actions; Attorney's Fees...............................25 2. [504] Applicable Law............................................................................25 3. [505] Acceptance of Service of Process................................................25 C. [506] Rights and Remedies Are Cumulative.....................................................26 D. [507] Inaction Not a Waiver of Default.............................................................26 E. [508] Remedies and Rights of Termination.......................................................26 1. [509] Defaults........................................................................................26 2. [510] Specific Performance...................................................................26 3. [511] Termination by the Developer......................................................26 4. [512] Termination by the Agency..........................................................27 5. [513] Option Agreement........................................................................27 6. [514] Right of Reverter..........................................................................27 7. [515] Agency's Option to Acquire Plans...............................................28 VI. [600] GENERAL PROVISIONS...................................................................................28 A. [601 ] Notices, Demands and Communications Between Parties ....................... 28 B. [602] Conflicts of Interest..................................................................................28 C. [603] Enforced Delay; Extension of Times of Performance .............................29 D. [604] Non -Liability of Officials and Employees of the Agency ....................... 29 E. [605] Interpretation; Entire Agreement, Waivers; Counterparts; Attachments........................................................................................................29 F. [605] No Brokers...............................................................................................30 G. [606] Amendments to this Agreement...............................................................30 `3 7 882/015610-0043 346077.03 PM03 -V- AFFORDABLE HOUSING AGREEMENT This Affordable Housing Agreement ("Agreement") is entered into as of the day of , 2003 ("Effective Date") by and between LA QUINTA REDEVELOPMENT AGENCY, a public body corporate and politic (the "Agency") and SANTA ROSA DEVELOPMENT, INC., a California corporation (the "Developer"). The Agency and the Developer (collectively referred to as the "Parties") hereby agree as follows: I. [100] SUBJECT OF AGREEMENT A. [1011 Purpose of Agreement The purpose of this Agreement is to effectuate the Redevelopment Plan for the La Quinta Redevelopment Project Area No. 2 (the "Project Area") by providing for the improvement of certain property situated within the Project Area, by assisting in the financing of the acquisition of the "Site" (as hereinafter defined) and the development thereon of a "senior citizen housing development," as defined in Civil Code Section 51.3(b)(4), consisting of not less than one hundred forty-nine (149) single-family detached homes and related improvements (the "Project") to be sold to "Eligible Buyers" at an "Affordable Housing Cost" (as those terms are defined in Section 401 hereof). As used herein, the term "Unit" refers to each of the 149 single family dwelling units and the particular lot on which the unit is constructed, and the term "Units" refers to all of the 149 single family dwelling units and the lots on which they are constructed. The Units are subject to the Declaration of Covenants, Conditions, and Restrictions For Property, attached hereto and incorporated herein as Attachment No. 8 ("Declaration"). The Agency financial assistance in this Agreement shall be utilized to effectuate a portion of the Agency's overall affordable housing program pursuant to the requirements of California Health and Safety Code Section 33334.2 to expend twenty percent (20%) of its increment funds to improve, increase and preserve the community's supply of low- and moderate -income housing. The acquisition and development of the Site and the occupancy of the single-family housing as developed for senior citizen households of limited incomes, all as provided in this Agreement, are in the vital and best interests of the City of La Quinta (the "City") and the health, safety and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements under which the Project has been undertaken. B. f 1021 The Redevelopment Plan This Agreement is subject to the provisions of the Redevelopment Plan for the Project Area (the "Redevelopment Plan") which was approved and adopted by Ordinance No. 139 of the City Council of the City of La Quinta on the 16th day of May, 1989. Said ordinance and Redevelopment Plan are fully incorporated herein by reference. Any amendment hereafter to the Redevelopment Plan (as so approved and adopted) which changes the uses or development permitted on the Site as proposed in this Agreement, or otherwise changes the restrictions or controls that apply to the Site, or otherwise affects the Developer's obligations or rights with respect to the Site, shall not apply to the Site without the 238 882/015610-0043 346077.03 PM03 !_. written consent of the Developer. Amendments to the Redevelopment Plan applying to other property in the Project Area shall not require the consent of the Developer. C. f 1031 The Project Area The Project Area is located in the City and is generally bounded by Washington Street, the northern corporate boundary, Jefferson Street and Avenue 50. The exact boundaries are as set out in the Redevelopment Plan. D. j 1041 The Site The "Site" is currently owned by the Agency and consists of certain of real property at the corner of Avenue 48th and Adams Street located within the Project Area in the City of La Quinta, County of Riverside. The Site is depicted in the Site Map, which is attached hereto and incorporated herein as Attachment No. 1. The legal description of the Site is provided on Attachment No. 2, which is attached hereto and incorporated herein by this reference. E. [ 1051 Parties to the Agreement [1061 The Agency The Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under the Community Redevelopment Law of the State of California (Health & Safety Code § 33000 et seq.). The principal office of the Agency is located at 78-495 Calle Tampico, La Quinta, California 92253, or such other address as Agency shall hereafter designate in writing to Developer. "Agency", as used in this Agreement, includes the La Quinta Redevelopment Agency and any and all assignees of or successors to its rights, powers and responsibilities. 2. [1071 The Developer The Developer is Santa Rosa Development, Inc. a California corporation. The principal office and mailing address of the Developer for purposes of this Agreement is 71084 Tamerisk Lane, Rancho Mirage, CA 92270. By executing this Agreement, each person signing on behalf of the Developer warrants and represents to the Agency that the Developer has the full power and authority to enter into this Agreement, that all authorizations required to make this Agreement binding upon the Developer have been obtained, and that the person or persons executing this Agreement on behalf of the Developer are fully authorized to do so. Whenever the term "Developer" is used in this Agreement, such term shall include any and all nominees, assignees, or successors in interest as herein provided. 23� 882/015610-0043 346077.03 PM03 -2- 3. f 1081 Prohibition Against Change in Ownership Management and Control of Developer and Prohibition Against Transfer of the Site The qualifications and identity of the Developer are of particular interest to the Agency. It is because of these qualifications and identity that the Agency has entered into this Agreement with the Developer. Consequently, no person, whether a voluntary or involuntary successor of Developer, shall acquire any rights or powers under this Agreement nor shall the Developer assign all or any part of this Agreement or the Site without the prior written approval of the Agency. A voluntary or involuntary sale or transfer of any interest in the Developer of the Site prior to the issuance of a Certificate of Completion for the Project shall be deemed to constitute an assignment or transfer for the purposes of this Section 108, and the written approval of the Agency shall be required prior to effecting such an assignment or transfer. Any purported transfer, voluntarily or by operation of law, except with the prior written consent of the Agency, shall render this Agreement absolutely null and void and shall confer no rights whatsoever upon any purported assignee or transferee. Prior to the issuance of a Certificate of Completion for the Project on the Site, the Developer shall not, except as permitted by this Agreement, assign or attempt to assign this Agreement or any rights or duties herein, nor make any total or partial sale, transfer, conveyance, or assignment of the whole or any part of the Site or any of the improvements thereon, without the prior written approval of the Agency. Notwithstanding any other provision of this Agreement to the contrary, Agency approval of an assignment of this Agreement or transfer of the Site, or any interest therein shall not be required in connection with: (a) the conveyance or dedication of any portion of the Site to the City of La Quinta, or other appropriate governmental agency, including public utilities, where the granting of such easements permits or facilitates the development of the Project on the Site; or (b) any assignment of this Agreement or transfer of the Site, or any of the improvements located thereon, to a limited liability company in which Developer has a greater than fifty percent (50%) ownership and management interest; (c) any assignment of this Agreement or transfer of the Site, or any of the improvements located thereon, to any of Developer's principals or majority shareholders; (d) any assignment of this Agreement, or transfer of the Site and any of the improvements located thereon, to a general or limited partnership in which Developer is a general partner with a greater than fifty percent (50%) ownership and management interest; and (e) any assignment of this Agreement or transfer of the Site, or any of the improvements located thereon, by Developer's principals or majority shareholders to other entities or individuals, provided that after all such assignments in the aggregate, Developer's majority shareholders retain a greater than fifty percent (50%) ownership and management interest; and . Notwithstanding anything in this Section 108 to the contrary, no transfer or assignment by Developer or any successor in interest to Developer shall be effective unless and until the transferor and transferee execute and deliver to Agency an assignment and assumption agreement in a form and with content reasonably acceptable to Agency's legal counsel. This Section 108 shall not be applicable to the sales of Units to Eligible Buyers in accordance with this Agreement and no assignment and assumption agreement shall be required for the conveyance of a home to an Eligible Buyer. This Section 108 shall become inapplicable for each lot in the Site as to which the City has issued a Certificate of Occupancy for the Unit constructed thereon. 240 882/015610-0043 1 1 C 346077.03 PM03 -3- F. [1091 Representations by the Developer The Developer represents and warrants to the Agency as follows: 1. The Developer is duly established and in good standing under the laws of the State of California and has duly authorized, executed and delivered this Agreement and any and all other agreements and documents required to be executed and delivered by the Developer in order to carry out, give effect to, and consummate the transactions contemplated by this Agreement. This Agreement is enforceable against the Developer in accordance with its terms. 2. The Developer does not have any contingent obligations or contractual agreements which will materially adversely affect the ability of the Developer to carry out its obligations hereunder. 3. There are no pending or, so far as is known to the Developer, threatened, legal proceedings to which the Developer is or may be made a party to or to which it or any of its property is or may become subject, which have not been fully disclosed in the material submitted to the Agency, which will materially adversely affect the ability of the Developer to carry out its obligations hereunder. 4. There is no action or proceeding pending or, to the Developer's best knowledge, threatened, looking toward the dissolution or liquidation of the Developer and there is no action or proceeding pending or, to the Developer's best knowledge, threatened by or against the Developer which could affect the validity and enforceability of the terms of this Agreement, or adversely affect the ability of the Developer to carry out its obligations hereunder. 5. The Developer has, and will as required by its obligations hereunder, dedicate, allocate and otherwise make available, sufficient financial and other resources to perform its obligations under this Agreement. Each of the foregoing items 1 to 5, inclusive, shall be deemed to be an ongoing representation and warranty and shall survive the close of escrow for the Site and shall continue until the sale of the last Unit in the Project. The Developer shall advise the Agency in writing if there is any change material pertaining to any matters set forth or referenced in the foregoing items 1 to 5, inclusive. G. [1101 Representations by the A eg_nc_y The Agency represents and warrants to Developer as follows: 1. Agency is a public body, corporate and politic, existing pursuant to the California Community Redevelopment Law (California Health and Safety Code Section 33000), which has been authorized to transact business pursuant to action of the City of La Quinta. Agency has full right, power and lawful authority to transfer the Site as provided herein and the execution, performance, and delivery of this Agreement by Agency has been fully authorized by all requisite actions on the part of Agency. The parties who have executed this Agreement on behalf of Agency are authorized to bind Agency by their signatures hereto. 882/015610-0043 346077.03 PM03 -4- 2 �. rl 7'I 2. Agency does not, as far as is known to Agency, have any contingent obligations or contractual agreements which will materially adversely affect the ability of Agency to carry out its obligations hereunder. 3. There are no pending or, so far as is known to Agency, threatened, legal proceedings to which Agency is or may be made a party or to which it or any of its property is or may become subject, which will materially adversely affect the ability of Agency to carry out its obligations hereunder. 4. There is no action or proceeding pending or, to Agency's best knowledge, threatened, looking toward the dissolution or liquidation of Agency and there is no action or proceeding pending or, to Agency's best knowledge, threatened by or against Agency which could affect the validity and enforceability of the terms of this Agreement, or adversely affect the ability of Agency to carry out its obligations hereunder. 5. To the best of Agency's knowledge, the Site is not currently in violation of any law, ordinance, rule, regulation or requirement applicable to its use and operation. 6. Agency is not the subject of a bankruptcy proceeding. 7. To the best of Agency's actual knowledge, without duty of investigation, no Hazardous Materials (as defined in Section 214.5 below) are now or have been released, used, or stored on or within any portion of the Site in violation of applicable laws or regulations governing the release, use, or storage of Hazardous Materials, and there has not been any federal, state, or local enforcement, clean-up, removal, remedial, or other governmental or regulatory actions instituted or completed affecting the Site. As used in this Section 110, the term "knowledge" or "known" shall mean the actual (not constructive or imputed) knowledge of Agency, without any investigation or inquiry or duty of investigation or inquiry. 11. [200] AGENCY ASSISTANCE The Agency agrees to provide to Developer pursuant to the Agreement certain financial assistance and incentives in an amount not to exceed Seven Million Eight Hundred Thousand Dollars ($7,800,000), which shall be composed of the "Development Assistance," and the "Homebuyer Assistance," (as those terms are defined below), and which shall include (i) funding for processing and obtaining certain entitlements necessary for the Project and for payment of certain public fees connected with the Project, and (ii) provision of assistance for Eligible Buyers who purchase Units in the Project, all as more particularly set forth in Sections 201 and 202 below (collectively, "Agency Assistance"). The Agency Assistance has been funded from the Agency's Low and Moderate Income Housing Fund. Accordingly, Developer acknowledges and agrees that the use of the Site shall be subject to all of the income and affordability restrictions set forth in this Agreement, and the Declaration. 242 024 882/015610-0043 346077.03 PM03 -5- A. I2011 Development Assistance. Agency shall provide, as part of the Agency Assistance, the Development Assistance, which shall be a grant to Developer in an amount not to exceed Eight Hundred Thousand Dollars ($800,000). Agency shall disburse the Development Assistance in accordance with the terms and conditions set forth in that certain disbursement schedule attached hereto and incorporated herein as Attachment No. 6 ("Disbursement Schedule"). B. [2021 Homebuyer Assistance Agency shall provide as part of the Agency Assistance a loan in an amount up to, but not exceeding, Sixty -Seven Thousand Dollars ($67,000) to each Eligible Buyer of a Unit in the Project ("Homebuyer Loan Amount"). Prior to or concurrent with each close of escrow for the sale of a Unit to an Eligible Buyer, Agency shall deposit into said escrow the Homebuyer Loan Amount to be applied towards the purchase price of such Unit. Nothing herein shall prohibit or prevent Developer from providing, from Developer's own funds, additional contributions to the Homebuyer Assistance. In the event the Developer exhausts the full amount of the Homebuyer Assistance prior to the time the last Unit has been sold, Developer shall provide, out of its own funds, the homebuyer assistance towards the purchase price of the remaining Units. Upon the sale of said remaining Units, the amounts expended by Developer pursuant to the immediately preceding sentence shall be deemed to be Agency funds, and repayment of said loans, if any, shall be made to Agency and not to Developer. C. F2031 Buyer Affordable Housing Documents Each buyer of a Unit shall be required to execute all of the following to assure the affordability of the Unit to Eligible Buyers for a period of forty-five (45) years following the date of transfer of said Unit from Developer to an Eligible Buyer ("Covenant Period"): (i) an affordable housing agreement that prohibits during the Covenant Period the resale of the Unit except to an Eligible Buyer and grants the Agency an option to purchase the Unit ("Option to Purchase") in the event the then -owner is unable to locate an Eligible Buyer ("Buyer Affordable Housing Agreement"); (ii) a memorandum reciting Agency's Option to Purchase ("Buyer Memorandum Re Option to Purchase"); (iii) a promissory note ("Buyer Promissory Note") whose terms shall include, (a) principal in the Homebuyer Loan Amount, (b) seven percent (7%) interest per annum, compounded annually, (c) a 45-year term, (d) that no payments shall be due unless an "Event of Acceleration" (as that term is defined in the Declaration) occurs, triggering acceleration and repayment of the Homebuyer Loan Amount, (e) assumability by an Eligible Buyer, and (f) full credit of all payments at end of term if all conditions, covenants and restrictions have been satisfied; (iv) a second deed of trust securing the Buyer Promissory Note ("Buyer Second Trust Deed"); and (v) a disclosure statement acknowledging and consenting to all of the affordability and resale restrictions contained in the aforementioned documents ("Buyer Disclosure Statement"). The documents listed in clauses (i)-(v) above shall be collectively referred to herein as the "Buyer Affordable Housing Documents." Current sample forms of each of the Buyer Affordable Housing Documents are attached hereto and incorporated herein as Attachment No. 10. Said forms shall be subject to change to conform with this Agreement and all applicable Fannie Mae, HUD or other government or lender requirements. 241 882/015610-0043 -6- O 346077.03 PM03 D. [2041 Conditions Precedent to the Transfer of the Site Prior to, and as conditions to conveyance of the Site by Agency to Developer and to funding any portion of the Agency Assistance (except as expressly provided below), the Developer shall complete each of the following by the respective times established therefor in that certain schedule attached hereto and incorporated herein as Attachment No. 4 ("Schedule of Performance"). 1. the Developer shall not be in default of this Agreement; 2. the Developer provides to the Executive Director insurance certificates conforming to Section 308 of this Agreement; 3. the Developer shall have executed and deposited with escrow for recordation and delivery to the Agency the Declaration and the "Option Agreement" (as that term is defined in Section 513 hereof); 4. the Developer shall have provided a conditional loan approval or other evidence of financing reasonably satisfactory to the Agency Executive Director sufficient to perform Developer's responsibilities for construction of the Project pursuant to this Agreement; and 5. the Developer has approved the environmental condition of the Site and agrees to acquire the Site in its present condition. 6. the Developer shall have processed and obtained all of the "Project Entitlements" (as that term is defined in Section 305). The foregoing items numbered 1 to 6, inclusive, together constitute the "Agency's Conditions to Close" for the conveyance of the Site to the Developer and the funding of the Agency Assistance; provided however, that Developer may obtain certain portions of the Agency Assistance prior to the time it obtains the Project Entitlements, as set forth in the Disbursement Schedule. E. [2051 Acquisition of the Site, Purchase Price The Developer shall acquire a fee simple marketable title to the Site pursuant to a grant deed in the form attached hereto and incorporated herein as Attachment No. 5 ("Grant Deed"). Developer's purchase price for the Site is One Dollar ($1). F. j2061 Escrow 1. Opening of Escrow. Agency and Developer agree to open an escrow (the "Escrow") with First American Title Insurance Company, or with another mutually agreeable escrow company (the "Escrow Agent"), by the time established therefor in the Schedule of Performance. This Agreement constitutes Agency's and Developer's escrow instructions for the Agency's sale and Developer's purchase of the Site and a duplicate original of this Agreement shall be delivered to the Escrow Agent upon the opening of the Escrow. The Escrow Agent is 882/015610-0043 346077 03 PM03 - / - 026 hereby empowered to act under this Agreement, and the Escrow Agent, upon indicating within five (5) days after the opening of the Escrow its acceptance of the provisions of this Section 206, in writing, delivered to the Agency and the Developer, shall carry out its duties as Escrow Agent hereunder. 2. Deposits Into Escrow. Agency and Developer shall deposit the following documents and pay into the Escrow the following fees, charges and costs promptly after the Escrow Agent has notified the Agency of the total amount of such fees, charges and costs, but not earlier than five (5) days prior to the scheduled date for closing the Escrow: a. Agency and Developer shall each pay one-half of the Escrow fee; b. Agency shall pay the costs, if any, of drawing the Grant Deed; C. Agency shall pay recording fees, if any; d. Agency and Developer shall pay their respective Notary fees; e. Agency shall pay the premium for the title insurance policy up to the amount set forth in Section 211 and Developer shall pay for its portion, if any, as set forth in Section 211. f. Agency shall pay for any transfer tax and any state, county or city documentary stamps. g. Developer shall deposit with the Escrow Agent the executed Declaration and the Option Agreement. 3. Escrow Officer Obligations. The Escrow Officer shall notify the Agency when all outstanding documents, including the Grant Deed, the Declaration, and the Option Agreement, have been executed and submitted to Escrow by the applicable party. The Escrow Agent shall record the following documents in the following order of recordation: (1) Grant Deed, (2) Option Agreement, and (3) Declaration. All funds received in the Escrow shall be deposited by the Escrow Agent, with other escrow funds of the Escrow Agent in an interest -earning general escrow account or accounts with any state or national bank doing business in the State of California. Such funds may be transferred to any other general escrow account or accounts. All disbursements shall be made by check of the Escrow Agent. Any amendment to these escrow instructions shall be in writing and signed by the Agency. At the time of any amendment, the Escrow Agent shall agree to carry out its duties as Escrow Agent under such amendment. The liability of the Escrow Agent in the capacity of escrow holder with respect to the Agency is limited to performance of the obligations imposed under it under Sections 206, 210, 211, and 212, of this Agreement. 2�J 882/015610-0043 346077.03 PM03 -g . V 027 G. [2071 Conveyance of Units to Eligible Buyers Each Eligible Buyer of a Unit in the Project shall be required to execute a complete set of Buyer Affordable Housing Documents. At the time the Developer conveys a Unit in the Project to an Eligible Buyer, Agency agrees to subordinate the Declaration, the Buyer Affordable Housing Agreement, the Buyer Memorandum Re Option to Purchase, and the Buyer Second Deed of Trust to the first priority lien of any purchase money deed of trust by recording a subordination agreement in a form approved by Agency. H. f 2081 Conveyance of Title and Delivery of Possession Provided that the Developer is not in default under this Agreement and all conditions precedent to such conveyance have occurred, and subject to any mutually agreed upon extensions of time, conveyance to the Developer of title to the Site shall be completed on or prior to the date specified in the Schedule of Performance. The Agency and the Developer agree to perform all acts necessary to conveyance of title in sufficient time for title to be conveyed in accordance with the foregoing provisions. Possession shall be delivered to the Developer concurrently with the conveyance of title, except that limited access may be permitted before conveyance of title as permitted in Section 214 of this Agreement. The Developer shall accept title and possession on said date. I. [2091 Condition of Title The Agency shall convey to the Developer fee simple title to the Site free and clear of all recorded liens, encumbrances, encroachments, assessments, leases and taxes except as approved by Developer pursuant to this Section 209. Within five (5) days after the Effective Date, Agency shall cause First American Title Insurance Company, or another title company reasonably acceptable to Agency and Developer (the "Title Company"), to deliver to Developer a standard preliminary title report (the "Title Report") with respect to the Site, together with legible copies of the documents underlying the exceptions ("Exceptions") set forth in the Title Report. Developer shall have the right to reasonably approve or disapprove the Exceptions; provided, however, that the Developer hereby approves the Redevelopment Plan and the lien of current non -delinquent real property taxes and assessments, if any, as Exceptions. Developer shall have ten (10) business days from the date of receipt of the Title Report and the Exceptions pursuant to this Section 209 to give written notice to Agency of its approval or disapproval of any of such Exceptions. Developer's failure to give written approval of the Title Report within such time limit shall be deemed approval of the Title Report by Developer. If Developer notifies Agency of its disapproval of any Exceptions in the Title Report, Agency shall have the right, but not the obligation, to remove any disapproved Exceptions within ten (10) business days after receiving written notice of Developer's disapproval or provide assurances satisfactory to Developer that such Exception(s) will be removed on or before conveyance of the Site. If Agency cannot or in its sole discretion does not elect to remove any of the disapproved Exceptions within that period, Developer shall have ten (10) business days after the expiration of such ten (10) business days to either give Agency written notice that it elects to proceed with the conveyance of the Site subject to the disapproved 24C 882/015610-0043 346077.03 PM03 -9- Exceptions or to give Agency written notice that it elects to terminate this Agreement. Developer's failure to give written notice of its election to proceed with the conveyance or to terminate this Agreement shall be deemed its election to proceed subject to the disapproved exceptions. Developer shall have the right to approve or disapprove any Exceptions reported by the Title Company after Developer has approved the condition of title for the Site (which are not created by Developer). Agency shall not voluntarily create any new exceptions to title following the date of this Agreement. J. j2101 Payment of the Purchase Price and Recordation of Deed The Developer shall deposit the Purchase Price, the executed and acknowledged Declaration, and Option Agreement, and other sums required hereunder, if any, with the Escrow Agent prior to the date for conveyance of the Site, provided that the Escrow Agent shall have notified the Developer in writing that the Grant Deed, properly executed and acknowledged by the Agency, has been delivered to the Escrow Agent and that title is in condition to be conveyed in conformity with the provisions of Section 209 of this Agreement. Upon close of the Escrow, the Escrow Agent shall record the Grant Deed for recordation among the land records in the Office of the County Recorder of Riverside County and shall deliver the Purchase Price and any other required sums to the Agency. Immediately following the recordation of the Grant Deed, the Escrow Agent shall record the Option Agreement and the Declaration, as provided in Section 206. K. [2111 Title Insurance Concurrently with recordation of the Grant Deed, the Escrow Agent shall instruct First American Title Insurance Company or some other title insurance company satisfactory to the Agency and the Developer having equal or greater financial responsibility ("Title Company"), to provide and deliver to the Developer an ALTA standard form policy of title insurance that does not require a survey issued by the Title Company insuring that the title is vested in the Developer, or its assignee, as applicable, in the condition required by Section 209 of this Agreement. The Title Company shall provide the Agency with a copy of the title insurance policy and the title insurance policy shall be in the amount of One Million Three Hundred Forty -Nine Thousand Six Hundred Thirty -Three Dollars ($1,349,633). The Agency shall pay the title insurance premium attributable to the ALTA standard form policy of title insurance. The Title Company shall, if requested by the Developer, increase the amount of the title insurance policy or provide the Developer with an extended policy, coverages, or endorsements. The Developer shall pay the portion of the premium associated with such extended or additional coverages or endorsements. L. j2121 Taxes and Assessments Ad valorem taxes and assessments, if any, on the Site, and taxes upon this Agreement or any rights hereunder, levied, assessed or imposed for any period commencing prior to conveyance of title shall be borne by the Agency. All ad valorem taxes and assessments levied or imposed for any period commencing after close of the Escrow shall be paid by the Developer. 247 882/015610-0043 346077.03 PM03 -10- M. r131 Conveyance Free of Possession The Site shall be conveyed free of any possession or right of possession by any person except that of the Developer and the easements and other encumbrances of record (subject to Developer's right to review the condition of title pursuant to Section 209). N. I2141 Inspections, Condition of Site 1. Inspections. The Developer shall conduct the Developer's own investigation of the Site, including but not limited to its physical condition, the soils and toxic conditions of the Site and all other matters which in the Developer's judgment affect or influence the Developer's proposed use of the Site and the Developer's willingness to develop the Site pursuant to this Agreement. The Developer's investigation may include, without limitation, the preparation by a duly licensed soils engineer of a soils report for the Site. Prior to the acquisition of the Site, the Developer shall provide written notice to the Agency of the Developer's determinations concerning the suitability of the physical condition of the Site. If, in the Developer's reasonable judgment, the physical condition of the Site is unsuitable for the use or uses to which the Site will be put to the extent that it is not economically feasible for the Developer to develop the Site pursuant to this Agreement, then the Developer shall have the option either to (a) take any action necessary to place the Site in a condition suitable for development, at no cost to the Agency; or (b) terminate this Agreement pursuant to the provisions of Section 511 hereof. If the Developer has not notified the Agency of its determinations concerning the suitability of the physical condition of the Site by the date scheduled for the close of Escrow, the Developer shall be deemed to have waived its right to terminate this Agreement pursuant to this Section. 2. "As Is". The Agency has provided the Developer with all information of which it has actual knowledge concerning the physical condition of the Site, including, without limitation, information about any "Hazardous Materials," as defined below. The Developer acknowledges and agrees that any portion of the Site that it acquires from the Agency pursuant to this Agreement shall be purchased "AS IS" "WHERE IS" "WITH ALL FAULTS," in its current physical condition, with no warranties of any kind or nature, express or implied, except those warranties set forth in Section 110.7 above, as to the physical condition thereof, the presence or absence of any latent or patent condition thereon or therein, including, without limitation, any Hazardous Materials thereon or therein, and any other matters affecting the Site. 3. Indemnity. The Developer agrees, from and after the date of recordation of the Grant Deed, to defend, indemnify, protect and hold harmless the Agency and its officers, beneficiaries, employees, agents, attorneys, representatives, legal successors and assigns ("Indemnities") from, regarding and against any and all liabilities, obligations, orders, decrees, judgments, liens, demands, actions, "Environmental Response Actions" (as defined in subsection 5 below), claims, losses, damages, fines, penalties, expenses, `Environmental Response Costs" (as defined in subsection 5 below) or costs of any kind or nature whatsoever, together with fees (including, 2�$ 882/015610-0043 346077.03 PM03 without limitation, reasonable attorneys' fees and experts' and consultants' fees), occurring during and caused by Developer's use and occupancy of the Site, and resulting from or in connection with the actual or claimed generation, storage, handling, transportation, use, presence, placement, migration and/or release of Hazardous Materials at, on, in, beneath or from the Site, unless caused by the negligence or willful misconduct of Indemnities. The Developer's defense, indemnification, protection and hold harmless obligations herein shall include, without limitation, the duty to respond to any governmental inquiry, investigation, claim or demand regarding the Hazardous Materials, at the Developer's sole cost. Notwithstanding the foregoing, the Agency agrees to indemnify, defend, and hold Developer harmless for, from, and against any and all claims, demands, liabilities, costs, expenses, Environmental Response Actions, Environmental Response Costs, damages, cause or causes or action of any nature whatsoever arising from any misrepresentation or breach of the warranty set forth in Section 110.7 above, or otherwise resulting from or in connection with the generation, storage, handling, transportation, use, and/or release of Hazardous Materials at, on, in, beneath, or from the Site by the Agency or during the Agency's ownership or possession of the Site. 4. Release and Waiver. Subject to the exceptions set forth in Section 214.3 above, the Developer hereby releases and waives all rights, causes of action and claims the Developer has or may have in the future against the Indemnities arising out of or in connection with any Hazardous Materials at, on, in, beneath or from the Site. In furtherance of the intentions set forth herein, the Developer acknowledges that it is familiar with Section 1542 of the Civil Code of the State of California which provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected this settlement with the debtor." The Developer hereby waives and relinquishes any right or benefit which it has or may have under Section 1542 of the Civil Code of the State of California or any similar provision of the statutory or nonstatutory law of any other applicable jurisdiction to the full extent that it may lawfully waive all such rights and benefits pertaining to the subject matter of this Section 214. 5. Definitions. a. As used in this Agreement, the term `Environmental Response Actions" means any and all activities, data compilations, preparation of studies or reports, interaction with environmental regulatory agencies, obligations and undertakings associated with environmental investigations, removal activities, remediation activities or responses to inquiries and notice letters, as may be sought, initiated or required in connection with any local, state or federal governmental or private party claims, including any claims by the Developer. b. As used in this Agreement, the term `Environmental Response Costs" means any and all costs associated with Environmental Response Actions including, without limitation, any and all fines, penalties and damages. 882/015610-0043 �y p 346077.03 PM03 -12- ! i C. As used in this Agreement, the term "Hazardous Materials" means any substance, material or waste which is (1) defined as a "hazardous waste," "hazardous material," "hazardous substance," "extremely hazardous waste," or "restricted hazardous waste" under any provision of California law; (2) petroleum; (3) asbestos; (4) polychlorinated biphenyls; (5) radioactive materials; (6) designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C. Section 1251 et seq. (33 U.S.C. Section 1321) or listed pursuant to Section 307 of the Clean Water Act (33 U.S.C. Section 1317); (7) defined as a "hazardous substance" pursuant to the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903) or its implementing regulations; (8) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq. (42 U.S.C. Section 9601); or (9) determined by California, federal or local governmental authority to be capable of posing a risk of injury to health, safety or property. 6. Materiality. The Developer acknowledges and agrees that the defense, indemnification, protection and hold harmless obligations of the Developer for the benefit of the Agency set forth in this Agreement are a material element of the consideration to the Agency for the performance of its obligations under this Agreement, and that the Agency would not have entered this Agreement unless the Developer's obligations were as provided for herein. O. F2151 Preliminary Work by the Developer Prior to the conveyance of title to the Site from the Agency to the Developer, representatives of the Developer shall have the right of access to the Site at all reasonable times for the purpose of obtaining data and making surveys and tests necessary to carry out this Agreement. Prior to Developer's entry on the Site pursuant to this Section, Developer shall procure the insurance described in Section 308 below. The Developer shall indemnify, defend, and hold harmless the Agency and its officers, officials, employees, agents, and representatives, for any injury or damages arising out of any activity pursuant to this section. The Developer shall have access to all data and information on the Site available to the Agency, but without warranty or representation by the Agency as to the completeness, correctness or validity of such data and information. Any preliminary work undertaken on the Site by the Developer prior to conveyance of title thereto shall be done only after written consent of the Agency and at the sole expense of the Developer. The Developer shall save and protect the Agency against any claims resulting from such preliminary work, access or use of the Site by Developer, its agents or contractors. Copies of data, surveys and tests obtained or made by the Developer on the Site shall be filed with the Agency. Any preliminary work by the Developer shall be undertaken only after securing any necessary permits from the appropriate governmental agencies. 882/015610-0043 346077.03 PM03 -13- III. [3001 DEVELOPMENT OF THE SITE A. [3011 Development of the Site [3021 Scope of Development The Project will be comprised of the construction of not less than one hundred forty-nine (149) single family detached housing units, and shall include all of the onsite private improvements necessary for the development in accordance with approved plans and permits, all as set forth in this Agreement and in the scope of development attached hereto and incorporated herein as Attachment No. 3 ("Scope of Development"). Upon close of the Escrow, the Developer shall commence and complete construction of the Project on the Site by the time established therefor in the Schedule of Performance. 2. f30 1 Plans Drawinus and Related Documents By the time set forth therefor in the applicable items in the Schedule of Performance, the Developer shall prepare and submit to the City for its approval all plans, drawings, and documents for the Project in conformance with all requirements of the City and which contain the overall plan for development of the Site in sufficient detail to enable the City to evaluate the proposal for conformity to the requirements of the La Quinta Municipal Code and this Agreement. The Site shall be developed as established in this Agreement and the aforementioned documents, except as changes may be mutually agreed upon between the Developer and the Agency; provided that any changes shall be consistent with the material terms of this Agreement. The landscaping and finish grading plans, if any finish grading plans are required by the City, shall be prepared by a professional landscape architect or registered civil engineer who may be the same firm as the Developer's architect or civil engineer. During the preparation of all drawings and plans, staff of the Agency and the Developer shall hold regular progress meetings to coordinate the preparation of, submission to, and review of drawings, plans and related documents by, the City. The staff of the Agency and the Developer shall communicate and consult informally as frequently as is necessary to insure that the formal submittal of any documents to the Agency can receive prompt consideration. 3. r3041 Review and Approval of Plans Drawings and Related Documents The Agency and the City shall have the right to review and approve all plans and drawings which may be required by the City with respect to any permits and entitlements which are required to be obtained to develop the Project, including any changes therein. During each stage of the processing of plans for the Project, the Agency and the City shall have the right to require additional information and shall advise the Developer if any submittal of plans or drawings is not complete or not in accordance with City/Agency procedures. If the Agency or the City determines that such a submittal is not complete or not in 2J1 882/015610-0043 346077.03 PM03 -14- 3 3 accordance with procedures, such tender shall not be deemed to constitute a submittal for purposes of satisfying the Schedule of Performance; provided, however, Agency shall provide Developer with a detailed written report of any such deficiency or noncompliance with procedures and Developer shall revise and resubmit such plans in accordance with the Schedule of Performance and such written report. If the Developer desires to make any substantial changes in the construction plans for the Project after the approval thereof by the Agency and the City, the Developer shall submit the proposed changes to the Agency and the City for their approval. If the construction plans, as modified by the proposed change, conform to the requirements of this Section 304 and the Scope of Development, the Agency will approve the proposed change and will endeavor to obtain, at no cost to Agency, the City's approval of the same. 4. [3051 Project Entitlements Prior to, and as one of the Agency's Conditions to Close, as set forth in Section 204, Developer shall (i) prepare a tract map subdividing the Site from adjacent real property owned by the Agency ("Tract Map"), (ii) prepare and obtain approval from the City of La Quinta ("City") covenants, conditions, and restrictions providing for maintenance of all commonly - owned property within the Project by a homeowners' association ("CC&Rs"), which CC&Rs provide that the City and Agency are third party beneficiaries with the right, but not the obligation, to enforce the terms thereof, (iii) obtain from the City of La Quinta approval for all plans, drawings, and related documents required for the Project, such that immediately after the close of escrow for the Site Developer shall be entitled to obtain grading and building permits for the Project; and (iv) obtain from the City of La Quinta all permits and entitlements necessary for the Project as required in this Agreement, by applicable State law, by City code, and all other applicable law, including but not limited to a site development plan, a Specific Plan, any conditional use permit, any zone change, any variance, any vacation of public rights of way, and any approvals or certifications as required by the California Environmental Quality Act (California Public Resources Code § 21000 et seq.), the approval of which by the City of La Quinta is subject to the City's legislative discretion (all of the foregoing, the "Project Entitlements"). Agency agrees to fully cooperate with, and assist, at no cost to Agency, Developer in its pursuit of Project Entitlements, subject to Agency's exercise of its legislative discretion and without any representation, warranty, or guaranty by Agency that the City will issue, or will issue with conditions, any Project Entitlement. Without limiting the generality of the foregoing, Agency shall review all submittals by Developer in a timely manner and shall provide Developer with all information, in Agency's possession or control, that Developer may reasonably request in writing in connection with the Project Entitlements (or the pursuit thereof). In addition, Agency shall prepare, with funds deposited by Developer (or deducted from the Second Disbursement, as that term is defined in the Disbursement Schedule; provided, however, if the expenditure is not eligible for reimbursement under the terms of the Disbursement Schedule Developer shall repay the amount to Agency), all necessary environmental documents as required by applicable law, including but not limited to the California Environmental Quality Act, for approval or certification, as the case may be, by the City of La Quinta. 25^ 882/015610-0043 346077.03 PM03 -15- n � 1'3 5. [3061 Cost of Development With the exception of the Agency Assistance, all costs for planning, designing, and constructing the Project, including but not limited to all development and building fees, broker's fees and commissions, Site remediation (if any), grading and preparation costs, off -site and on -site construction and improvement costs shall be borne exclusively by the Developer. The Developer shall also bear all costs related to discharging the duties of the Developer set forth in this Agreement. 6. [30 1 Construction Schedule The Developer shall commence and complete construction of the Project by the respective times established therefor in the Schedule of Performance. 7. F3081 Indemnity, Insurance Requirements The Developer shall indemnify, defend, and hold harmless the Agency and the City, and their respective officers, officials, employees, agents, and representatives, from all claims or suits for, and damages to, property and injuries to persons, including accidental death (including expert witness fees, attorneys fees, and costs), which may be caused by any of the Developer's activities under this Agreement. Commencing with Effective Date hereof and ending on the sale of the last Unit to an Eligible Buyer, Developer shall procure and maintain, at its sole cost and expense, in a form and content satisfactory to the Executive Director, the following policies of insurance: A policy of commercial general liability insurance written on a per occurrence basis in an amount not less than: (A) for death and bodily injury, either (i) a combined single limit of Three Million Dollars ($3,000,000.00) or (ii) Three Million Dollars ($3,000,000) per person and Three Million Dollars ($3,000,000.00) per occurrence, and Three Million Dollars ($3,000,000.00) in the aggregate, and (B) for property damage, Three Million Dollars ($3,000,000.00) per occurrence. A policy of worker's compensation insurance in such amount as will fully comply with the laws of the State of California and which shall indemnify, insure, and provide legal defense for both the Developer and Agency against any loss, claim or damage arising from any injuries or occupational diseases occurring to any worker employed by or any persons retained by Developer in the course of carrying out the work or services contemplated in this Agreement. A policy of comprehensive automobile liability insurance written on a per occurrence basis in an amount not less than either (i) bodily injury liability limits of Three Million Dollars ($3,000,000.00) per person and Three Million Dollars ($3,000,000.00) per occurrence, and property damage liability limits of Three Million Dollars ($3,000,000.00) per occurrence and Three Million Dollars ($3,000,000.00) in the aggregate or (ii) combined single limit liability of Three Million Dollars ($3,000,000.00). Said policy shall include coverage for owned, non -owned, leased, and hired cars. 882/015610-0043 r -16- 1 `� � 251 346077.03 PM03 l The following additional requirements shall apply to all of the above policies of insurance: All of the above policies of insurance shall be primary insurance and, except the Worker's Compensation insurance, shall name Agency, City, and their respective officers, officials, members, employees, agents, and representatives as additional insureds. The insurer shall waive all rights of subrogation and contribution it may have against Agency, City, and their officers, officials, members, employees, agents, and representatives, and their respective insurers. All of said policies of insurance shall provide that said insurance may not be amended or cancelled without providing thirty (30) days' prior written notice to Agency and City. In the event any of said policies of insurance are cancelled, the Developer shall, prior to the cancellation date, submit new evidence of insurance in conformance with this Section to the Executive Director. Not later than the Effective Date of this Agreement, Developer shall provide the Executive Director with Certificates of Insurance or appropriate insurance binders evidencing the above insurance coverages and said Certificates of Insurance or binders shall be subject to the reasonable approval of the Executive Director. The policies of insurance required by this Agreement shall be satisfactory only if issued by companies qualified to do business in California, rated "A" or better in the most recent edition of Best Rating Guide, The Key Rating Guide or in the Federal Register, and only if they are of a financial category Class VII or better, unless such requirements are waived by the Risk Manager of City ("Risk Manager") due to unique circumstances. The policies of insurance required by this Agreement shall not require Developer to meet a deductible of more than One Hundred Thousand Dollars ($100,000) unless approved in writing by Agency's Executive Director in his or her sole and absolute discretion. Developer agrees that the provisions of this Section shall not be construed as limiting in any way the extent to which Developer may be held responsible for the payment of damages to any persons or property resulting from the Developer's activities or the activities of any person or persons for which the Developer is otherwise responsible. 8. [3091 City and Other Governmental Agency Permits Before commencement of construction or development of any buildings, structures or other works of improvement upon the Site or in connection with any off -site improvement, the Developer shall, subject to Section 201, at its own expense, secure or cause to be secured any and all permits which may be required by the City or any other governmental agent affected by such construction, development or work. It is understood that the Developer's obligation is to pay all necessary fees and to timely submit to the City final drawings with final corrections to obtain building permit; the Agency will, without obligation to incur liability or expense therefor, use its best efforts to expedite issuance of building permits and certificates of occupancy for construction that meet the requirements of the La Quinta Municipal Code. 9. [3101 Rights of Access For purpose of assuring compliance with this Agreement, representatives of the Agency and the City shall have the right of access to the Site without charges or fees, at normal 254 882/015610-0043 _17_ I'I F, 346077.03 PM03 business hours during the period of this Agreement for the purposes of this Agreement, including, but not limited to, the inspection of the work being performed in constructing the Project, so long as they comply with all safety rules. Such representatives of the Agency or of the City shall be those who are so identified in writing by the Executive Director of the Agency. The Agency shall hold the Developer harmless from any bodily injury or related damages arising out of the activities of the Agency and the City as referred to in this Section 310. 10. r3111_Local, State and Federal Laws The Developer shall perform under this Agreement and carry out its performance under this Agreement, including without limitation the construction of the Project, in conformity with all applicable federal and state laws and local ordinances, including all applicable federal and state labor standards, as to the Site, provided, however, Developer and its contractors, successors, assigns, transferees, and lessees are not waiving their rights to contest any such laws, rules or standards. 11. [3121 Anti -Discrimination Pursuant to Section 33435 and 33050 of the California Community Redevelopment Law, the Developer for itself and its successors and assigns, agrees, that in the construction of the Project on the Site or other performance under this Agreement, the Developer shall not discriminate against any employee or applicant for employment because of sex, marital status, race, color, religion, ancestry, or national origin. 12. [3131 Taxes and Assessments After the conveyance of title by Agency to Developers or its assignee, the Developer shall pay prior to delinquency all real estate taxes and assessments on the Site for any period subsequent to the conveyance of title and possession, so long as the Developer retains any ownership interest therein. The Developer shall remove or have removed any levy or attachment made on the Site or any part thereof, or assure the satisfaction thereof within a reasonable time but in any event prior to any sale or transfer of all or any portions thereof. Notwithstanding the above, the Developer shall have the right to contest the validity or amounts of any tax, assessment, or encumbrance available to the Developer in respect thereto, and nothing herein shall limit the remedies available to the Developer in respect thereto. 13. [3141 Right of the Agency to Satisfy Other Liens on the Site After Title Passes After the conveyance of title by Agency and prior to the completion of construction, and after the Developer has had written notice and has failed after a reasonable time, to challenge, cure, or satisfy any liens or encumbrances on the Site which are not otherwise permitted under this Agreement, the Agency shall have the right but no obligation to satisfy any such liens or encumbrances. Notwithstanding the above, the Developer shall have the right to contest the validity or amounts of any tax, assessment, or encumbrance available to the Developer in respect thereto. 255 882/015610-0043 346077.03 PM03 -1 g- 14. j3151 Certificate of Completion Promptly after the completion of the Project in conformity with this Agreement (as determined by the Executive Director of the Agency), upon the written request of the Developer, the Agency shall furnish the Developer with a Certificate of Completion (in the form attached hereto and incorporated herein as Attachment No. 9) which evidences and determines the satisfactory completion of the construction and development of the Project pursuant to the provisions and covenants specified in this Agreement, the Redevelopment Plan and the California Community Redevelopment Law. The issuance and recordation of a Certificate of Completion with respect to the Project shall not supersede, cancel, amend or limit the continued effectiveness of any obligations relating to the maintenance, or uses, or payment of monies, or any other obligations, except for the obligation to complete construction of the Project as of the time of the issuance of such applicable certificate in accordance with the requirements of this Agreement. If requested by Developer, the Agency in its reasonable discretion may issue a partial Certificate of Completion for one or more of the completed Units in the Project prior to the completion of construction of all of the Units in the Project, provided that no partial Certificate of Completion shall be issued by the Agency unless and until all of the infrastructure (including but not limited to streets, curbs, gutters, main sewer lines, and utilities stubbed to the property line of each lot) for the entire development has been installed with required sign -off by the City building official. The exact description of each partial Certificate of Completion shall be determined by the Agency in its sole discretion, subject to the provisions of this Section. The Agency shall not unreasonably withhold the Certificate of Completion. If the Agency refuses or fails to furnish a Certificate of Completion after written request from the Developer, the Agency shall, within ten (10) business days after the written request, provide the Developer with a written statement of the reasons the Agency refused or failed to furnish such Certificate of Completion. The statement shall also contain the Agency's opinion of the action the Developer must take to obtain the Certificate of Completion. Upon issuance of a Certificate of Completion for the Project, construction of the Project shall be deemed to have been completed in conformity with this Agreement. The issuance of a Certificate of Completion shall not affect the continued effectiveness of the Declaration recorded pursuant to this Agreement. The Certificate of Completion is not a notice of completion as referred to in Section 3093 of the California Civil Code. The Certificate of Completion, at Agency's discretion, may be re -titled and recorded as a "Release of Construction Covenants." 882/015610-0043 346077.03 PM03 -19- 15. [316] No Encumbrances Except Mortgages Deeds of Trust Sales and Leases -Back or Other Financing for Development Notwithstanding any prohibition in this Agreement, mortgages, deeds of trust, sales and leases -back or any other form of conveyance required for any reasonable method of financing are permitted before issuance of a Certificate of Completion but only for the purpose of securing loans of funds to be used for financing the acquisition of the Site, the construction of the Project and any other expenditures necessary and appropriate to effect construction of the Project under this Agreement. The Developer shall notify the Agency in advance of any mortgage, deed of trust, sale and lease -back or other form of conveyance for financing if the Developer proposes to enter into the same before issuance of a Certificate of Completion. The Developer shall not enter into any such conveyance for financing without the prior written approval of the Agency, which approval the Agency agrees to give if any such conveyance is given to a responsible financial or lending institution or other acceptable person or entity. The words "mortgage" and "deed of trust," as used herein, include all other appropriate modes of financing real estate acquisition, construction and land development. The Agency agrees to subordinate this Agreement, the Declaration, and "Repurchase Option II" and "Repurchase Option III" to the Option Agreement (as those terms are defined in Section 513 hereof) to the lien of such mortgage or deed of trust pursuant to a subordination agreement in form and substance reasonably acceptable to the holder of the mortgage or deed of trust and the Agency. 16. [3171 Holder Not Obligated to Construct Improvements The holder of any mortgage, deed of trust or other security interest authorized by this Agreement shall in no way be obligated by the provisions of this Agreement to construct or complete the Project or to guarantee such construction or completion, nor shall any covenant or any other provision in the Grant Deed for the Site be construed so to obligate such holder. Nothing in this Agreement shall be deemed to construe, permit or authorize any such holder to devote the Site to any uses or to construct any improvements thereon other than those uses or improvements provided for or authorized by this Agreement. 17. [3181 Notice of Default to Mortgage Deed of Trust or Other Security Interest Holders, Right to Cure Whenever the Agency shall deliver any notice or demand to the Developer with respect to any breach or default by the Developer in completion of construction of the Project, the Agency shall at the same time deliver a copy of such notice or demand to each holder of record of any mortgage, deed of trust or other security interest authorized by this Agreement who has previously made a written request to the Agency therefor. Each such holder shall (insofar as the rights of the Agency are concerned) have the right, at its option, within sixty (60) days after the receipt of the notice, to cure or remedy or commence to cure or remedy any such default and to add the cost thereof to the security interest debt and the lien on its security interest. In the event there is more than one such holder, the right to cure or remedy a breach or default of the Developer under this Section 318 shall be exercised by the holder first in priority or as the holders may otherwise agree among themselves, but there shall be only one exercise of such right to cure and remedy a breach or default of the Developer under this Section 318. Nothing contained in this Agreement shall be deemed to permit or authorize such holder to undertake or 2�7 882/015610-0043 346077.03 PM03 -20- 0 continue the construction or completion of the Project (beyond the extent necessary to conserve or protect the improvements or construction already made) without first having expressly assumed the Developer's obligations to the Agency by written agreement satisfactory to the Agency. The holder in that event must agree to complete, in the manner provided in this Agreement, the construction to which the lien or title of such holder relates and submit evidence satisfactory to the Agency that it has the qualifications and financial responsibility necessary to perform such obligations. Any such holder properly completing such improvements shall be entitled, upon written request made to the Agency, to a Certificate of Completion from the Agency. 18. f 3191 Failure of Holder to Complete Improvements In any case where, sixty (60) days after an uncured default by the Developer in completion of construction under this Agreement, the holder of any mortgage, deed of trust or other security interest creating a lien or encumbrance upon the Site has not exercised the option to construct, or if it has exercised the option and has not proceeded diligently with construction, the Agency may purchase the mortgage, deed of trust or other security interest by payment to the holder of the amount of the unpaid debt, plus any accrued and unpaid interest. If the ownership of the Site has vested in the holder, the Agency, if it so desires, shall be entitled to a conveyance of the Site from the holder to the Agency upon payment to the holder of an amount equal to the sum of the following: 1. The unpaid mortgage, deed of trust or other security interest debt at the time title became vested in the holder (less all appropriate credits, including those resulting from collection and application of rentals and other income received during foreclosure proceedings); 2. All expenses with respect to foreclosure, including reasonable attorneys' fees and trustee's fees; 3. The net expenses, if any (exclusive of general overhead), incurred by the holder as a direct result of the subsequent management of the Site or part thereof, 4. The costs of any authorized improvements made by such holder; and 5. An amount equivalent to the interest that would have accrued on the aggregate of the amounts in Subparagraphs 1-4 had all such amounts become part of the mortgage or deed of trust debt and such debt had continued in existence to the date of payment by the Agency. 1.9. j3201 Rightgency to Cure Mortgage Deed of Trust or Other Security Interest Default In the event of a default or breach by the Developer of a mortgage, deed of trust or other security interest with respect to the Site prior to the completion of the Project, and the holder has not exercised its option to complete the construction, the Agency may cure the default prior to completion of any foreclosure. In such event, the Agency shall be entitled to reimbursement from the Developer of all costs and expenses incurred by the Agency in curing the default. The Agency shall also be entitled to a lien upon the Site to the extent of such costs 882/015610-0043 -21- 346077.03 PM03 and disbursements. Any such lien shall be subject to mortgages, deeds of trust or other security interests executed for the sole purpose of obtaining funds to purchase and develop the Site as authorized herein. 20. j321 ] Agency Agreement to Cooperate with Construction Lender Notwithstanding anything in this Agreement to the contrary, Agency agrees to reasonably accommodate Developer's construction lender by making amendments to this Agreement that are commercially reasonably necessary to effect the Developer's construction loan, including such subordination agreements as may be necessary. The Agency Executive Director shall have the authority to enter into one or more such amendments of this Agreement on behalf of the Agency and such subordination agreements consistent with this provision. IV. 14001 USE OF THE SITE A. f 4011 Affordable Housing Developer hereby covenants and agrees, for itself and its successors and assigns, to develop not less than one hundred forty-nine (149) residential housing units on the Site to be sold to "Eligible Buyers" at an "Affordable Housing Cost," all as more fully described in the Declaration. For purposes of this Agreement, the term "Eligible Buyer" shall mean a buyer of one of the Units in the Project who satisfies all of the following requirements: (i) at least one person in residence in the residential unit in question is a "qualifying resident" or "senior citizen" who is 55 years of age or older, for purposes of residency in a "senior citizen housing development" (as those terms are defined in California Civil Code Sections 51.3(b)(1) and (4)); (ii) each other resident in the same dwelling unit is either a "qualifying resident," "senior citizen," "qualified permanent resident" or "permitted health care resident" (as those terms are defined in California Civil Code Sections 51.3(b)(2), (3), and (7)); and (iii) such person or persons qualify as "persons and families of moderate income" within the meaning of California Health and Safety Code Section 50093 (i.e., households whose income, adjusted for family size, do not exceed one hundred twenty (120%) of the Riverside County Median Income). For purposes of this Agreement, the term "Affordable Housing Cost" shall mean that purchase price which would result in monthly housing payments, including the cost for a thirty (30) year mortgage for that portion of the purchase price which is to be paid in the form of loan proceeds under currently prevailing mortgage loan rates or the interest rate of any below -market mortgage program for which such purchaser has obtained a first trust deed loan, (i) if the household earns not more than one hundred ten percent (110%) of Riverside County median income, not less than twenty-eight percent (28%) of the gross income of the household, nor more than thirty-five percent (35%) of one hundred ten percent (110%) of Riverside County median income adjusted for family size appropriate for the Unit, or (ii) if the gross income of the household exceeds one hundred ten percent (110%) of Riverside County median income, not more than thirty-five percent (35%) of the actual gross income of the household. Sample calculations of an Affordable Housing Cost for the Units are set forth in Exhibit `B" to the Declaration. 882/015610-0043 346077.03 PM03 -22 B. [4021 Uses In Accordance with Redevelopment Plan,• Nondiscrimination The Developer covenants and agrees for itself, its successors, its assigns, and every successor in interest to the Site or any part thereof that the Developer and such successors and assignees, shall devote the Site to the uses specified in the Redevelopment Plan, the Grant Deed, the Declaration, the Option Agreement, and this Agreement for the periods of time specified therein. The foregoing covenants shall run with the land. The Developer covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, nor shall the Developer itself or any person claiming under or though it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Site. The foregoing covenants shall run with the land. The Developer shall refrain from restricting the rental, sale or lease of the property on the basis of race, color, creed, religion, sex, marital status, national origin or ancestry of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: 1. In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through his or her heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself or herself or any person claiming under or though him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." 2. In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "There shall be no discrimination against or segregation or any person or group of persons on account of race, color, creed, religion, sex, marital status, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the premises herein leased." 882/015610-0043 346077.03 PM03 -23- 3. In contracts: "There shall be no discrimination against or segregation of, any person, or group of persons on account of race, color, creed, religion, sex, marital status, ancestry or national origin, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the premises." The covenants established in this Agreement and the deeds of conveyance for the Site shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency, its successors and assigns, the City and any successor in interest to the Site, together with any property acquired by the Developer pursuant to this Agreement, or any part thereof. The covenants against racial discrimination shall remain in effect in perpetuity. C. [4031 Effect of Violation of the Terms and Provisions of this Agreement After Completion of Construction The Agency is deemed the beneficiary of the terms and provisions of this Agreement and of the covenants running with the land, for and in its own rights and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided. The Agreement and the covenants shall run in favor of the Agency, without regard to whether the Agency has been, remains or is an owner of any land or interest therein in the Site or in the Project Area. The Agency shall have the right, if this Agreement or covenants are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other property proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and covenants may be entitled. D. [4041 Maintenance of the Site The Developer shall maintain the Project on the Site in conformity with the La Quinta Municipal Code and the requirements of the Declaration, and shall keep the Site free from any graffiti and from any accumulation of debris or waste materials. The Developer shall also maintain the landscaping required to be planted under the Scope of Development in a healthy and attractive condition. If, at any time, Developer fails to maintain the Site or any portion thereof, and said condition is not corrected as soon as reasonably possible after written notice from the Agency, either the Agency or the City may enter the Site or applicable portion thereof to perform the necessary maintenance thereon and Developer shall pay such costs as are reasonably incurred for such maintenance plus a fifteen percent (15%) administrative fee. Upon the close of escrow pursuant to which Developer has conveyed a Unit to an Eligible Buyer, the Developer's obligations under this Section 404 with respect to such Unit shall be assumed by the Eligible Buyer of such Unit. This covenant shall run with the land and shall remain in effect for the term of the Redevelopment Plan. 882/015610-0043 346077.03 PM03 -24 2Fj 0� V. 15001 DEFAULTS AND REMEDIES A. [5011 Defaults -- General Subject to the extensions of time set forth in Section 603, failure or delay by either party to perform any term or provision of this Agreement constitutes a default under this Agreement. A party claiming a default shall give written notice of default to the other party, specifying the default complained of and the actions required to correct such default. Except as otherwise expressly provided in Section 508 of this Agreement, the claimant shall not institute proceedings against the other party if the other party within thirty (30) days from receipt of such notice immediately, with due diligence, commences to cure, correct or remedy such failure or delay and completes such cure, correction or remedy as soon as reasonably practicable after receipt of such notice. B. [5021 Legal Actions [503] Institution of Legal Actions; Attorney's Fees In addition to any other rights or remedies and subject to the restrictions in Section 501, either party may institute legal action to seek specific performance of the terms of this Agreement, or to cure, correct or remedy any default, to recover damages for any default, or to obtain any other legal or equitable remedy consistent with the purpose of this Agreement. Such legal actions must be instituted in the Superior Court of the County of Riverside, State of California, in an appropriate municipal court in that county, or in the Federal District Court in the Central District of California. In the event of any litigation between the parties hereto, the prevailing party shall be entitled to receive, in addition to the relief granted, its reasonable attorney's fees and costs and such other costs incurred in investigating the action and prosecuting the same, including costs for expert witnesses, costs on appeal, and for discovery. 2. [5041 Applicable Law The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 3. L5051 Acceptance of Service of Process In the event that any legal action is commenced by the Developer against the Agency, service of process on the Agency shall be made by personal service upon the Executive Director or in such other manner as may be provided by law. In the event that any legal action is commenced by the Agency against the Developer, service of process on the Developer shall be made by personal service upon any officer or director of the Developer and shall be valid whether made within or without the State of California or in such other manner as may be provided by law. 2�7 044 882/015610-0043 346077.03 PM03 -25- C. [5061 Rights and Remedies Are Cumulative Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. D. [5071 Inaction Not a Waiver of Default Any failures or delays by either party in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies, or deprive either such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. E. f5081 Remedies and Rights of Termination 1. [5091 Defaults If either party defaults with regard to any of the provisions of this Agreement, the non -defaulting party shall serve written notice of such default upon the defaulting party. If the default is not cured or commenced to be cured by the defaulting party within thirty (30) days after service of the notice of default (or within such other period as is set forth herein), the defaulting party shall be entitled to pursue whatever remedies to which such party is entitled under this Agreement. 2. f5101 Specific Performance The non -defaulting party, upon expiration of applicable notice and cure periods, shall be permitted to, but not obligated to, commence an action for specific performance of the terms of this Agreement. In this regard, Developer specifically acknowledges that Agency is entering into this Agreement for the purpose of assisting in the redevelopment of the Site and the provision of affordable housing and not for the purpose of enabling Developer to speculate in land. Agency shall also have the right to pursue damages for Developer's defaults but in no event shall Developer be entitled to damages of any kind from Agency, including damages for economic loss, lost profits, or any other economic or consequential damages of any kind. 3. [511 ] Termination by the Developer Prior to Agency's conveyance of the Site to Developer, in the event that Agency is in material default of this Agreement, and any such failure is not cured within thirty (30) days, or for those defaults which cannot reasonably be cured within thirty (30) days, commenced to be cured within said thirty (30) day period and thereafter diligently prosecuted to completion, after written demand by the Developer then, at the option of the Developer, upon written notice thereof to the Agency, all provisions of this Agreement shall terminate and be of no further force and effect; thereafter, neither the Agency nor the Developer shall have any further rights against or liability to the other with respect to this Agreement. 263 882/015610-0043 346077.03 PM03 -26- 4. f 51 1 Termination by the Agency In the event that prior to the close of the Escrow: a. The Developer (or any successor in interest) assigns or attempts to assign the Agreement or any rights therein or in the Site in violation of this Agreement; or b. There is a change in the ownership of the Developer contrary to the provisions of Section 108 hereof, or C. The Developer does not submit certificates of insurance, construction plans, drawings and related documents as required by this Agreement, in the manner and by the dates respectively provided in this Agreement therefor, or is otherwise in material default hereof, and such default or failure is not be cured within thirty (30) days, or for those defaults which cannot reasonably be cured within thirty (30) days, commenced to be cured within said thirty (30) day period and thereafter diligently prosecuted to completion, after the date of written demand therefor by the Agency; or d. The Developer fails to satisfy any or all of Agency's Conditions to Close by the time established therefor in the Schedule of Performance; or then, at the option of the Agency, upon such written notice thereof to the Developer as may be set forth above, this Agreement shall be terminated, and thereafter neither party shall have any further rights or liability against the other under this Agreement. 5. [5131 Option Agreement In addition to any rights and remedies available to Agency hereunder, Agency shall be entitled, in its sole and absolute discretion, to repurchase the Site, or a portion thereof, from Developer in the event that, (i) Developer fails to commence construction of the Project ("Repurchase Option I"), (ii) after commencement of construction, Developer fails to continuously proceed with, and complete, construction of the Project ("Repurchase Option II") within certain specified timeframes, or (iii) Developer transfers or suffers an involuntary transfer of the Site in violation of the terms hereof ("Repurchase Option III"). Said repurchase rights shall be as set forth in an option agreement to be recorded against the Site at the Closing, the form of which is attached hereto and incorporated herein as Attachment No. 7 ("Option Agreement"). 6. [5141 Ri6t of Reverter In addition to any rights and remedies available to Agency hereunder, Agency shall be entitled, in its sole and absolute discretion, to reenter and take possession of the Site, or a portion thereof, from Developer in the event (i) Developer fails to commence construction of the Project, (ii) that, after commencement of construction, Developer fails to continuously proceed with and complete, construction of the Project within certain, specified timeframes, or (iii) Developer transfers or suffers an involuntary transfer of the Site in violation of the terms hereof. Said reversion rights shall be as set forth in the Declaration. 2r4 882/015610-0043 346077.03 PM03 -27 7. [5151 Agency's Option to Acquire Plans If this Agreement is terminated for any reason, at the option of the Agency, which may be exercised in the Agency's sole and absolute discretion, the Developer shall deliver to the Agency an executed assignment in a form reasonably acceptable to the Agency of the Developer's right to use all plans, blueprints, drawings, sketches, specifications, tentative or final subdivision maps, landscape plans, utilities plans, soils reports, noise studies, environmental assessment reports, grading plans and any other materials relating to the construction of the Project on the Site (the "Plans"), together with copies of all of the Plans, as have been prepared for the development of the Site to date of the termination. Notwithstanding the foregoing, however, Developer does not covenant to convey to the Agency the copyright or other ownership rights of third parties. Agency understands and agrees that the assignment to Agency under this Section 515 is subject and subordinate to any assignment which Developer may make to a lender providing financing for the Project, and Agency agrees to execute any documents required by such lender acknowledging and effectuating such subordination of Agency's rights in and to the assignment. Agency's acquisition or use of the Plans or any of them shall be without any representation or warranty by Developer as to the accuracy or completeness of any such Plans, and Agency shall assume all risks in the use of the Plans. VI. [6001 GENERAL PROVISIONS A. [6011 Notices Demands and Communications Between Parties Written notices, demands and communications between the Agency and the Developer shall be sufficiently given if (i) delivered by hand, (ii) delivered by reputable same - day or overnight messenger service that provides a receipt showing date and time of delivery, or (iii) dispatched by registered or certified mail, postage prepaid, return receipt requested, to the principal offices of the Agency and the Developer at the addresses specified in Section 106 and 107, respectively. Such written notices, demands and communications may be sent in the same manner to such other addresses as either party may from time to time designate by mail as provided in this Section 601. Any written notice, demand, or communication shall be deemed received immediately if delivered by hand or delivered by messenger in accordance with the preceding paragraph, and shall be deemed received on the third (3rd) day from the date it is postmarked if delivered by registered or certified mail in accordance with the preceding paragraph. B. (6021 Conflicts of Interest No member, officer, official, or employee of the Agency shall have any personal interest, direct or indirect, in this Agreement, nor shall any member, official or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership or association in which he is directly or indirectly interested. 265 4`7 882/015610-0043 346077.03 PM03 -2p C. j6031 Enforced Delay' Extension of Times of Performance In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in default, and all performance and other dates specified in this Agreement shall be extended, where delays or defaults are due to: war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor; subcontractor or supplier; acts or omissions of the other party; acts or failures to act of the City of La Quinta, or the Agency, or any other public or governmental agency or entity (except that the acts or failures to act of the Agency shall not excuse performance by the Agency); or any other causes beyond the control or without the default of the party claiming an extension of time to perform. Notwithstanding anything to the contrary in this Agreement, an extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days after the commencement of the cause. Times of performance under this Agreement may also be extended in writing by the mutual agreement of Agency and Developer. The Agency Executive Director shall also have the authority on behalf of Agency to administratively approve extensions of time not to exceed a cumulative total of one (1) year. Notwithstanding the foregoing portion of this Section 603, the Developer is not entitled pursuant to this Section 603 to an extension of time to perform because of past, present, or future difficulty in obtaining suitable construction financing for the development of the Site, or because of economic or market conditions. D. r6041 Non -Liability of Officials and Employees of the Agency No member, official or employee of the Agency or the City shall be personally liable to the Developer, or any successor in interest, in the event of any default or breach by the Agency or the City or for any amount which may become due to the Developer or its successors, or on any obligations under the terms of this Agreement. E. [6051 Inter2retation• Entire Agreement Waivers; Counterparts; Attachments The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of this Agreement or any other rule of construction that might otherwise apply. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the parties or their predecessors in interest with respect to all or any part of the subject matter hereof. All waivers of the provisions of this Agreement must be in writing by the appropriate authorities of the Agency and the Developer, and all amendments hereto must be in writing by the appropriate authorities of the Agency and the Developer. Except as otherwise expressly provided, in any circumstance where under this Agreement either party is required to approve or disapprove any matter, approval shall not be unreasonably withheld. 882/015610-0043 . 346077.03 PM03 -29- �' This Agreement may be executed in counterparts, each of which, when this Agreement has been signed by all the Parties hereto, shall be deemed an original, and such counterparts shall constitute one and the same instrument. The exhibits and attachments to this Agreement are incorporated herein and made a part hereof. F. [6051 No Brokers Agency and Developer each represent and warrant to the other that it has not retained any real estate broker, agent, or finder in connection with this Agreement or the disposition or conveyance of the Site as set forth herein, and each shall indemnify, defend, and hold harmless the other from and against any claim or lawsuit (including attorneys fees) for the payment of any real estate commission or finder's or broker's fees arising out of this Agreement to the extent caused by the acts or omissions of the Agency or Developer as the case may be. G. f 6061 Amendments to this Agreement The Developer and the Agency agree to mutually consider reasonable requests for amendments to this Agreement which may be made by either of the parties hereto, lending institutions, or bond counsel or financial consultants to the Agency, provided such requests are consistent with this Agreement and would not substantially alter the basic business terms included herein. The Agency's Executive Director shall have the authority to approve, on behalf of the Agency, amendments to this Agreement that would not substantially alter the basic business terms. All other amendments shall require the action of the Agency Board. All amendments, including those authorized to be approved by the Agency's Executive Director, shall be in writing and shall be signed by authorized representatives of Agency and Developer. The Agency's Executive Director shall have the authority, on behalf of the Agency, to approve extensions of time in Developer's performance under this Agreement, including, but not limited to, times of performance set forth in the Schedule of Performance, for a cumulative period of up to one (1) year. [end — signature page and attachments follow] 882/015610-0043 346077.03 PM03 -30- 267 64'1 IN WITNESS WHEREOF, the Agency and the Developer have signed this Agreement on the respective dates set forth below. LA QUINTA REDEVELOPMENT AGENCY, a public body corporate and politic By: Dated: 12003 Its: ATTEST: Agency Secretary APPROVED AS TO FORM: RUTAN & TUCKER, LLP Attorneys for the La Quinta Redevelopment Agency Chairman SANTA ROSA DEVELOPMENT, INC., a California corporation Dated: , 2003 By: Its: By: Dated , 2003 Its: 882/015610-0043 346077.03 PM03 -3 1- ATTACHMENT NO. 1 SITE MAP [SEE NEXT PAGE] 882/015610-0043 051 346077.03 PM03 ATTACHMENT NO.2 LEGAL DESCRIPTION [See Following Page] � r . 882/015610-0043 346077.03 PM03 ATTACHMENT NO.3 SCOPE OF DEVELOPMENT SINGLE FAMILY HOMES I. GENERAL SUMMARY This document outlines the general requirements for Site improvements. Specific details shall be addressed in the specific plan and construction plans that will be prepared for this development. H. DEVELOPMENT CONCEPT The Site shall improved by the Developer in accordance with the provisions of this Agreement, subject to all applicable codes, ordinances, and statutes including requirements and procedures set forth in the La Quinta Municipal Code, and the Redevelopment Plan regulations adopted in conjunction with or subsequent to execution of this Agreement. III. ON -SITE DEVELOPMENT AND IMPROVEMENTS Developer shall prepare such plans, reports, and studies, and obtain such permits and approvals as required, including as applicable grading plans, for construction of the project. Plans shall be prepared by a licensed civil engineer in good standing and subject to the approval of the Director of Public Works. Developer shall grant and permit all necessary and appropriate utility easements and rights for the development of the Site, including but not limited to sanitary sewers, storm drains, water, electrical power, telecommunications, natural gas, cable television, etc. IV. LANDSCAPING Developer shall be responsible to fully landscape the Project in accordance with a landscape plan approved by the City. V. PUBLIC IMPROVEMENTS Developer shall be responsible for the construction of those public improvements that may be identified as part of preparing and processing a specific plan for the project. This shall include developing the well site proposed for the northwest corner of the Site in accordance with the requirements set forth by the Coachella Valley Water District (CVWD). With respect thereto, Developer shall be responsible for obtaining and delivering to the City such bonds or other improvement security as City may require in accordance with applicable law, including but not limited to payment and performance bonds. 2'7 882/015610-0043 346077.03 PM03 VI. DEVELOPMENT STANDARDS All development on the Site shall conform with the development standards adopted as part of the specific plan that will be prepared and processed after this Agreement is executed. A. General Project Design All structures on the Site shall be designed and constructed to be consistent with the conceptual drawings prepared as part of the development proposal submitted by the Developer. B. Dwelling Unit Design The dwelling Units shall range in size from a minimum of 1,176 square feet to a maximum of 1,300 square feet and include at two distinct floor plans. There shall be a mix of 74 two -bedroom and 75 three -bedroom homes. Each of the Units shall have an enclosed two -car garage with direct access between the garage and the Unit in addition to the primary entrance to the Unit. Developer shall be permitted to adjust floor plans and square footages of individual Units in accordance with applicable City codes, regulations, and procedures. C. Development Process The Developer and its representatives, including its architect and engineer, shall work with the Agency and City staff to develop and execute the architectural concept, architectural drawings, Site plan, specific plan, tentative tract map, precise plan, grading plan, off -Site improvement plans, landscaping plans and related plans consistent with the conditions of approval adopted by the City and Agency and the applicable regulations contained in the La Quinta Municipal Code. ?73 882/015610-0043 346077.03 PM03 -2- ATTACHMENT NO.4 SCHEDULE OF PERFORMANCE ACTIVITY TIME FRAME 1. Agency approves this Agreement. January 7, 2003. 2. Agency and Developer execute Within ten (10) business days of approval of Agreement and open Escrow. Agreement by Agency. 3. Developer provides evidence of insurance Within ten (10) days after approval of to Agency. A reement by Agency. 4. Developer to submit complete set of Within thirty (30) business days after documents to City as necessary to prepare approval of Agreement by Agency. and process Project Entitlements. 5. Developer processes through the City, and Within one hundred eighty (180) days after obtains all of, the Project Entitlements. the Effective Date. 6. Agency and Developer close Escrow on Within ten (10) business days after the City Agency's transfer of title to Site to approves the Project Entitlements, but in no Developer. event later than one (1) year after the Effective Date, and provided that Developer has satisfied all of the Agency's Conditions to Close. 7. Developer commences construction on the Within sixty (60) days after close of Escrow. Project. 8. Developer completes construction of On or before the date Developer receives common area recreation building and certificate of occupancy for thirtieth (301") pool. house. 9. Developer receives certificate of On or before January 31, 2007. occupancy for final house. 10. Agency issues a Certificate of Completion Within ten (10) days after Agency receipt of for the improvements or provides written request from Developer for Certificate Developer with a written explanation of of Completion pursuant to Section 315 of the reasons why such a Certificate shall not be Agreement. issued. It is understood that the foregoing Schedule is subject to all of the terms and conditions of the text of the Agreement. The summary of items of performance in the Schedule is not intended 2 1 to supercede or modify any more complete description in the text; in the event of any conflict or 882/015610-0043 346077.03 PM03 inconsistency between this Schedule and text of the Agreement, the text of the Agreement shall govern. 2 C- 70 882/015610-0043 346077.03 PM03 -2- ATTACHMENT NO.5 GRANT DEED [SEE FOLLOWING PAGES] z7s 882/015610-0043 346077.03 PM03 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Santa Rosa Development, Inc. 71084 Tamerisk Lane Rancho Mirage, CA 92270 Attn: Michael Shovlin MAIL TAX STATEMENTS TO: Santa Rosa Development, Inc. 71084 Tamerisk Lane Rancho Mirage, CA 92270 Attn: Michael Shovlin SPACE ABOVE THIS LINE FOR RECORDER'S USE In accordance with Section 11932 of the California Revenue and Taxation Code, Grantor has declared the amount of the transfer tax which is due by a separate statement which is not being recorded with this Grant Deed. GRANT DEED FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic, organized and existing under the California Community Redevelopment Law (Health & Safety Code Section 33000 et seq.) (the "Grantor"), hereby grants to SANTA ROSA DEVELOPMENT, INC., a California corporation ("Grantee"), that certain real property ("Property") located in the City of La Quinta, County of Riverside, State of California, described in the legal description attached hereto as Exhibit "A" and incorporated herein by this reference, subject to all matters of record, and is further subject to the following: A. Reservation of Subsurface Rights. Grantor excepts and reserves from the conveyance herein described all interest of the Grantor in oil, gas, hydrocarbon substances, and minerals of every kind and character lying more than five hundred (500) feet below the surface, together with the right to drill into, through, and across, and to use and occupy all parts of the Property lying more than five hundred (500) feet below the surface thereof for any and all purposes incidental to the exploration for and production of oil, gas, hydrocarbon substances, or minerals from the Property or other lands, but without, however, any right to use the surface of the Property or any portion of the Property within five hundred (500) feet below the surface of the Property for such exploration. B. Conveyance in Accordance With Redevelopment Plan. The Property is conveyed in accordance with and subject to the Redevelopment Plan for Project Area No. 2 ("Redevelopment Plan"), a copy of which is on file with the City Clerk of the City of La Quinta, California. All uses on the Property shall conform to the uses permitted by the 882/015610-0043 346077.03 PM03 Redevelopment Plan. The foregoing shall remain in effect until the expiration of the Redevelopment Plan. C. Nondiscrimination. Grantee, on behalf of itself and its successors and assigns to all or any portion of the Property, covenants and agrees as follows: 1. There shall be no discrimination against, or segregation of, any persons, or group of persons, on account of race, color, creed, religion, sex, marital status, ancestry, or national origin in the sale, lease, or rental or in the use, occupancy, or enjoyment of the Property, nor shall the grantee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees, or vendees of the Property or any portion thereof, The foregoing covenants shall run with the land and shall remain in effect in perpetuity. 2. The grantee shall refrain from restricting the rental, sale, or lease of any portion of the Property, or contracts relating to the Property, on the basis of race, color, creed, religion, sex, marital status, age, ancestry, or national origin of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: a. In deeds: "The grantee herein covenants by and for itself, its heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, age, ancestry, or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the land herein conveyed, nor shall the grantee itself, or any persons claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the land herein conveyed. The foregoing covenants shall run with the land." b. In leases: "The lessee herein covenants by and for itself, its heirs, executors, administrators, and assigns, and all persons claiming under or through it, and this lease is made and accepted upon and subject to the following conditions: `That there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, age, ancestry, or national origin in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the land herein leased, nor shall the lessee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the land herein leased."' C. In contracts pertaining to the realty: "There shall be no discrimination against or segregation of any persons or group of persons on account of race, color, creed, religion, sex, marital status, age, ancestry, or national origin in the sale, lease, transfer, use, occupancy, tenure, or enjoyment of land, nor shall the transferee itself, or any person claiming under or through it, establish or permit any such practice or practices of 2'7 a 882/015610-0043 346077.03 PM03 -2-}' M O discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees, or vendees of land." The foregoing nondiscrimination covenants shall remain in effect in perpetuity. D. Covenants Run With The Land. All covenants contained in this Grant Deed shall be covenants running with the land. E. Covenants for Benefit of Grantor. All covenants set forth in this Grant Deed, without regard to technical classification or designation, shall be binding for the benefit of the Grantor, and such covenants shall run in favor of Grantor for the entire period during which such covenants shall be in force and effect, without regard to whether the Grantor is or remains an owner of any land or interest therein to which such covenants relate. Grantor, in the event of any breach of any such covenants, shall have the right to exercise all the rights and remedies and to maintain any actions at law or equity or other property proceedings to enforce the curing of such breach. ATTEST: Agency Secretary APPROVED AS TO FORM: RUTAN & TUCKER, LLP Agency Counsel 882/015610-0043 346077.03 PM03 "Grantor" LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic Executive Director "Grantee" SANTA ROSA DEVELOPMENT, INC., a California corporation By: _ Name: Its: -3- 279 STATE OF CALIFORNIA ) ss COUNTY OF ) On personally appeared before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] STATE OF CALIFORNIA ) ss COUNTY OF ) On , before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 882/015610-0043 346077.03 PM03 -4- '� STATE OF CALIFORNIA ) ) ss COUNTY OF On personally appeared before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 882/015610-0043 346077.03 PM03 -5- 2S1 0 61, EXHIBIT "A" LEGAL DESCRIPTION OF PROPERTY The land referred to is situated in the State of California, County of Riverside, City of La Quinta and is described as follows: [TO BE INSERTED] 2�^ !n 882/015610-0043 346077.03 PM03 -6- ATTACHMENT NO. 6 DEVELOPMENT ASSISTANCE DISBURSEMENT SCHEDULE AND PROCEDURES A. DISBURSEMENT OF DEVELOPMENT ASSISTANCE [All disbursements subject to the Disbursement Procedures below] 1. First Disbursement. As of the Effective Date, Developer shall be entitled to a portion of the Development Assistance in an amount up to, but not exceeding, Two Hundred Fifty Thousand Dollars ($250,000) ("First Disbursement"). The First Disbursement shall be disbursed to Developer to reimburse Developer for architectural, engineering, and fee costs that have been incurred by Developer in its preparation of a Specific Plan for the Proj ect. 2. Second Disbursement. As of the date Developer files a Specific Plan for the Project with the City, Developer shall be entitled to a portion of the Development Assistance in an amount up to, but not exceeding, Two Hundred Thousand Dollars ($200,000) ("Second Disbursement"). The Second Disbursement shall be disbursed to Developer to reimburse Developer for (a) architectural, planning, engineering, and environmental costs that Developer incurs in (i) revising the Specific Plan it has prepared for the Project to satisfy Agency requirements, and (ii) preparing the Tract Map for the Project; and (b) any public agency fees Developer incurs in developing the Project. 3. Third Disbursement. As of the date Developer receives the Project Entitlements, Developer shall be entitled to a portion of the Development Assistance in an amount up to, but not exceeding, Two Hundred Thousand Dollars ($200,000) ("Third Disbursement"). The Third Disbursement shall be disbursed to Developer to reimburse Developer for (a) costs Developer incurs in preparing construction and engineering drawings required by City prior to City's issuance of building permits for the Project, and (b) building permit fees Developer incurs for the Project. 4. Fourth Disbursement. As of the date City issues building permits for the Project, Developer shall be entitled to a portion of the Development Assistance in an amount up to, but not exceeding, One Hundred Fifty Thousand Dollars ($150,000) ("Fourth Disbursement"). The Fourth Disbursement shall be disbursed to Developer to reimburse Developer for any planning and engineering costs Developer incurs for the Project, and any building permit fees Developer incurs for the Project, that have not been reimbursed pursuant to the First Disbursement, Second Disbursement or Third Disbursement. B. DISBURSEMENT PROCEDURES 1. Conditions for Each Disbursement. Prior to each and every disbursement of a portion of the Development Assistance, the following conditions shall be satisfied: n r. PJ 882/015610-0043� 346077.03 PM03 a. Application. Developer shall have delivered the Application attached hereto as Exhibit "A", including supporting documentation showing the work performed and the actual cost thereof to the Agency Executive Director at least fifteen (15) business days prior to the requested disbursement. The Application shall be completed and certified to be accurate by Developer. The Application shall specifically identify the nature of each expense, and shall identify the status of completion of such construction. b. Approval of Application. The Executive Director shall review and approve the Application and accompanying documents, and the Executive Director shall determine that the work is reimbursable pursuant to Attachment 6 of the Agreement within ten (10) business days. The Executive Director shall advise Developer of any issues within the ten (10) day period and shall pay by check all uncontested amounts requested by the Application within twenty (20) days of the receipt of the Application. C. Lien Waivers. Agency shall have received unconditional releases of mechanics' and materialmen's lien rights and stop notice rights, pursuant to the California Civil Code, executed by all contractors, subcontractors, and other persons rendering services or delivering materials covered by the requests made in the Application. d. Frequency. Agency shall not be obligated to make disbursements more frequently than once per month. e. Use of Disbursements. Developer shall use or apply all of the assistance set forth in this Attachment No. 15 solely for reimbursement or payment of the items described in the Application pursuant to which the disbursement was made. 2S4 882/015610-0043 346077.03 PM03 -2- C EXHIBIT "A" FORM OF APPLICATION FOR DISBURSEMENT [SEE FOLLOWING PAGES] 882/015610-0043 346077.03 PM03 2Sr w- "�." TO: La Quinta Redevelopment Agency ("Agency") REQUEST NO. DATE: "DEVELOPER": SANTA ROSA DEVELOPMENT, INC. PROJECT: 48TH AND ADAMS AFFORDABLE HOUSING PROJECT Pursuant to an Affordable Housing Agreement dated as of (the "Agreement") between Developer and Agency, Developer hereby requests that Agency disburse $ of the financial assistance identified in Attachment No. 6 to the Agreement. This advance is requested to pay for the expenses set forth below as described in Attachment No. 6. Developer hereby certifies that the amounts shown on the attached schedule and the accompanying invoices represent costs incurred for improvements identified which are eligible for reimbursement at this time in accordance with the provisions of Attachment No. 6 and the Agreement. SUBMITTED BY: REVIEWED AND APPROVED BY: Item of Cost Date: Agency Inspector Date: DISBURSEMENT SCHEDULE Maximum Reimbursement Amount Amount Previously Amount Requested Disbursed this Disbursement 2Sf 882/015610-0043 1 346077.03 PM03 ATTACHMENT NO. 7 OPTION AGREEMENT [SEE FOLLOWING PAGES] 237 882/015610-0043 I 346077.03 PM03 FREE RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, CA 92253 Attn: Executive Director (SPACE ABOVE THIS LINE FOR RECORDING USE) (EXEMPT FROM RECORDING FEE PER GOV. CODE § 6103) OPTION AGREEMENT SUBORDINATED NOTICE: This OPTION AGREEMENT contains a subordination clause which may result in your security interest in the property becoming subject to and of lower priority than the lien of some other or later security instrument. THIS OPTION AGREEMENT ("Option Agreement") is made this day of , (the "Effective Date"), by SANTA ROSA DEVELOPMENT, INC., a California corporation ("Developer"), and the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"). RECITALS A. Developer has entered into an Affordable Housing Agreement ("Affordable Housing Agreement") dated with the La Quinta Redevelopment Agency ("Agency"), pursuant to which Agency conveyed to Developer that certain real property located at the corner of Avenue 48th and Adams Street, in the City of La Quinta, County of Riverside, State of California (the "Site"). All defined terms used herein shall have the same meaning as set forth in the Affordable Housing Agreement unless otherwise stated. The Site is legally described in Exhibit "A" attached hereto and incorporated herein. B. As a condition to the Agency's conveyance of the Site to Developer, Developer was required to grant to Agency an option to repurchase the Site from Developer, if Developer fails to commence, continuously proceed with, or complete construction within certain specified time frames, all as further described herein. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and incorporating the above recitals and all of the terms and conditions contained in the Affordable Housing Agreement, Developer hereby grants to Agency the following repurchase options: 28S 882/015610-0043 350204.02 PM03 Repurchase Option I - Failure to Commence Construction Developer hereby grants to Agency an exclusive option to repurchase the Site ("Repurchase Option I") if Developer fails to commence construction of the Project (for the purposes of this Option Agreement, "commencement of construction of the Project" shall be defined as Developer's substantial commencement, and thereafter uninterrupted continuation, of excavation work on the Site) within one hundred eighty (180) days after the Effective Date, subject to Section 4(h) below. In the event of Developer's failure to commence construction within such one hundred eighty (180) day time period, Agency shall be entitled to exercise, but is not obligated to exercise, the foregoing option for a period of ninety (90) days following the expiration of the one hundred eighty (180) day period described above ("Repurchase Option I Period"). (a) Exercise of Option Agency shall exercise the Repurchase Option I by giving written notice to Developer ("Agency's Notice of Option 1 Exercise"), in accordance with Section 5 of this Option Agreement, prior to the expiration of the Repurchase Option I Period. Failure of Agency to exercise the Repurchase Option I shall constitute a waiver by Agency of its exercise of this Repurchase Option I only, and shall not constitute a waiver by Agency of any remedies it may have under the terms of the Affordable Housing Agreement or of any other agreement for Developer's failure to timely commence construction (as defined herein or as such term may be defined in any other agreement). Any Agency waiver as described in the preceding sentence shall not be deemed a waiver of any other Developer breach of the terms or conditions of the Affordable Housing Agreement. (b) Repurchase Price and Escrow - Repurchase Option I Agency's repurchase price for the Site ("Repurchase Option I Repurchase Price") shall be Developer's Purchase Price for the Site ($1.00). Within five (5) business days after Agency has exercised Repurchase Option I, or as soon thereafter as reasonably practicable, an escrow shall be opened with an escrow company selected by Agency for the reconveyance of the Site to Agency. Agency shall deposit the Repurchase Option I Repurchase Price in escrow not later than one (1) business day prior to the anticipated close of escrow date. The escrow shall be subject to Agency's approval of a then -current preliminary title report and, at Agency's option, environmental and other site testing. Any monetary lien(s) or encumbrance(s) shown on such preliminary title report that is (are) created concurrent with or after the Close of Escrow that conveyed the Site from Agency to Developer shall be removed by Developer at its sole expense prior to the close of escrow pursuant to this Section I(b) unless such exception(s) is (are) accepted by Agency in its sole discretion; provided, however, that Agency shall accept the following exceptions to title: (i) current taxes not yet delinquent, (ii) matters affecting title existing on the date of recordation of the Grant Deed to the Site (Attachment No. 5 to the Affordable Housing Agreement); and (iii) matters shown as printed exceptions in the standard form ALTA policy of title insurance. In the event the Site is encumbered by a mortgage or deed of trust, Agency shall be permitted to unilaterally instruct the 299 882/015610-0043 350204.02 PM03 -2- escrow agent to satisfy the indebtedness secured thereby out of the proceeds payable to Developer through the foregoing escrow. Any additional amount necessary to satisfy such indebtedness shall be paid by Developer. Agency and Developer shall each pay one-half (1/2) of the escrow fees. Developer shall pay for documentary tax stamps, recording fees, and for an ALTA standard form owner's policy of title insurance in the amount of the Repurchase Option I Repurchase Price showing title vested in Agency free and clear of all liens and encumbrances except those permitted by this paragraph. (Agency shall pay the portion of the title insurance premium attributable to any extra or extended coverages or if the amount of insurance requested by Agency is higher than the Repurchase Option I Repurchase Price.) Any other costs and expenses shall be allocated between the parties in the manner customary for a commercial property conveyance in Riverside County. Agency shall have thirty (30) days after exercise of the Repurchase Option I to enter upon the Site to conduct any tests, inspections, investigations, or studies of the condition of Site. Developer shall permit Agency access to the Site for such purposes. Agency shall indemnify, defend, and hold harmless Developer and its officers, directors, shareholders, employees, agents, and representatives from and against all claims, liabilities, or damages, and including expert witness fees and reasonable attorney's fees and costs, arising out of any such testing, inspection, or investigatory activity on the Site. Escrow shall close promptly after acceptance by Agency of the condition of title and the physical and environmental condition of the Site. 2. Repurchase Option II - Failure to Continuously Proceed With or Complete Construction Developer hereby grants to Agency an exclusive option to repurchase the Site ("Repurchase Option II") if, after commencement of construction, Developer fails to continuously proceed with, and complete, construction of the Project on the Site (for purposes of this Option Agreement, "continuously proceed with construction" shall be defined as construction that is interrupted, if at all, for periods of no longer than one (1) month; and "completion of construction of the Project" shall be defined as the issuance by the City of La Quinta ("City") to Developer of a Certificate of Occupancy for the Project) within twenty-four (24) months after commencement of construction, subject to Section 4(h) below ("Completion Deadline"). In the event of Developer's failure to continuously proceed with, or to complete, construction of the Project by the Completion Deadline, Agency shall be entitled to exercise, but is not obligated to exercise, the foregoing option for a period of ninety (90) days following the Completion Deadline ("Repurchase Option II Period"). (a) Exercise of Option Agency shall exercise the Repurchase Option II by giving written notice to Developer, in accordance with Section 5 of this Option Agreement, prior to the expiration of the Repurchase Option II Period. Failure of Agency to exercise the Repurchase Option II shall constitute a waiver by Agency of Developer's breach of its obligation to timely complete construction. Any Agency waiver as described in the preceding sentence shall not be deemed a waiver of any other Developer breach of the terms or conditions of the Affordable Housing Agreement. 210 } r� 882/015610-0043 350204.02 PM03 -3- (b) Determination of Repurchase Price - Repurchase Option II Agency and Developer shall comply with the following terms and provisions to determine Agency's repurchase price for the Site ("Repurchase Option II Repurchase Price"), the clearance of unusable improvements, the escrow for the reconveyance, and other matters therein discussed: (1) Within ten (10) days after Agency's exercise of Repurchase Option II, Developer shall deliver to Agency a list of improvements, if any, constructed by Developer on the Site that are usable for the purposes for which the Site was conveyed to Developer ("Site Improvements"). (2) Developer, within fifteen (15) days after submission of the list of Site Improvements to Agency, shall deliver to Agency a statement of Developer's costs for each of the Site Improvements ("Statement of Costs"). (3) After Agency's receipt of the Site Improvements list and the Statement of Costs, Agency and Developer shall consult with each other in good faith the purpose of arriving at an agreement concerning the Site Improvements that are usable to Agency ("Usable Improvements") and the costs for those Usable Improvements. Developer agrees that the final determination of which of the Site Improvements are Usable Improvements shall be made by Agency in its sole discretion. The Site Improvements that are not included within the list of Usable Improvements shall be deemed "Unusable Improvements." The "Cost of the Usable Improvements" shall be the lesser of: (a) an amount equal to seventy-five percent (75%) of Developer's construction costs actually incurred as of the date of Agency's exercise of Repurchase Option II ("Construction Cost Percentage"), as verified by Developer's provision of all information pertaining to its cost of construction for the Project on the Site up to the date of Agency's exercise of Repurchase Option II, including construction contracts, invoices, and such other information and documents reasonably required by Agency to verify the Construction Cost Percentage; or (b) a cost mutually determined by Agency or Developer, or in the event Agency and Developer cannot arrive at a mutually agreeable determination of costs for the Usable Improvements, the cost shall be defined as the costs as listed in Developer's Statement of Costs unless Agency, in its sole discretion and at Agency's cost, obtains a written appraisal of the fair market value of the Usable Improvements from an independent and qualified MAI appraiser ("Agency's Usable Improvements Appraisal"). If Agency, in its sole discretion, decides to use Agency's Usable Improvements Appraisal as a basis for a portion of the Repurchase Price as described below, Agency shall provide a copy of the Agency's Usable Improvements Appraisal to Developer and the following shall apply: 882/015610-0043 350204.02 PM03 -4- (i) If Developer does not agree with Agency's Usable Improvement Appraisal, Developer shall notify Agency in writing within five (5) business days of receipt thereof. Within thirty (30) days thereafter, Developer, at its cost, shall deliver to Agency a written appraisal of the fair market value of the Usable Improvements prepared by an independent and qualified MAI appraiser ("Developer's Usable Improvements Appraisal"). (ii) If Developer fails to deliver Developer's Usable Improvements Appraisal to Agency within the time provided, Agency's Usable Improvements Appraisal shall constitute the final and binding determination of the fair market value of the Usable Improvements. (iii) If Developer delivers Developer's Usable Improvements Appraisal to Agency within the time provided, and such Developer's Usable Improvements Appraisal is lower than Agency's Usable Improvements Appraisal, then Developer's Usable Improvements Appraisal shall constitute the final and binding determination of the fair market value of the Usable Improvements. (iv) If Developer delivers Developer's Usable Improvements Appraisal to Agency within the time provided, and such Developer's Usable Improvements Appraisal is higher than Agency's Usable Improvements Appraisal, but less than or equal to five percent (5%) higher, the average of Developer's Usable Improvements Appraisal and Agency's Usable Improvements Appraisal shall constitute the final and binding determination of the fair market value of the Usable Improvements. (v) If Developer delivers Developer's Usable Improvements Appraisal to Agency within the time provided, and such Developer's Usable Improvements Appraisal is higher than Agency's Usable Improvements Appraisal, and is more than five percent (5%) higher, Agency and Developer shall appoint, and shall share the cost of, a third independent and qualified MAI appraiser who shall perform a review appraisal and shall render a determination of the fair market value of the Usable Improvements, which value cannot be higher than the amount of Developer's Usable Improvements Appraisal. If Agency and Developer cannot agree on a third appraiser, then an amount equal to twenty-five percent (25%) of the difference between Agency's and Developer's Usable Improvements Appraisals shall be added to Agency's Usable Improvements Appraisal and that sum shall constitute the final and binding determination of the fair market value of the Usable Improvements. ^ 882/015610-0043 350204.02 PM03 -5- r 1 Within ninety (90) days after Agency's exercise of the Repurchase Option I1, but in no event prior to the conclusion of Agency's and Developer's consultations referred to hereinabove, Developer shall have the obligation, at its sole cost and expense, to remove from the Site all structures, buildings, pavings, landscaping, and other improvements except the Usable Improvements (collectively, the "Unusable Improvements") installed by Developer or its contractor(s). Any such work of removing the Unusable Improvements undertaken by Developer or its contractors shall be accomplished to the reasonable satisfaction of Agency. If Developer does not remove any of the Unusable Improvements prior to the close of escrow for the Repurchase Option 1I, Agency shall have the right to remove such Unusable Improvements not so removed by Developer. The amount of Agency's Repurchase Option 1I Repurchase Price for the Site, as described immediately below, shall be adjusted downward to reflect any costs incurred by Agency in removing any such Unusable Improvements. Agency's Repurchase Option II Repurchase Price for the Site shall be the sum of (i) and (ii): (i) the Repurchase Option I Repurchase Price; and (ii) the lesser of (A) the Cost of Usable Improvements (if any) or (B) the fair market value of Usable Improvements (if any) determined as set forth hereinabove. Within five (5) days after Agency has exercised Repurchase Option II, or as soon thereafter as reasonably practicable, an escrow shall be opened with an escrow company selected by Agency for the reconveyance of the Site to Agency. Agency shall deposit the Repurchase Option II Repurchase Price in escrow not later than one (1) business day prior to the anticipated close of escrow date. The escrow shall be subject to approval of a then -current preliminary title report and, at Agency's option, environmental and other site testing. Any monetary lien(s) or encumbrance(s) shown on such preliminary title report that is (are) created concurrent with or after the Close of Escrow that conveyed the Site from Agency to Developer shall be removed by Developer at its sole expense prior to the close of escrow pursuant to this Section 2(c) unless such exception(s) is (are) accepted by Agency in its sole discretion; provided, however, that Agency shall accept the following exceptions to title: (i) current taxes not yet delinquent, (ii) matters affecting title existing on the date of recordation of the Grant Deed to the Site (Attachment No. 5 to the Affordable Housing Agreement); and (iii) matters shown as printed exceptions in the standard form ALTA owner's policy of title insurance. In the event the Site or any portion thereof is encumbered by a mortgage or deed of trust, Agency shall be permitted to unilaterally instruct the escrow agent to satisfy the indebtedness secured thereby out of the proceeds payable to Developer through the foregoing escrow. Any additional amount necessary to satisfy such indebtedness shall be paid by Developer. Agency and Developer shall each pay one-half (1/2) of the escrow fees; provided, however, that Agency shall deduct its share from the price paid to Developer to repurchase the Site, as described above. Developer shall pay for documentary tax stamps, recording fees, and for a ALTA standard form owner's policy of title insurance in the amount of the Repurchase Option II Repurchase Price showing title vested in Agency free and clear of all liens and encumbrances except those permitted by this paragraph. Any other costs and expenses shall be allocated between the parties in the manner customary for a commercial property conveyance in Riverside County. Agency shall have thirty (30) days after exercise of the Repurchase Option 1I, to enter upon the Site to conduct any tests, inspections, investigations, or studies of the condition of Site. Developer shall permit Agency access to the Site for such purposes. Agency shall indemnify, defend, and hold harmless Developer and its officers, directors, shareholders, employees, agents, and representatives from and against all 293 882/015610-0043 -6- � -; ) 350204.02 PM03 .. claims, liabilities, or damages, and including expert witness fees and reasonable attorney's fees and costs, arising out of any such testing, inspection, or investigatory activity on the Site. Escrow shall close promptly after acceptance by Agency of the condition of title and the physical and environmental condition of the Site. 3. Repurchase Option III - Transfer of the Site Developer hereby grants to Agency an exclusive option to repurchase the Site (Repurchase Option III) if, prior to the time Agency issues a Certificate of Completion for the Project, Developer transfers or suffers an involuntary transfer of the Site in violation of the terms of the Affordable Housing Agreement. In the event of Developer's transfer of the Site in violation of the Affordable Housing Agreement, Agency shall be entitled to exercise, but is not obligated to exercise, the foregoing option for a period of ninety (90) days following the transfer that gives rise to Agency's option under this Section ("Repurchase Option III Period"). (a) Exercise of Option Agency shall exercise the Repurchase Option III by giving written notice to Developer ("Agency's Notice of Option III Exercise"), in accordance with Section 5 of this Option Agreement, prior to the expiration of the Repurchase Option III Period. Failure of Agency to exercise the Repurchase Option III shall constitute a waiver by Agency of its exercise of this Repurchase Option III only, and shall not constitute a waiver by Agency of any remedies it may have under the terms of the Affordable Housing'Agreement or of any other agreement for Developer's failure to timely commence construction (as defined herein or as such term may be defined in any other agreement). Any Agency waiver as described in the preceding sentence shall not be deemed a waiver of any other Developer breach of the terms or conditions of the Affordable Housing Agreement. (b) Repurchase Price and Escrow - Repurchase Option III Agency's repurchase price for the Site ("Repurchase Option III Repurchase Price") shall be as follows: (i) In the event Developer has not yet commenced construction of the Project at the time Agency exercises its Repurchase Option III, Agency's Repurchase Option III Price shall be the Repurchase Option I Repurchase Price, as set forth in Section I(b) of this Option Agreement. (ii) In the event Developer has commenced construction of the Project at the time Agency exercises its Repurchase Option III, Agency's Repurchase Option III Repurchase Price shall be the Repurchase Option II Repurchase Price, as set forth in Section 2(b) of this Option Agreement. 4. Additional Terms Applicable to the Repurchase Options The following additional terms shall apply to Repurchase Option I, Repurchase Option II, and Repurchase Option III, as applicable: 882/015610-0043 350204.02 PM03 -7- (a) The Repurchase Option I, Repurchase Option II, and Repurchase Option III created hereby shall be irrevocable by Developer and, subject to any subordination by Agency in accordance with paragraph (i) below, shall be binding upon the successors and assigns of Developer. (b) Agency shall have sixty (60) days after exercising Repurchase Option I (or Repurchase Option III if Agency exercises Repurchase Option III and the Repurchase Option I Repurchase Price is the applicable repurchase price for the Site) to deliver to Developer a written commitment to close escrow, and escrow shall close no later than ninety (90) days after Agency's notice of commitment to close escrow, unless an extension to any of the foregoing time periods is/are required due to a delay not the fault of Agency, or the parties, each in its sole discretion, mutually agree to extend one or both of such periods (c) Agency shall have until the later of (i) sixty (60) days after exercising Repurchase Option II (or Repurchase Option III if Agency exercises Repurchase Option III and the Repurchase Option II Repurchase Price is the applicable repurchase price for the Site), or (ii) thirty (30) days after the determination of the purchase price pursuant to Section 2(b) of this Option Agreement (whether said purchase price is the Repurchase Option II Repurchase Price or the Repurchase Option III Repurchase Price), to deliver to Developer a written commitment to close escrow, and escrow shall close no later than ninety (90) days after Agency's notice of commitment, unless an extension to any of the foregoing time periods is/are required due to a delay not the fault of Agency, or the parties, each in its sole discretion, mutually agree to extend one or both of such periods (d) In the event that, at the time Agency exercises Repurchase Option II or Repurchase Option III Developer has obtained a Certificate of Completion from the City for one or more of the lots that comprise the Site, (i) the provisions of this Option Agreement shall apply only to that portion of the Site for which Certificates of Completion have not been issued ("Uncompleted Portion of the Site") and any calculations for determining the Repurchase Option II Repurchase Price or the Repurchase Option III Repurchase Price shall be based solely upon the Uncompleted Portion of the Site, and (ii) Developer agrees to cooperate with Agency to effect the subdivision of the Uncompleted Portion of the Site from the completed portions of the Site (those portions of the Site for which Certificates of Completion have been issued). (e) Notwithstanding any covenant, term, or provision in this Section 4 to the contrary, Agency shall not be obligated to exercise Repurchase Option I, Repurchase Option II, or Repurchase Option III, or once exercised, to close escrow. Agency shall not be liable to Developer for any costs incurred by Developer occasioned by Agency's decision not to close escrow. 29 882/015610-0043 350204.02 PM03 _g_ (f) Agency, but not Developer, shall have the right of specific performance to enforce the terms of this Section 4. (g) In the event Developer commences and completes construction of the Project and Agency has not exercised Repurchase Option I, Repurchase Option II, or Repurchase Option III, Agency shall execute and record a termination of this Option Agreement within fifteen (15) business days after the final and permanent Certificate of Occupancy is issued by the City. (h) Notwithstanding anything to the contrary herein, in addition to specific provisions of this Option Agreement, performance by either party hereunder shall not be deemed to be in default where delays or defaults are due to war; insurrection; strikes; lock -outs; riots; floods; earthquakes; fires; casualties; supernatural causes; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority litigation; unusually severe weather; inability to secure necessary labor, materials or tools; acts of the other party; acts or the failure to act of a public or governmental agency or entity (except that acts or the failure to act of Agency shall not excuse performance by Agency unless the act or failure is caused by the acts or omissions of Developer); or any other causes beyond the reasonable control or without the fault of the party claiming an extension of time to perform. In the event of such a delay (herein "Enforced Delay"), the party delayed shall continue to exercise commercially reasonable efforts to minimize the period of the delay. An extension of time for any such cause shall be limited to the period of the Enforced Delay, and shall commence to run from the time of the commencement of the cause, provided notice by the party claiming such extension is sent to the other party within fifteen (15) days following the commencement of the cause. The following shall not be considered as events or causes beyond the control of Developer, and shall not entitle Developer to an extension of time to perform: (i) Developer's failure to obtain financing for the Project, (ii) Developer's failure to negotiate agreements with prospective tenants or users for the Project, (iii) interest rates or (iv) economic or market conditions. Times of performance under this Option Agreement may also be extended by mutual written agreement by Agency and Developer. Agency's Executive Director shall also have the authority on behalf of Agency to administratively approve extensions of time not to exceed a cumulative total of one (1) year. (i) Subordination. The Agency agrees to subordinate Repurchase Option II and Repurchase Option III to Developer's construction loan, provided that (i) the maximum cumulative principal amount of the construction loan shall not exceed ninety percent (90%) of the lender's appraised value of the Site upon completion of the Project, which amount shall be verified in writing to Agency Executive Director's reasonable satisfaction; (ii) the 882/015610-0043 (1 r F 350204.02 PM03 -9- r` ; loan(s) shall obligate Developer to expend loan proceeds for no other purpose than the Project; and (iii) the loan(s) shall provide that any notice of a Developer breach or default shall also be sent to the Agency at the address listed in Section 5 and that upon receipt of such notice, Agency shall have the right to (A) cure the noticed breach or default, (B) negotiate with the lender regarding the noticed breach or default, and (C) purchase the Site from Developer subject to the construction lender's deed of trust, without the consent of Developer or the holder of the construction lender's deed of trust, that Agency's exercise of the foregoing rights shall not, in and of itself, give rise to any right on the part of the lender to accelerate the amounts due under the loan. 5. Notices Demands and Communications Between the Parties Formal notices, demands, and communications between Agency and Developer shall be given either by (i) personal service, (ii) delivery by reputable document delivery service such as Federal Express that provides a receipt showing date and time of delivery, or (iii) or by mailing in the United States mail, certified mail, postage prepaid, return receipt requested, addressed to: To Agency: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, CA 92253 Attn: Executive Director With a copy to: Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400 Costa Mesa, California 92626 Attn: M. Katherine Jenson, Esq. To Developer: Santa Rosa Development, Inc. 71084 Tamerisk Lane Rancho Mirage, CA 92270 Attn: Michael Shovlin With a copy to: Notices personally delivered or delivered by document delivery service shall be deemed effective upon receipt. Notices mailed in the manner provided above shall be deemed effective on the second business day following deposit in the United States mail. Such written notices, demands, and communications shall be sent in the same manner to such other addresses as either party may from time to time designate by mail. 297 882/015610-0043 079 350204.02 PM03 -10- 6. Agency's Option to Acquire Plans If Agency exercises Repurchase Option I, Repurchase Option II, or Repurchase Option III in accordance with this Agreement, at the option of the Agency, which may be exercised in the Agency's sole and absolute discretion, the Developer shall deliver to the Agency an executed assignment in a form reasonably acceptable to the Agency of the Developer's right to use all plans, blueprints, drawings, sketches, specifications, tentative or final subdivision maps, landscape plans, utilities plans, soils reports, noise studies, environmental assessment reports, grading plans and any other materials relating to the construction of the Project on the Site (the "Plans"), together with copies of all of the Plans, as have been prepared for the development of the Site to date of the termination. Notwithstanding the foregoing, however, Developer does not covenant to convey to the Agency the copyright or other ownership rights of third parties. Agency understands and agrees that the assignment to Agency under this Section 6 is subject and subordinate to any assignment which Developer may make to a lender providing financing for the Project, and Agency agrees to execute any documents required by such lender acknowledging and effectuating such subordination of Agency's rights in and to the assignment. Agency's acquisition or use of the Plans or any of them shall be without any representation or warranty by Developer as to the accuracy or completeness of any such Plans, and Agency shall assume all risks in the use of the Plans. 7. Applicable Law and Forum, Attorne 'sees The Municipal and Superior Courts of the State of California in the County of Riverside shall have the exclusive jurisdiction of any litigation between the parties arising out of this Option Agreement. This Option Agreement shall be governed by, and construed under, the laws of the State of California. In addition to any other rights or remedies, either party may take legal action, in law or in equity, to cure, correct, or remedy any default, to recover damages for any default, to compel specific performance of this Option Agreement, to obtain declaratory or injunctive relief, or to obtain any other remedy consistent with the purposes of this Option Agreement. The rights and remedies of the parties are cumulative and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. Service of process on Agency shall be made in the manner required by law for service on a public entity. Service of process on Developer shall be made in any manner permitted by law and shall be effective whether served within or outside of California. If either party to this Option Agreement is required to initiate or defend, or is made a party to, any action or proceeding in any way connected with this Option Agreement, the party prevailing in the final judgment in such action or proceeding, in addition to any other relief which may be granted, shall be entitled to reasonable attorney's fees. Attorney's fees shall include reasonable costs for investigating such action, conducting discovery, retaining expert witnesses, and all other necessary costs the court allows which are incurred in such litigation. 8. Nonliability of Agency Officials and Employees No officer, official, employee, agent, or representative of Agency shall be personally liable to Developer or any successor in interest, in the event of any default or breach by Agency, 2�a 882/015610-0043 350204.02 PM03 or for any amount which may become due to Developer or its successor, or for breach of any obligation of the terms of this Option Agreement. 9. Nondiscrimination Developer covenants for itself, its heirs, executors, assigns, and all persons claiming under or through them, that there shall be no discrimination against any person on account of race, color, creed, religion, sex, marital status, national origin, or ancestry with respect to this Option Agreement or use of the Site. 10. Interpretation The terms of this Option Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of this Option Agreement or any other rule of construction which might otherwise apply. The Section headings are for purposes of convenience only, and shall not be construed to limit or extend the meaning of this Option Agreement. 11. Entire Agreement This Option Agreement integrates all of the terms and conditions mentioned herein, or incidental hereto, and supersedes all negotiations or previous agreements between the parties with respect to all or any part of the subject matter hereof. All waivers of the provisions of this Option Agreement must be in writing and signed by the appropriate authorities of the party to be charged, and all amendments and modifications hereto must be in writing and signed by the appropriate authorities of Agency and Developer. 12. Counterparts This Option Agreement may be executed in counterparts, each of which, after all the parties hereto have signed this Option Agreement, shall be deemed to be an original, and such counterparts shall constitute one and the same instrument. 13. Severability In the event any section or portion of this Option Agreement shall be held, found, or determined to be unenforceable or invalid for any reason whatsoever, the remaining provisions shall remain in effect, and the parties hereto shall take further actions as may be reasonably necessary and available to them to effectuate the intent of the parties as to all provisions set forth in this Option Agreement. [END - SIGNATURES ON NEXT PAGE] 299 882/015610-0043 l 350204.02 PM03 -12- �; , IN WITNESS WHEREOF, the parties have executed this Option Agreement as of the date first above written. "DEVELOPER" SANTA ROSA DEVELOPMENT, INC., a California corporation By: Name: Its: "AGENCY" LA QUINTA REDEVELOPMENT AGENCY a public body, corporate and politic IM ATTEST: Agency Secretary APPROVED AS TO FORM: RUTAN & TUCKER, LLP Attorneys for the La Quinta Redevelopment Agency Executive Director 3r)0 882/015610-0043 4 350204.02 PM03 -13- � STATE OF CALIFORNIA ) ) ss COUNTY OF On , before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. [SEAL] STATE OF CALIFORNIA ) ss COUNTY OF ) On personally appeared Notary Public before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 1. 3�i 882/015610-0043 350204.02 PM03 -14- EXHIBIT "A" LEGAL DESCRIPTION OF THE SITE 0 882/015610-0043 350204.02 PM03 -1 S- ATTACHMENT 8 DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS FOR PROPERTY [SEE FOLLOWING PAGES] 882/015610-0043 346077.03 PM03 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO:) La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, California 92253 Attention: Executive Director (Space Above for Recorder's Use) (Exempt from Recordation Fee per Gov. Code § 6103) DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS FOR PROPERTY THIS DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS FOR PROPERTY (the "Declaration") is made by and between SANTA ROSA DEVELOPMENT, INC., a California corporation (the "Covenantor") and the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency" or "Covenantee") as of the day of , 2001 RECITALS A. Covenantor is fee owner of record of that certain real property (the "Property") located in the City of La Quinta, County of Riverside, State of California, legally described in the attached Exhibit "A", which Property Covenantor acquired from Agency pursuant to a Grant Deed recorded concurrently herewith. B. This Declaration and the Grant Deed described in Recital A are part of a redevelopment project described in that certain Affordable Housing Agreement, entered into by and between Covenantor and Covenantee and recorded concurrently herewith. As described in the Affordable Housing Agreement, the Property includes not less than one hundred forty-nine (149) single family lots on each of which Covenantor shall construct a single family home for sale to "Eligible Buyers" (as that term is defined in Section Lb herein) (the "Project"). C. The Property is within the La Quinta Redevelopment Project Area (the "Project Area") in the City of La Quinta and is subject to the provisions of the Redevelopment Plan for the Project Area (the "Redevelopment Plan"). D. The Community Redevelopment Law (California Health and Safety Code 33000 et seq.) provides that a redevelopment agency shall establish covenants running with the land in furtherance of redevelopment plans. NOW, THEREFORE, THE COVENANTEE AND THE COVENANTOR AGREE AS FOLLOWS: 304 882/015610-0043 346077.03 PM03 1. Definitions. a. "Affordability Period" shall be forty-five (45) years from the date of transfer to an Eligible Buyer, as evidenced by the recordation of a Buyer Affordable Housing Agreement by said Eligible Buyer. b. "Affordable Housing Cost" shall be that purchase price which would result in monthly housing payments, including the cost for a thirty (30) year mortgage for that portion of the purchase price which is to be paid in the form of loan proceeds under currently prevailing mortgage loan rates or the interest rate of any below -market mortgage program for which such purchaser has obtained a first trust, deed loan, of (i) for households which earn not more than one hundred ten percent (110%) of Riverside County median income, not less than twenty-eight percent (28%) of the gross income of the household, nor more than thirty-five percent (35%) of one hundred ten percent (110%) of Riverside County median income adjusted for family size appropriate for the Unit, or (ii) if the gross income of the household exceeds one hundred ten percent (110%) of Riverside County median income, not more than thirty-five percent (35%) of the actual gross income of the household. A sample calculation of an Affordable Housing Cost for the Units is set forth on Exhibit "B", which is attached hereto and incorporated herein by this reference ("Calculation of Affordable Housing Costs"). C. "Buyer Affordable Housing Documents" shall collectively refer to the following documents, all of which shall be required to be executed by each buyer of a Unit to assure the affordability of the Unit to Eligible Buyers: (i) an affordable housing agreement that prohibits the resale of the Unit except to an Eligible Buyer and grants the Covenantee an option to purchase the Unit ("Option of Purchase") in the event the buyer is unable to locate an Eligible Buyer ("Buyer Affordable Housing Agreement"); (ii) a Memorandum reciting Covenantee's Option to Purchase ("Buyer Memorandum re Option to Purchase"); (iii) a promissory note ("Buyer Promissory Note") whose terms shall include a second deed of trust securing the Buyer Promissory Note ("Buyer Second Trust Deed"); and (iv) a disclosure statement acknowledging and consenting to all of the affordability and restrictions contained in the aforementioned documents ("Buyer Disclosure Statement"). d. "Covenantor" shall mean Covenantor and any successor in interest of Covenantor to the Site. e. "Eligible Buyer" shall mean a buyer of one of the Units in the Project who satisfies all of the following requirements: (i) at least one person in residence in the residential unit in question is a "qualifying resident" or "senior citizen" for purposes of residency in a "senior citizen housing development" (as those terms are defined in California Civil Code Section 51.3(b)(1) and (4)); (ii) each other resident in the same dwelling unit is either a "qualifying resident," "senior citizen," "qualified permanent resident" or "permitted health care resident" within the meaning of California Civil Code Section 51.3(b)(2), (3), and (7); and (iii) such person or persons qualify as "persons and families of moderate income" within the meaning of California Health and Safety Code Section 50093 (i.e., households whose household income, adjusted for family size, do not exceed one hundred twenty (120%) of the Riverside County Median Income). r 882/015610-0043 * M 346077.03 PM03 -2�` f. "Owner" shall mean an Eligible Buyer to whom Covenantor has conveyed fee title to one of the Units or any successor in interest to said Eligible Buyer to all or any portion of the Unit. g. "Proposed Buyer" shall mean a person or family determined to be an Eligible Buyer, to whom the Covenantor or any successor Owner desires and proposes to Transfer a Unit. h. "Purchase Housing Cost" for an Eligible Buyer purchasing a Unit shall be a cost that includes all of the following associated with that Unit, estimated or known as of the date of the proposed sale of the Unit: (1) Principal and interest on a fixed rate mortgage loan including any rehabilitation loans, and any loan insurance fees associated therewith. (2) Property taxes and assessments. (3) Fire and casualty insurance covering replacement value of property improvements. (4) Any homeowner association fees. (5) Estimate of utilities cost. (6) Estimate of property maintenance costs. The sum of (1) through (5), inclusive, shall not exceed the Affordable Housing Cost. i. "Sales Price" shall mean all sums paid by an Eligible Buyer to Covenantor for, or in conjunction with, the acquisition of a Unit, including the purchase price designated in any purchase agreement, consideration for personal property and all other costs and fees paid by the Eligible Buyer to or for the benefit of the Covenantor. j. "Transfer" shall mean (i) any sale, assignment, or transfer of an interest in a Unit, including, without limitation, a fee simple interest, tenancy in common, joint tenancy, community property, tenancy by the entireties, life estate, or other limited estate, leasehold interest or any rental of the Unit, or (ii) any interest evidenced by a land contract. k. "Unit" shall mean one of the one hundred forty-nine (149) single-family detached homes to be constructed on the Property. Each Unit in the Project shall be subject to the restrictions of this Declaration. Notwithstanding the foregoing, this Declaration shall be subordinate to the lien of a first deed of trust against the Property, and shall not impair the rights of any institution or lender which is the maker of a loan secured by such first deed of trust, or such lender's assignee or successor in interest, to exercise its remedies under the deed of trust in the event of default under the first deed of trust by the Covenantor. Such remedies under the first deed of trust 882/015610-0043 346077.03 PM03 -3- include the right of foreclosure or acceptance of a deed or assignment in lieu of foreclosure. After such foreclosure or acceptance of a deed in lieu of foreclosure, the affordability covenants and the transfer restrictions set forth in Sections 1, 2 and 7 of this Declaration as to each lot covered by this Declaration that is the subject to the foreclosure, shall be forever terminated and shall have no further effect as to the Property or any transferee thereafter; provided, however, if the holder of such deed of trust acquired title to the Property pursuant to a deed or assignment in lieu of foreclosure, said Sections 1, 2 and 7 of this Declaration shall automatically terminate upon such acquisition of title, provided that (i) the Covenantee has been given written notice of a default under such first deed of trust; and (ii) the Covenantee shall not have cured the default under such first deed of trust within the thirty (30) day period provided in such notice sent to the Covenantee. Notwithstanding any other provision hereof, the nondiscrimination covenants and the maintenance requirements set forth in this Declaration shall remain in full force and effect as to the Property and any transferee. 2. Sale of Units. Covenantor agrees that Covenantor shall sell each Unit to an Eligible Buyer at an Affordable Housing Cost and that during the Affordability Period each subsequent resale of a Unit by the then -Owner thereof shall be to an Eligible Buyer at an Affordable Housing Cost. Covenantor agrees that this Declaration shall be recorded against each lot in the Property concurrently with the close of escrow pursuant to which Covenantor acquired fee title to the Property. Covenantor agrees to commence to market each Unit not later than the completion of construction of said Unit. Escrow for a Transfer of a Unit by Covenantor to an Eligible Buyer shall not close until after issuance of a certificate of occupancy to be issued by the City building department for such Unit. For purposes of satisfying the requirement that all of the Units shall be occupied by Eligible Buyer: (a) an individual or family who qualifies as an Eligible Buyer at the time he or she first takes title to a Unit will be deemed a Eligible Buyer as long as he or she continues to hold title to such Unit even though the Eligible Buyer subsequently ceases to meet the income requirements of an Eligible Buyer, and (b) when an Owner releases title to a Unit, such unit will be considered as occupied by an Eligible Buyer if it is held vacant and available for such occupancy until title is transferred to another Eligible Buyer. 3. Restrictions on Transfer by Sale of the Property or Any Unit. a. For the duration of the Affordability Period, Covenantor, for itself and any subsequent Owner of a Unit, hereby subjects the Property to certain restrictions and limits the price at which Covenantor or any Owner of a Unit may sell and/or resell a Unit and the persons to whom Covenantor or any Owner of a Unit may sell a Unit. b. COVENANTOR UNDERSTANDS THAT THE DETERMINATION OF THE SALES PRICE CAN BE MADE ONLY AT THE TIME OF THE PROPOSED TRANSFER, TAKING INTO CONSIDERATION INTEREST RATES, PROPERTY TAXES AND OTHER FACTORS THAT CANNOT BE ACCURATELY PREDICTED AND THAT THE SALE PRICE PERMITTED HEREUNDER MAY NOT INCREASE OR DECREASE IN THE SAME MANNER AS OTHER SIMILAR REAL + t « 882/015610-0043 346077.03 PM03 -4- PROPERTY WHICH IS NOT ENCUMBERED BY THIS RESTRICTION. COVENANTOR FURTHER ACKNOWLEDGES THAT IN SETTING THE SALES PRICE, THE PRIMARY OBJECTIVE OF THE COVENANTEE AND THIS DECLARATION IS TO PROVIDE HOUSING TO ELIGIBLE BUYERS AT AN AFFORDABLE HOUSING COST. THE SALES PRICE MAY BE LESS THAN OTHER SIMILAR PROPERTIES WHICH HAVE NO RESTRICTIONS. Covenantor's Initials C. Transfer of a Unit. Covenantor may transfer a Unit only in strict accordance with the provisions of this Declaration. Specifically, during the Affordability Period, Covenantor may transfer a Unit (i) only to an Eligible Buyer whose assets immediately prior to the close of escrow for the Unit do not exceed the limits set forth in the Asset Limitation Requirements set forth in the La Quinta Housing Program Implementation Manual, (ii) only if the Purchase Housing Cost does not exceed the Affordable Housing Cost for the Eligible Buyer; and (iii) only if the Transfer has previously been approved in writing by the Covenantee. In order to comply with this Subsection 3(c), Covenantor must calculate the Affordable Housing Cost for the Proposed Buyer of the Unit in accordance with the definition set forth in Section l(b) of this Declaration. The Covenantor should contact the Covenantee housing staff to obtain assistance in determining this calculation. After calculating the Affordable Housing Cost for the Proposed Buyer, the Covenantor must ensure that the sum of the Sales Price and all costs listed in the definition of Purchase Housing Cost set forth in Section 1 of this Declaration does not exceed an Affordable Housing Cost. The calculation of the Sales Price under this Section 3(c) is illustrated by example in the Calculation of Affordable Housing Cost. d. Notwithstanding anything to the contrary in this Section 3, at close of the escrow pursuant to which the Developer shall transfer a Unit to an Eligible Buyer, the Eligible Buyer shall execute a complete set of Buyer Affordable Housing Documents as described in Section 1 hereof. C. The foregoing provisions will apply to every successive Transfer during the Affordability Period except that the then -Owner shall be responsible for complying with the requirements of the Developer as set forth in this Section 3. 4. Process to Complete Transfer by Sale of Restricted Units. Prior to the Transfer by sale of a Unit, Covenantor shall do all of the following: a. Notice to Covenantee: Covenantor shall send to the Covenantee in care of the La Quinta Housing Department (or its successor), at P.O. Box 1504, La Quinta, California 92253, the form attached hereto and incorporated herein as Exhibit "C" ("Request for Approval of Proposed Buyer") fully completed and executed by the Covenantor and the Proposed Buyer. b. Qualification of Proposed Buyer. No Transfer shall occur unless and until determination is made based on the Request for Approval of Proposed Buyer that the Proposed p s 882/015610-0043 346077.03 PM03 -5- CYb Buyer (i) intends to occupy the Unit as the Proposed Buyer's principal residence and (ii) is an Eligible Buyer whose assets at the close of escrow for the Unit do not exceed the limits set forth in the Asset Limitation Requirements, which are attached to the La Quinta Housing Program Implementation Manual as Attachment 1. Each Request for Approval of Proposed Buyer shall include a statement by the Proposed Buyer certifying its intent with regard to the occupancy of the Unit and as to the truth and accuracy of all information supplied as to the Gross Income (calculated as set forth in 25 Cal. Code of Regs., Section 6914) of the Proposed Buyer. Covenantor shall certify pursuant to the Request for Approval of Proposed Buyer the information provided on said request form. Covenantor shall be entitled to rely on the information on the Request for Approval of Proposed Buyer and attachments thereto in making the determination required by this subsection 4(b) unless the Covenantor has knowledge of, or a reasonable basis for belief as to the inaccuracy or falsehood of the Request for Approval of Proposed Buyer. C. Unit Sales Price. The Sales Price for the Unit shall not exceed the maximum price at which the Purchase Housing Cost to be paid by the Proposed Buyer would not exceed the Affordable Housing Cost. The calculation of the Sales Price under this subsection is illustrated by the Calculation of Affordable Housing Cost. However, in determining the Affordable Housing Cost, the family size of the Proposed Buyer shall be deemed to be 1 person in the case of a studio Unit, 2 persons in the case of a 1 bedroom Unit, 3 persons for a 2 bedroom Unit , 4 persons for a 3 bedroom Unit, or 5 persons for a 4 bedroom Unit. If the actual family size of the Proposed Buyer is larger, then the actual family size shall be used. d. Certificates from Covenantor and Proposed Buyer. With respect to each initial sale of a Unit, Covenantor shall submit to the Covenantee, not later than four (4) weeks prior to close of escrow on the sale of the Unit, a certificate that (i) the Covenantor has made the affirmative determinations required by Section 4(b) above and (ii) the Sales Price conforms with Section 4(c) above. The Covenantor shall concurrently submit to the Covenantee the Request for Approval of Proposed Buyer and all attachments thereto and all other documents or material with regard to information required by Section 4(a) and/or (b) above, whether or not relied on by the Covenantor. Further, the Covenantor and Proposed Buyer each shall certify in writing, in a form acceptable to the Covenantee, that the Transfer shall be closed in accordance with, and only with, the terms of the sales contract and other documents submitted to and approved by the Covenantee and that all consideration delivered by the Proposed Buyer to Covenantor has been fully disclosed to the Covenantee. The written certificate shall also include a provision that, in the event a Transfer is made in violation of the terms of this Declaration or false or misleading statements are made in any documents or certificate submitted to the Covenantee for its approval of the Transfer, the Covenantee shall have the right to file an action at law or in equity to seek termination and/or rescission of the sales contract and/or declare the sale void, notwithstanding the fact that the Transfer may have closed and become final as between Covenantor and its Proposed Buyer. In the event Covenantor fails to comply with Sections 4(a) or 4(b) above, any costs, liabilities or obligations incurred by the Covenantor and its Proposed Buyer for the return of any monies paid or received or for any costs and legal expenses, shall be borne jointly and severally by the Covenantor and its Proposed Buyer and such parties shall hold the City of La Quinta ("City") and Covenantee harmless and reimburse their expenses, legal fees and costs for any action and City and/or Covenantee take in enforcing the terms of this Section 4(d). 30:) 882/015610-0043 346077.03 PM03 -6- e. Execution of Buyer Affordable Housing Documents. Notwithstanding anything to the contrary in this Agreement, at close of escrow of the sale of the Unit from the Covenantor to an Eligible Buyer, the Eligible Buyer shall execute a complete set of Buyer Affordable Housing Documents. The Buyer Affordable Housing Documents require, among other things, that during the Affordability Period for said Unit, (i) the Unit must be owner - occupied at all times and cannot be rented or leased; (ii) the Unit may only be Transferred at an Affordable Housing Cost to an Eligible Buyer; and (iii) the maximum permitted sales price for the Unit may be less than fair market value. g. Delivery of Documents. Upon the close of the proposed Transfer, the Covenantor shall provide the Covenantee with a certified copy of the recorded documents, a copy of the final sales contract, settlement statement, escrow instructions, all certificates required by this Section 4 and any other documents which the Covenantee may request. COVENANTOR UNDERSTANDS THAT THE DETERMINATION OF THE AFFORDABLE HOUSING COST CAN BE MADE ONLY AT THE TIME OF THE PROPOSED TRANSFER, TAKING INTO CONSIDERATION INTEREST RATES, THE TERMS OF SALE OFFERED TO AND THE ECONOMIC CIRCUMSTANCES OF THE PROPOSED BUYER AND OTHER FACTORS THAT CANNOT BE ACCURATELY PREDICTED, AND THAT THE TRANSFER PRICE PERMITTED HEREUNDER MAY BE LESS THAN THE FAIR MARKET VALUE OF THE PROPERTY AND MAY NOT INCREASE OR DECREASE IN THE SAME MANNER AS OTHER SIMILAR REAL PROPERTY WHICH IS NOT ENCUMBERED BY THIS RESTRICTION. COVENANTOR FURTHER ACKNOWLEDGES THAT IN SETTING THE TRANSFER PRICE THE PRIMARY OBJECTIVE OF THE COVENANTEE AND THIS DECLARATION IS TO PROVIDE HOUSING TO ELIGIBLE BUYERS AT AN AFFORDABLE HOUSING COST. The covenant contained in this Section 3 shall run with the land and shall automatically terminate and be of no further force or effect upon the Expiration Date set forth in Section 12 hereof. 5. Nondiscrimination Covenants Covenantor by and for itself, its successors and assigns, and all persons claiming under or through them that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Property, nor shall Covenantor itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the Property. Covenantor, and its successors and assigns, shall refrain from restricting the rental or lease (if permitted by Covenantee) or sale of the Property on the basis of race, color, religion, sex, marital status, national origin or ancestry of any person. All such deeds, leases, or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: 3 l 0 882/015610-0043 (PI Z 346077.03 PM03 -7- (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself or herself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, sex, marital status, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the premises herein leased." (c) In contracts: "There shall be no discrimination against or segregation of, any person, or group of persons on account of race, color, religion, sex, marital status, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself of herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees or vendees of the premises." Nothing in this Section 5 shall be construed to authorize the rental or lease of the Property if such rental or lease is not otherwise permitted. The covenants in this paragraph 5 shall run with the land in perpetuity. 6. Maintenance of Property Covenantor shall properly maintain the buildings, landscaping and yard areas on the Property as follows: (a) No improperly maintained landscaping shall be visible from public rights - of -way, including: (1) no lawns with grasses in excess of six (6) inches in height; (2) no untrimmed hedges; (3) no trees, shrubbery, lawns, and other plant life dying from lack of water or other necessary maintenance; 3 11_ 882/015610-0043'�, 346077.03 PM03 -8- and (4) no trees and shrubbery grown uncontrolled without proper pruning; (5) no vegetation so overgrown as to be likely to harbor rats or vermin; (6) no dead, decayed, or diseased trees, weeds, and other vegetation. (b) No yard areas shall be left unmaintained, including: (1) no broken or discarded furniture, appliances, and other household equipment stored in yard areas for periods exceeding one (1) week; (2) no packing boxes, lumber, trash, dirt, and other debris stored in yards for periods exceeding one (1) week in areas visible from public property or neighboring properties; (3) no unscreened trash cans, bins, or containers stored for unreasonable periods in areas visible from public property or neighboring properties; and areas. (4) no vehicles parked or stored in areas other than approved parking (c) No buildings may be left in an unmaintained condition, including: (1) no violations of state law, Uniform Codes, or City ordinances; (2) no condition that constitutes an unsightly appearance that detracts from the aesthetics or property value of the subject property or constitutes a private or public nuisance; (3) no broken windows or chipped, cracked, or peeling paint; and (4) no conditions constituting hazards and/or inviting trespassers or malicious mischief, and (5) no graffiti. 7. Covenantee's Right of Reverter Covenantee shall have the additional right, at its option, to reenter and take possession of the Property with all improvements thereon and revert in the Covenantee the estate theretofore conveyed to the Covenantor, if after conveyance of title to the Property and prior to issuance of the Certificate of Completion for the lot or lots in question, the Covenantor shall: 1. Fail to proceed with the construction of the Project as required by the Affordable Housing Agreement (subject to any force majeure delays) for a period of one (1) month after written notice of such abandonment or suspension from the Covenantee subject to any force majeure delays under Section 603 of the Affordable Housing Agreement; or G 1 882/015610-0043 346077.03 PM03 -9- 2. Abandon or substantially suspend construction of the improvements for a period of one (1) month (subject to any force majeure delays) after written notice of such abandonment or suspension from the Covenantee; or 3. Transfer or suffer any involuntary transfer of the Property or any part thereof in violation of the Affordable Housing Agreement. Such right to reenter, repossess and revest to the extent provided in this Declaration shall be subordinate and subject to and be limited by and shall not defeat, render invalid or limit: a. Any mortgage, deed of trust or other security instrument permitted by the Affordable Housing Agreement; or b. Any rights or interest provided in the Affordable Housing Agreement for the protection of the holder of such mortgages, deeds of trust or other security instruments. Upon the revesting in the Covenantee of title to the Property or any part thereof as provided in this Section 7, the Covenantee shall, pursuant to its responsibilities under state law, use its best efforts to resell the Property or part thereof as soon and in such manner as the Covenantee shall find feasible and consistent with the objectives of such law and of the Redevelopment Plan to a qualified and responsible party or parties (as determined by the Covenantee) who will assume the obligation of making or completing the improvements, or such other improvements in their stead, as shall be satisfactory to the Covenantee and in accordance with the uses specified for the Property or part thereof in the Redevelopment Plan. Upon such resale of the Property, the proceeds thereof shall be applied: (i) First, to reimburse the Covenantee on its own behalf or on behalf of the City for all costs and expenses incurred by the Covenantee, including, but not limited to, salaries to personnel in connection with the recapture, management and resale of the Property or part thereof (but less any income derived by the Covenantee from the Property or part thereof in connection with such management); all taxes, assessments and water and sewer charges with respect to the Property or part thereof (or, in the event the Property is exempt from taxation or assessment or such charges during the period of ownership, then such taxes, assessments or charges as determined by the County of Riverside assessing official as would have been payable if the Property were not so exempt); any payments made or necessary to be made to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations, defaults or acts of the Covenantor; any expenditures made or obligations incurred with respect to the making or completion of the improvements or any part thereof on the Property or part thereof-, and any amounts otherwise owing the Covenantee by the Covenantor; and (ii) Second, to reimburse the Covenantor up to the amount equal to the sum of: (a) the Purchase Price paid to the Covenantee by the Covenantor for the Property (or allocable to the part thereof); plus (b) the costs and expenses incurred by the Covenantor for the development of the Property and for construction of the improvements existing on the Property at the time of the reentry and repossession; less (c) any payments for work that has not been completed by the Covenantor on the Property or the improvements. 313 882/015610-0043 _ 1 O_ 346077.03 PM03 Any balance remaining after such reimbursements shall be retained by the Covenantee as its property. To the extent that the rights established in this Section 7 involve a forfeiture, it must be strictly interpreted against the Covenantee, the party for whose benefit it is created. The rights established in this Section 7 are to be interpreted in light of the fact that the Covenantee will convey the Property to the Covenantor for development and not for speculation. 8. Covenants Do Not Impair Liens No violation or breach of covenants, conditions, restrictions, provisions, or limitations contained in this Declaration shall defeat or render invalid or in any way impair the lien or charge of any mortgage or deed of trust or security instrument. 9. Conflict with Other Laws; Severability. In the event that any provision of this Declaration is found to be contrary to applicable law, then the contrary provisions of this Declaration shall be deemed to mean those provisions which are enforceable and consistent with such laws and policies. The remaining portions of this Declaration shall be deemed modified in a manner which is consistent with the goals and intent of this Declaration to provide housing at an Affordable Housing Cost to Eligible Buyers. Every provision of this Declaration is intended to be severable. In the event any term or provision of this Declaration is declared by a court of competent jurisdiction to be unlawful, invalid or unenforceable for any reason, such determination shall not affect the balance of the terms and provisions of this Declaration, which terms and provisions shall remain binding and enforceable. 10. Covenants for Benefit of City and Covenantee. All covenants without regard to technical classification or designation shall be binding for the benefit of the Covenantee and the City and such covenants shall run in favor of the Covenantee and the City for the entire period during which such covenants shall be in force and effect, without regard to whether the Covenantee or the City is or remains an owner of any land or interest therein to which such covenants relate. The Covenantee and the City, in the event of any breach of any such covenants, shall have the right to exercise all the rights and remedies and to maintain any actions at law or suits in equity or other proper legal proceedings to enforce and to cure such breach to which it or any other beneficiaries of these covenants may be entitled during the term specified for such covenants, except the covenants against discrimination which may be enforced at law or in equity at any time in perpetuity. 11. Notices. Demands and Communications Written notices, demands and communications between the Covenantor and the Covenantee shall be sufficiently given if (i) delivered by hand, (ii) delivered by reputable same - day or overnight courier service that provides a receipt showing date and time delivery, or (iii) dispatched by registered or certified mail, postage prepaid, return receipt requested, as follows: 882/015610-0043 346077.03 PM03 Covenantor: Santa Rosa Development, Inc. 71084 Tamerisk Lane Rancho Mirage, CA 92270 Attn: Michael Shovlin Covenantee: La Quinta Redevelopment Agency Attention: Executive Director 78-495 Calle Tampico La Quinta, California 92253 Such addresses for notice may be changed from time to time upon notice to the other party. Any written notice, demand or communication shall be deemed received immediately if delivered by hand and shall be deemed received on the third (3rd) calendar day from the date it is postmarked if delivered by registered or certified mail. 12. Expiration Date. This Declaration shall automatically terminate and be of no further force or effect as of forty-five (45) years from the date the Agency issues a Certificate of Completion for the Project. 13. Counterparts This Declaration may be executed in counterparts each of which, when both Covenantor and Covenantee have signed this Declaration, shall be deemed an original and shall constitute one and same instrument. [end — signature page follows] 882/015610-0043_ r 346077.03 PM03 -12- IN WITNESS WHEREOF, the Covenantee and Covenantor have caused this instrument to be executed on their behalf of their respective officers hereunto duly authorized as of the date set forth above. "COVENANTEE" THE LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic By: Its: Executive Director Attest: Secretary (Covenantee's and Covenantor's Signature must be acknowledged by a Notary Public) "COVENANTOR" SANTA ROSA DEVELOPMENT, INC., a California corporation By: Its: By: Its: APPROVED AS TO FORM RUTAN & TUCKER, LLP Attorneys for the La Quinta Redevelopment Agency 30) 882/015610-0043 - I3- 346077.03 PM03 STATE OF CALIFORNIA ) ) ss COUNTY OF On personally appeared before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. [SEAL] STATE OF CALIFORNIA ) ss COUNTY OF ) On personally appeared Notary Public before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 317 882/015610-0043 346077.03 PM03 -14- STATE OF CALIFORNIA ) ) ss COUNTY OF On , before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 882/015610-0043 _ 1 _ 1 346077.03 PM03 t._ EXHIBIT A LEGAL DESCRIPTION OF PROPERTY [TO BE INSERTED] 31 c 882/015610-0043 i 1 346077.03 PM03 a EXHIBIT B CALCULATION OF AFFORDABLE HOUSING COST "Affordable Housing Cost" for the purposes of the Affordable Housing Agreement is that purchase price (inclusive of the proceeds of the Homebuyer Assistance) which would result in a monthly housing cost which is not less than twenty-eight percent (28 %) of the gross income of the purchaser and does not exceed the greater of (a) the product of thirty-five percent (35%) times one hundred ten percent (110%) of Riverside County median income adjusted for family size appropriate for the unit for Eligible Buyers earning not more than one hundred ten percent (110%) of Riverside County median income, or (b) the product of thirty- five percent (35 %) of the actual gross income of the household for Eligible Buyers earning more than one hundred ten percent (110 %) of Riverside County median income. The following is a worksheet of how to calculate Affordable Housing Cost using the two methods set forth above: A. All Moderate Income Buyers Monthly housing costs may not exceed 1/ 12 of 35 % x 110 % of Riverside County Median Income adjusted for family size appropriate for the unit. For a two- bedroom housing Unit, monthly housing costs may not exceed 1/12 of 35% x 110% of Riverside County Median Income for a family of 3 (example of Median Income is $45,250 in Riverside County pursuant to regulations issued by the California Department of Housing and Community Development in February 2002, or $1,452). Monthly Housing Costs include: a. Mortgage Principal and Interest b. Private Mortgage Insurance C. Property Taxes d. Fire/Casualty Insurance e. Property Maintenance f. Utilities Allowance g. Homeowner's Association ("HOA") Fees For example, in the following situation, for a 2 bedroom housing Unit, assuming an 8 % interest rate on a conventional loan, and assuming a down payment of at least 3 % of the purchase price and a second trust deed loan from the Agency of $ , the 882/015610-0043 1 346077.03 PM03 r: maximum loan amount would be $ and the maximum purchase price would be $ (down payment of $ + Agency Loan of $ + first trust deed loan of $ ). The foregoing is based upon the following monthly housing costs: a. Mortgage Principal and Interest $ b. Private Mortgage Insurance $0.00 C. Property Taxes $ d. Fire/Casualty Insurance $0.00 e. Property Maintenance $20.00 f. Utilities Allowance $70.00 g. Homeowner's Association $50.00 TOTAL: $ 140.00 B. Buyer's Income is between 110% and 120% of Riverside County Median Income Under method (b), monthly housing costs may not exceed 1/12 of 35% of the purchaser's income, instead of the formula set forth in paragraph (a) above. For example, if the purchaser is a three -person household earning $54,000 monthly housing costs may not exceed $1,575. The maximum sales price would be calculated in the same manner as in paragraph (a) above. For example, if all the other assumptions stated in that paragraph also apply herein, the purchaser's maximum loan amount would be $ , and the maximum purchase price, absent the Agency Second Trust Deed Loan would be $ . The foregoing is based upon the following monthly housing costs: a. Mortgage Principal and Interest $ b. Private Mortgage Insurance $0.00 C. Property Taxes $ d. Fire/Casualty Insurance $0.00 e. Property Maintenance $20.00 f. Utilities Allowance $70.00 g. Homeowner's Association $50.00 TOTAL: $ 140.00 321 882/015610-0043 346077.03 PM03 The foregoing are intended to be examples of how to calculate affordable housing cost, and the actual numbers will vary depending upon such factors as changes in median income, interest rates, amount of down payment, etc. Please see attached chart of Riverside County median income for moderate income purchasers. 882/015610-0043 346077.03 PM03 -19- RIVERSIDE COUNTY 2002 Affordable Housing Costs for Home Purchase Programs for Persons of Moderate Income (3) (Income figures based on Department of Housing and Community Development Income Limits dated February, 2002) 1 Person Household 2 Person Household 3 Person Household Median Median Median Income $35,200 Income $40,250 Income $45,250 Monthly Affordable Monthly Monthly Annual Housing Annual Affordable Annual Affordable Income(') Cost(2) Income Housinq Cost Income HousingCost $42,250 $1,129 $48,300 $1,291 $54,300 $1.452 4 Person Household 5 Person Household 6 Person Household Median Median Median Income $50,300 Income $54,300 Income $58,350 Monthly Monthly Monthly Annual Affordable Annual Affordable Annual Affordable Income Housinq Cost Income Housing Cost Income HousingCost $60,350 $1,614 $65,200 $1,742 $70,000 $1,872 7 Person Household 8 Person Household Median Median Income $62,350 Income $66,400 Monthly Monthly Annual Affordable Annual Affordable Income Housing Cost Income Housing Cost $74,850 $2,000 1 $79,650 $2,130 DEFINITIONS: 1. Annual Income: Gross income from all sources for all members of the household. 2. Monthly Housing Costs: Amount of mortgage payment principal and interest, mortgage insurance, property taxes, and property insurance. 3. Moderate Income Affordable Housing Costs: Assumes affordable housing costs computed at 35% of 110% of median income; may not be less than 28% of household's gross income. 882/015610-0043 346077.03 PM03 -20- EXHIBIT C REQUEST FOR APPROVAL OF PROPOSED BUYER [SEE ATTACHED PAGES] 882/015610-0043 346077.03 PM03 REQUEST FOR APPROVAL OF PROPOSED BUYER THIS FORM MUST BE DELIVERED TO THE AGENCY BEFORE PROCEEDING WITH ANY TRANSFER OF THE PROPERTY. La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, CA 92253 Attn: Project Officer Re: Request for Approval of Proposed Buyer To Whom It May Concern: The undersigned is the owner of real property in La Quinta, located at (the "Property"), which was developed with assistance from the Agency ("Owner"). The Owner now desires to transfer the Property and by this letter is requesting the Agency to approve the proposed buyer. 1. The Proposed Buyer is: Name: Current Address: Telephone Number: 2. The terms of the proposed transfer are (a) Sales price of $ . This sales price is based on the lesser of (i) Fair market value; or The maximum price at which the Purchase Housing Cost of the Proposed Buyer would not exceed Affordable Housing Cost. The calculation of the Sales Price under this subsection (ii) is illustrated in Exhibit `B" to the Declaration of Covenants, Conditions, and Restrictions for Property. 882/015610-0043 1 * 346077.03 PM03 IN ORDER TO ANSWER QUESTION 2(b) YOU MUST CALCULATE THE PROPOSED SALES PRICE BASED ON AFFORDABLE HOUSING COST, TAKING INTO CONSIDERATION ALL ITEMS LISTED IN THE DEFINITION OF PURCHASE HOUSING COST. (b) Price of any personal property being sold by the Owner to the proposed buyer: $ . (If none, so state.) (c) The price of $ to be paid by the proposed buyer for any services of Owner. (If none, so state). (d) All other amounts of money or other consideration, if any, concerning the Property or any other matter to be paid by the proposed buyer to the Owner: $ (If none, so state.) (e) Sources of payment of sales price: Sales price $ Cash down payment $ 1 st loan $ 2nd loan $ Other (describe) $ Total $ (f) The financing obtained by the proposed buyer to purchase the Property is as follows: 1 st Loan: Loan amount $ Monthly payments: $ Interest rate If variable interest, describe adjustment mechanism: Due date: Balloon payment amount: Points and fees: 3?c I '-. 81 882/015610-0043 346077.03 PM03 -2- Lender: Lender's address: 2nd Loan: Loan amount: $ Monthly payments: $ Interest rate If variable interest, describe adjustment mechanism: Due date: Balloon payment amount: Points and fees: Lender: Lender's address: Other Loans: (describe, if none, so state) (g) The monthly Purchase Housing Cost to be paid by the proposed buyer: 1 st loan monthly payment: $ 2nd loan monthly payment: $ Other loans monthly payment: $ Taxes and assessments (1/12 of $ yearly taxes and assessments): Insurance (1/12 of yearly $ premium): Homeowner's dues: $ Total: $ 882/015610-0043 346077.03 PM03 -3- 3. The proposed buyer represents, warrants and covenants the following: (a) The Property will be the principal residence of the proposed buyer. (b) The combined maximum annual income for all household members of the proposed buyer is $ . (This figure must include all sources of income.) (c) The proposed buyer will deliver to the Agency a signed financial statement on a form acceptable to the Agency. 4. The proposed buyer's household consists of the following persons who will reside in the Property: Adults (18 or over) - [name of each]: Minors (under 18) [name of each]: 5. The proposed buyer must submit to the Owner, on a form available from the Owner, an income certification so the Owner may determine if the proposed buyer is an Eligible Buyer. 6. A true and correct copy of the proposed buyer's most recent tax return to the U.S. Internal Revenue Service is attached hereto. 7. A true and correct copy of the purchase and sale or other agreement between the Owner and the proposed buyer is attached hereto. 882/015610-0043 346077.03 PM03 -4- I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. OWNER: Date signature print name street address city PROPOSED BUYER: Date signature print name street address city 882/015610-0043 346077.03 PM03 -5- signature print name telephone state zip code signature print name telephone state zip code Owner's Certification Based on the Proposed Buyer's Certificate above, and all documents attached hereto, Owner hereby certifies that: (1) Proposed Buyer is an Eligible Buyer; and (2) The monthly Purchase Housing Cost to be paid by the Proposed Buyer shall not exceed the monthly Affordable Housing Cost. [Capitalized terms used above are defined in the Agreement to which this certificate is attached unless otherwise provided herein.] OWNER: [Name] Date: 3.3tJ 882/015610-0043 346077.03 PM03 -6- ATTACHMENT NO. 9 CERTIFICATE OF COMPLETION [SEE ATTACHED PAGES] 882/015610-0043 1 346077.03 PM03 Recording Requested By And When Recorded Mail To: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, California 92253 Attn: Executive Director (Space above for Recorder's use) (Exempt from Recording Fee Per Gov. Code § 6103) CERTIFICATE OF COMPLETION OF CONSTRUCTION AND DEVELOPMENT WHEREAS, by an Affordable Housing Agreement dated , 2003 ("Agreement"), by and between the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic (hereinafter referred to as the "Agency") and SANTA ROSA DEVELOPMENT, INC., a California corporation ("Developer"), the Developer has constructed improvements upon the real property (the "Site"), legally described on the attached Exhibit "A", by constructing or causing to be constructed a senior citizen housing development ("Project") thereon according to the terms and conditions of the Agreement; and WHEREAS, pursuant to Section 315 of the Agreement, promptly after completion of the Project the Agency shall furnish the Developer with a Certificate of Completion upon written request therefor by the Developer; and WHEREAS, the issuance by the Agency of the Certificate of Completion shall be conclusive evidence that the construction of the Project conforms to the Agreement; and WHEREAS, the Developer has requested that the Agency furnish the Developer with the Certificate of Completion; and WHEREAS, the Agency has conclusively determined that the construction of the Project conforms to the Agreement; NOW, THEREFORE: 1. As provided in the Agreement, the Agency does hereby certify that the construction of the Project required to be constructed on the real property described in Exhibit "A" hereto has been satisfactorily performed and completed and that such development and construction work complies with the Agreement. 2. This Certificate of Completion does not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any holder of a mortgage or any insurer of a mortgage security money loaned to finance the work of construction if improvements and development of the real property described in Exhibit "A", or any part hereof. 33 882/015610-0043 1 4� 346077.03 PM03 ��' 3. This Certificate of Completion does not denote completion of any work required to be completed, other than on the real property described in Exhibit "A". 4. This Certificate of Completion is not a notice of completion as referred to in Section 3093 of the California Civil Code. IN WITNESS WHEREOF, the Agency has executed this Certificate as of this day ATTEST: Agency Secretary LA QUINTA REDEVELOPMENT AGENCY By Executive Director CONSENT TO RECORDATION SANTA ROSA DEVELOPMENT, INC., a California corporation which is the owner of fee title to the real property described in Exhibit "A" hereto, hereby consents to the recordation of this Certificate in the official records of Riverside County. By: Its: 333 882/015610-0043 "' 346077.03 PM03 -2 �_ STATE OF CALIFORNIA COUNTY OF On personally appeared ss before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. [SEAL] STATE OF CALIFORNIA COUNTY OF On personally appeared Notary Public ss before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] .1 882/015610-0043 3 346077.03 PM03 ATTACHMENT NO. 10 BUYER AFFORDABLE HOUSING DOCUMENTS I . BUYER AFFORDABLE HOUSING AGREEMENT 2. BUYER MEMORANDUM RE OPTION TO PURCHASE 3. BUYER PROMISSORY NOTE 4. BUYER SECOND DEED OF TRUST BUYER DISCLOSURE STATEMENT (Copies attached on following pages) h r,� 882/015610-0043 346077.03 PM03 TWit 4 4 Q" COUNCIL/RDA MEETING DATE: January 7, 2003 ITEM TITLE: Joint Public Hearing for Consideration of an Agreement for Purchase and Sale and Escrow Instructions by and Between the La Quinta Redevelopment Agency and Santa Rosa Development, Inc., a California Corporation, for the Sale of 11.9 Acres of Agency Property Located Northeast of the Intersection of Avenue 48 and Adams Street in La Quinta Project Area No. 2 • li k I o , •LA AGENDA CATEGORY: BUSINESS SESSION: CONSENT CALENDAR: STUDY SESSION: PUBLIC HEARING: 4 Adopt a Resolution of the Redevelopment Agency approving the Agreement for Purchase and Sale and Escrow Instructions and authorizes the Agency Chair and Executive Director to execute the necessary documents; direct the Executive Director to deposit the sale proceeds into the Agency's Low and Moderate Income Housing Fund; and designate the property sale proceeds to the Affordable Housing Agreement by and between the Agency and Santa Rosa Development, Inc. for certain property located northeast corner of Avenue 48 and Adams Street. The Agreement for Purchase and Sale and Escrow Instructions ("Agreement") will result in the receipt of $801,358 at the close of escrow. These funds will be deposited into the Agency's Low and Moderate Income Housing Fund and allocated to other affordable housing initiatives. F. :• `�� • In 1995, the Agency purchased an approximately 50.0 acre parcel located northeast of the Avenue 48/Adams Street intersection to reserve property for future affordable housing development. Subsequently, .5 acres was transferred to the Coachella Valley Water District in 1999 to satisfy well site requirements related to the development of the Miraflores affordable housing development; 14 acres were transferred to the A.G. Spanos Corporation in February 2000, for the development of a 200 unit apartment community that includes 20 affordable units; 20.04 acres is the subject of a separate affordable housing agreement for the development of 149 affordable housing units; and the disposition of the remaining 1 1.9 acres is the subject of this action. 336 G:\WPDOCS\CC Stf Rpts\48thAdamsMrktRate.wpd.wpd.doc Santa Rosa Development, Inc. ("Developer") first contacted the Agency in May 1998, regarding their interest in developing both affordable and market rate housing on the 50-acre parcel. The Agency delayed moving forward with their request until a majority of the dwellings in the Miraflores community (located at Avenue 48 and Jefferson Street) were sold. This occurred in March 2002; the Agency then entered into negotiations with the Developer to determine if a mutually acceptable transaction could be consummated. Negotiations concluded in August 2002, and the Agreement was subsequently drafted. In order to insure compatibility with the surrounding single-family neighborhoods the Developer proposes a development program that locates market rate homes adjacent to the existing single-family neighborhoods located west of Adams Street and south of Avenue 48. The development program entails 36 single story homes that will be priced from $265,000 to $360,000. If the Agreement is approved, the Developer will have 60 days to conduct due diligence activities and 180 days to prepare and process the entitlements and tract map required for development. Upon receiving the entitlements the Developer will then purchase the Property for $801,358. The 50.0-acre parcel was purchased with proceeds from the Agency's 1995 Housing Bonds. Pursuant to Federal statutes, the property sale proceeds must be used to either redeem outstanding 1995 Housing Bonds or be pledged to another affordable housing project. Staff recommends that when the $801,358 of property sale proceeds is received they be designated to fund a portion of the Agency's costs associated with the Affordable Housing Agreement between the Agency and Santa Rosa Development, Inc. Said agreement facilitates the development of 149 for -sale units affordable to moderate -income households. Accompanying the Resolution is a Summary Report that further details this transaction. The alternatives available to the Redevelopment Agency include: 1 . Adopt a Resolution of the Redevelopment Agency approving the Agreement for Purchase and Sale and Escrow Instructions and authorizes the Agency Chair and Executive Director to execute the necessary documents; direct the Executive Director to deposit the sale proceeds into the Agency's Low and Moderate Income Housing Fund; and designate the property sale proceeds to the Affordable Housing Agreement by and between the Agency and Santa Rosa Development, Inc. for certain property located northeast corner of Avenue 48 and Adams Street; or 2. Do not approve the Resolution of the Redevelopment Agency approving the Agreement for Purchase and Sale and Escrow Instructions; or 3. Provide staff with alternative direction. 337 G:\WPDOCS\CC Stf Rpts\48thAdamsMrktRate. wpd. wpd. doc Respectfully submitted, Her�han munity Development Director Approved for submission: �o Thomas P. Genovese, Executive Director Attachments: 1 . Summary Report 2. Agreement for Purchase and Sale and Escrow Instructions 338 G:\WPDOCS\CC Stf Rpts\48thAdamsMrktRate. wpd. wpd.doc RESOLUTION RDA NO. A RESOLUTION OF THE LA QUINTA REDEVELOPMENT AGENCY APPROVING AN AGREEMENT FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS BETWEEN THE AGENCY AND SANTA ROSA DEVELOPMENT, INC. FOR THE PROPERTY LOCATED AT THE NORTHEAST CORNER OF AVENUE 48 AND ADAMS STREET PURCHASE AND SALE AND ESCROW INSTRUCTIONS SANTA ROSA DEVELOPMENT, INC. WHEREAS, the La Quinta Redevelopment Agency ("Agency") is a public body, corporate and politic, organized and existing under the California Community Redevelopment Law ("Health & Safety Code § 33000 et seq.) ("CRL"); and WHEREAS, pursuant to the CRL, the City Council of the City of La Quinta ("City" or "City Council," as applicable) approved and adopted the Redevelopment Plan ("Redevelopment Plan") for Project Area No. 2 ("Project Area"), on May 16, 1989, by Ordinance No. 139; and WHEREAS, the Agency staff has negotiated an Agreement for Purchase and Sale and Escrow Instructions ("Agreement") with Santa Rosa Development, Inc., a California corporation ("Developer"), pursuant to which the Agency is to convey to the Developer certain real property located within the Project Area (the "Property") for Eight Hundred One Thousand Three Hundred Fifty -Eight Dollars ($801,358.00) for the Developer's subsequent development thereon of Thirty -Six (36) single family homes (the "Project"), all as more particularly described in the Agreement; and WHEREAS, the Agreement requires the Developer to execute and record against the Property an Option Agreement, which permits the Agency to reacquire the Property in the event the Developer fails to commence or complete construction of the Project within certain specified time frames, interrupts construction of the Project for a specified period of time, or transfers the Property in violation of the Agreement, all as more particularly described in the Agreement; and WHEREAS, Health and Safety Code Section 33433 requires that the Agency prepare a Summary Report to consider the Agency's proposed sale of the Property as set forth in the Agreement, that the Agency Board and the City Council conduct a noticed joint public hearing with respect to the Agreement, and that the approval of the Agreement be accompanied by certain findings and determinations as set forth herein; and WHEREAS, a Summary Report for the Agreement has been prepared and the joint public hearing has been conducted in accordance with applicable requirements of law; and 33� G:\WPDOCS\CCReso-COA\48thAdamsRDAMrktRate.wpd.doc 004 Resolution RDA No. Purchase and Sale Agreement Santa Rosa Development, Inc. Adopted: January 7, 2003 WHEREAS, the City Council and the Redevelopment Agency have considered all the information and evidence set forth in the Summary Report presented by the City/Agency staff and presented by persons wishing to appear and be heard concerning the impact of the Agreement on the Project Area and the City as a whole; and WHEREAS, the Agreement is in accordance with the Redevelopment Plan and is of benefit to the Project Area and the City of La Quinta; and WHEREAS, the Agency hereby determines that the Agency's sale of the Property pursuant to the Agreement is necessary to effectuate the purposes of the Redevelopment Plan; NOW, THEREFORE, BE IT RESOLVED BY THE LA QUINTA REDEVELOPMENT AGENCY AS FOLLOWS: That the above recitals are true and correct and incorporated herein. 2. That the La Quinta Redevelopment Agency hereby resolves as follows: a. The Agency finds and determines that the Agreement effectuates the purposes of the Community Redevelopment Law (Health & Safety Code § 33000 et seq.) and of the Redevelopment Plan and is in the best interests of the citizens of the City of La Quinta. b. The Agency's sale of the real property identified herein will eliminate blight and is consistent with the Agency's Five -Year Implementation Plan, based on the findings and conclusions of the Summary Report, which is incorporated herein. C. The consideration the Developer will pay for the Property is not less than the fair market value of the Property at its highest and best use in accordance with the Redevelopment Plan, based on the findings and conclusions of the Summary Report. 3. The Agreement, a copy of which is on file with the Agency Secretary, is hereby approved. The Agency Executive Director and Agency Counsel are hereby authorized and directed to make final modifications to the Agreement that are consistent with the substantive terms of the Agreement approved hereby, and the Agency Executive Director is authorized to thereafter sign the Agreement on behalf of the Agency. 4. The Agency Executive Director is authorized and directed, on behalf of the Agency, to (i) sign such other and further documents, including, but not limited 3,10 to subordination agreements and escrow instructions that require the Agency's signature, and (ii) take such other and further actions, as may be necessary and proper to carry out the terms of the Agreement. . O Ci 5 G:\WPDOCS\CCReso-COA\48thAdamsRDAMrktRate.wpd.doc Resolution RDA No. Purchase and Sale Agreement Santa Rosa Development, Inc. Adopted: January 7, 2003 PASSED, APPROVED, AND ADOPTED at a regular meeting of the La Quinta Redevelopment Agency held this 7th day of January, 2003, by the following vote: AYES: NOES: ABSENT: ABSTAIN: TERRY HENDERSON, Agency Chair City of La Quinta, California ATTEST: JUNE S. GREEK, Agency Secretary City of La Quinta, California APPROVED AS TO FORM: M. KATHERINE JENSON, Agency Counsel City of La Quinta, California 006 311 G:\WPDOCS\CCReso-COA\48thAdamsRDAMrktRate.wpd.doc SUMMARY REPORT FOR THE AGREEMENT FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS BETWEEN THE LA QUINTA REDEVELOPMENT AGENCY AND SANTA ROSA DEVELOPMENT, INC. December 24, 2002 INTRODUCTION This document is the Summary Report ("Report") for the Agreement for Purchase and Sale and Escrow Instructions ("Agreement") by and between the La Quinta Redevelopment Agency ("Agency") and Santa Rosa Development, Inc., a development partnership comprised of Desert Cities Development and the RecreActions Group of Companies (RGC) ("Developer"). The Agreement facilitates the sale of an 1 1.9-acre Agency -owned parcel ("Property") to the Developer who will construct and sell 36 market rate single-family dwellings ("Development"). The property sale proceeds will be deposited into the Agency's Low and Moderate Income Housing Fund. This Report has been prepared pursuant to Section 33433 of the California Health and Safety Code (the California Community Redevelopment Law or "Law") and addresses the following: • A summary of the proposed Development. • The cost of the Agreement to the Agency. • The estimated value of the interest to be conveyed, determined at the highest and best uses permitted by the Agency's Redevelopment Plan. • The estimated value of the interest to be conveyed determined at the use with the conditions, covenants, and development costs required by the Agreement. • An explanation of why the sale of property pursuant to the Agreement will assist in the elimination of blight. • Conformance with the Agency's Five Year Implementation Plan. THE DEVELOPMENT The Agency purchased the Property in 1995, in order to reserve land for affordable housing development. The Property was part of a larger 50 acre parcel; .5 acres was transferred to the Coachella Valley Water District in 1999, to satisfy well site requirements related to the development of the Miraflores affordable housing development; 14 acres were transferred to the A.G. Spanos Corporation in February 2000, for the development of a 200 unit apartment community that includes 20 affordable units; 20.04 acres is the subject of a separate affordable housing agreement with the Developer for the development of 149 affordable housing units; and the disposition of the remaining 11 .9 acres is the subject of this Report. 3111 O C G:\WPDOCS\Documents\SumRpt48thAdamsPur-Sale.wpd.doc 8 The Developer first contacted the Agency in May 1998, regarding their interest in developing both affordable and market rate housing on the 50-acre parcel. The Agency delayed moving forward with their request until a majority of the dwellings in the Miraflores community (located at Avenue 48 and Jefferson Street) were sold. This occurred in March 2002; the Agency subsequently entered into negotiations with the Developer to determine if a mutually acceptable transaction could be consummated. Negotiations concluded in August 2002, and the Agreement was subsequently drafted. In order to insure compatibility with the surrounding single-family neighborhoods the Developer proposes a development program that locates market rate homes adjacent to the existing single-family neighborhoods located west of Adams Street and south of Avenue 48. The development program entails 36 single story market rate homes that will be priced from $265,000 to $360,000. If the Agreement is approved, the Developer will have 60 days to conduct due diligence activities and 180 days to prepare and process the entitlements and tract map required for development. Upon receiving the entitlements, the Developer will then purchase the Property for $801,358. THE COST OF THE AGREEMENT TO THE AGENCY The Agency purchased the larger 50-acre parcel in 1995 for $1,909,300. The pro rata cost of the Property is $454,413. 1995 Housing Bond proceeds were used to fund this purchase, which feature a blended interest rate of 6%. The interest expense associated with the $454,413 purchase cost allocated to the Property is $190,680. Per the Agreement the Developer will purchase the Property for $801 ,358. This purchase price will cover both the Property acquisition and associated Bond proceeds interest cost ($645,093), and will generate $156,265 in additional sale proceeds. All of the sale proceeds will be deposited into the Agency's Low and Moderate income Housing Fund and designated for the 149-unit moderate -income affordable housing development that will be constructed adjacent to the Property. ESTIMATED VALUE OF INTEREST TO BE CONVEYED The Agency's redevelopment consultant reviewed comparable land sales for property designated for single-family development that was not yet entitled. This review identified per acre land values ranging from $38,660 to $75,000. Per the Agreement, the Developer will pay $67,347 per acre for the Property. This value is at the upper end of the comparable land sales valuation range and reflects market value. ESTIMATED VALUE OF THE INTEREST TO BE CONVEYED, DETERMINED AT THE USE AND WITH THE CONDITIONS, COVENANTS, AND DEVELOPMENT COSTS REQUIRED BY THE AGREEMENT The Agreement does not impose conditions and covenants that generate increased development costs or reduce potential development income. Instead, the Agreement requires that all site improvements comply with the development regulations set forth by the City of La Quinta. Thus, the value of the interest to be conveyed is not reduced 341 as a result of provisions contained in the Agreement. ()°".9 G:\WPDOCS\Documents\SumRpt48thAdamsPur-Sale.wpd.doc EXPLANATION OF WHY THE SALE OF THE PROPERTY PURSUANT TO THE AGREEMENT WILL ASSIST IN THE ELIMINATION OF BLIGHT At the time the Redevelopment Plan was adopted, La Quinta Redevelopment Project Area No. 2 ("Project Area No. 2") was determined to be blighted. The property conveyance and construction of the Development will result in the elimination of blighted conditions by increasing the housing stock within Project Area No. 2 and by generating funds that the Agency will use to increase and improve the supply of affordable housing within Project Area No. 2. Further, California Redevelopment Law identifies decent housing as vital to the state's future peace and property and the provision of affordable housing as a fundamental purpose of redevelopment. Per the Second Five Year Implementation Plan, the Agency has an obligation to facilitate the production of over 1,500 affordable units by 2004. In order to accomplish this task, the Agency must generate sufficient income to provide incentives to private developers and non-profit organizations to construct units that will generate less than market value returns. The Property sale proceeds will be dedicated to the production of affordable units on property adjacent to this site. These units will provide long-term affordable housing opportunities for moderate -income senior households. Further, by developing both the Property and the adjacent site with a combination of market and affordable units, the Agency will avoid concentrating affordable units in one location. CONFORMANCE WITH THE AGENCY'S FIVE YEAR IMPLEMENTATION PLAN The Second Five Year Implementation Plan and the Second Amended Housing Affordability Plan identifies a combination of market rate and affordable housing development for the Property. The conveyance of the Property and the subsequent development of market rate units conform to the provisions of both these Plans. A copy of the proposed Agreement is attached to this Report and is available for review at the Community Development Department located at the La Quinta City Hall. The proposed Agreement will be the subject of a joint public hearing to be conducted by the Agency and City Council on January 7, 2003, at 7:00 p.m., in the City Council Chambers, which are located at the La Quinta City Hall, 78-495 Calle Tampico, La Quinta, California. 3,14 010 G:\WPDOCS\Documents\SumRpt48thAdamsPur-Sale.wpd.doc AGREEMENT FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS BY AND BETWEEN THE LA QUINTA REDEVELOPMENT AGENCY ("SELLER") AND SANTA ROSA DEVELOPMENT, INC. ("BUYER") 882/015610-0043 325160,03 PM03 345 AGREEMENT FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS THIS AGREEMENT FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS ("Agreement") is made and entered into as of , 2002 ("Effective Date") by and between the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic ("Seller"), and SANTA ROSA DEVELOPMENT, INC., a California corporation ("Buyer"). RECITALS: A. Seller is the owner of that certain real property located in the City of La Quinta ("City"), County of Riverside, State of California, more particularly described and depicted in Exhibit "A" attached hereto and incorporated herein by this reference ("Property"). B. Buyer desires to purchase the Property from Seller and Seller desires to sell the Property to Buyer, on the terms and conditions set forth herein. C. Buyer intends to develop the Property with the "Project" as that term is defined in Section 17 hereof. AGREEMENT: NOW, THEREFORE, in consideration of the foregoing recitals and mutual covenants herein contained, the parties hereto agree as follows: l . PURCHASE PRICE. 1.1 Amount. Subject to the terms of this Agreement, Buyer hereby agrees to purchase the Property from Seller, and Seller agrees to sell the Property to Buyer, for the purchase price of Eight Hundred One Thousand Three Hundred Fifty -Eight Dollars ($801,358.00) ("Purchase Price"). 1.2 Payment of Purchase Price. On or before 5:00 p.m. on the business day preceding the Closing Date (as that term is defined in Section 4.1) or such earlier time as required by Escrow Holder in order to close Escrow on the Closing Date, Buyer shall deposit with Escrow Holder the Purchase Price in Good Funds (as used in this Agreement, the term "Good Funds" shall mean a confirmed wire transfer of immediately available funds, cashier's or certified check drawn on or issued by the office of a financial institution located in Riverside County, or cash), and such additional funds as may be required to meet Buyer's portion of the closing costs as hereinafter provided. 2. ESCROW. 2.1 Opening of Escrow. Closing of the sale of the Property shall take place through an escrow ("Escrow") to be established within three (3) business days after the execution of this Agreement by the parties hereto, with First American Title Company ("Escrow Holder") at its 31 882/015610-0043 ^ •` 325160.03 PM03 4 office located at 3625 Fourteenth Street, Riverside, CA 92502-0986. The opening of the Escrow (the "Opening of Escrow") shall be deemed to be the date that a fully executed copy of this Agreement is delivered to the Escrow Holder. Escrow Holder is instructed to notify Buyer and Seller in writing of the date of the Opening of Escrow. 2.2 Escrow Instructions. This Agreement, once deposited in Escrow, shall constitute the joint escrow instructions of Buyer and Seller to Escrow Holder. Additionally, if Escrow Holder so requires, Buyer and Seller agree to execute the form of escrow instructions that Escrow Holder customarily requires in real property escrows administered by it. In the event of any conflict or inconsistency between Escrow Holder's standard instructions and the provisions of this Agreement, the provisions of this Agreement shall supersede and be controlling. 3. DUE DILIGENCE. 3.1 Due Dili eg nce. As used herein, the term "Due Diligence Period" shall refer to a period of time to expire upon the date that is sixty (60) days after the Opening of Escrow. Buyer's obligation to consummate the transactions contemplated by this Agreement is subject to and conditioned upon Buyer's approval, deemed approval or waiver of the right to approve of the following contingencies set forth in this Section 3.1 (collectively, the "Contingencies"): 3.1.1 Title/Survey. Within five (5) days after the Effective Date, Seller shall deliver to Buyer a preliminary title report prepared by First American Title Company ("Title Company") describing the state of title of the Property together with copies of all underlying documents (collectively the "Preliminary Title Report"). Buyer may, at its sole cost and expense, obtain a current survey of the Property (the "Survey") provided it does so within thirty (30) days after the Effective Date. Notwithstanding anything herein to the contrary, Seller shall be obligated to remove all monetary encumbrances against the Property excluding non - delinquent real property taxes and assessments. Buyer shall notify Seller in writing of any objections Buyer may have to title exceptions contained in the Preliminary Title Report or matters shown on the Survey (if Buyer has obtained) no later than the date which is fifteen (15) days after the later of (i) its receipt of the Preliminary Title Report or (ii) its receipt of the Survey within the time period set forth above ("Buyer's Objection Notice"). Buyer's approval or disapproval of the matters set forth in the Preliminary Title Report (and the Survey, if applicable) may be granted or withheld in Buyer's sole and absolute discretion. Buyer's failure to provide Seller with a Buyer's Objection Notice within said period shall constitute Buyer's approval of all exceptions to title shown on the Preliminary Title Report and all matters shown on the Survey (if Buyer has obtained). Seller shall have a period of fifteen (15) days after receipt of Buyer's Objection Notice in which to deliver written notice to Buyer ("Seller's Notice") of Seller's election to either (i) agree to remove the objectionable items on the Preliminary Title Report or Survey prior to the Close of Escrow, or (ii) decline to remove any such title exceptions or Survey matters and terminate Escrow and the obligations of Buyer and Seller to purchase and sell the Property under this Agreement. Seller's failure to provide Buyer with Seller's Notice within said period shall constitute Seller's disapproval thereof. If Seller notifies Buyer of its election to terminate rather than remove the objectionable items on the Preliminary Title Report or Survey, Buyer shall have the right, by written notice delivered to Seller within five (5) days after Buyer's receipt of Seller's Notice, to agree to accept the Property subject to the objectionable items, in which event Seller's election to terminate shall be of no effect, and Buyer shall take title at the 317 882/015610-0043 -2- 325160.03 PM03 Close of Escrow subject to such objectionable items without any adjustment to or credit against the Purchase Price. All exceptions to title shown on the Preliminary Title Report, other than those which Seller may agree to remove pursuant to this Section 3.1.1, shall be deemed to have been approved by Buyer unless Seller is notified otherwise in writing. Upon the issuance of any amendment or supplement to the Preliminary Title Report which adds additional exceptions, including any survey exceptions, the foregoing right of review and approval shall also apply to said amendment or supplement; provided, however, that Buyer's initial period of review and approval or disapproval of any such additional exceptions shall be limited to fifteen (15) days following receipt of notice of such additional exceptions. The process set forth above for Buyer's review and Seller's response shall apply to any review and response with respect to any amendment or supplement to the Preliminary Title Report, and the Closing shall be extended for such period as is necessary to allow for that review and response process to be completed. 3.1.2 Environmental Condition. (a) During the Due Diligence Period, Seller shall permit Buyer and Buyer's directors, engineers, analysts, officers, employees, agents, contractors, subcontractors, consultants, representatives, attorneys and advisors (collectively, the "Buyer Representatives"), at the sole cost and expense of Buyer, to conduct physical inspections of the Property, including the site work, soil, subsurface soils, drainage, seismic and other geological and topographical matters, location of asbestos, toxic substances, hazardous materials or wastes, if any, and any other investigations as Buyer deems prudent with respect to the physical condition of the Property in order to determine the Property's suitability for Buyer's intended development. In no event shall Buyer conduct any intrusive testing procedures on the Property without the prior written consent of Seller, which consent shall not be unreasonably withheld. Such investigations may be made by Buyer and/or Buyer Representatives during any normal business hours. Buyer shall also have the right to investigate all matters relating to the zoning, use and compliance with other applicable laws, codes, and ordinances which relate to the use and occupancy of the Property. Seller shall cooperate to assist Buyer in completing such inspections and special investigations at no cost or expense to Seller. Such inspections and investigations shall be conducted only upon no less than twenty- four (24) hours' notice to Seller and shall be conducted at such times and in such a manner as to minimize any disruption to the Property. Seller shall have the right, but not the obligation, to accompany Buyer during such investigations and/or inspections. (b) As a condition to any such entry, Buyer shall (i) conduct all work or studies in a diligent, expeditious and safe manner and not allow any dangerous or hazardous conditions to occur on the Property during or after such investigation; (ii) comply with all applicable laws and governmental regulations; (iii) keep the Property free and clear of all materialmen's liens, lis pendens and other liens arising out of the entry and work performed under this paragraph; (iv) maintain or assure maintenance of workers' compensation insurance (or state 3?$ 882/015610-0043 -3- 325160.03 PM03 r ' i'l 882/015610-0043 325160.03 PM03 approved self-insurance) on all persons entering the property in the amounts required by the State of California; (v) provide to Seller prior to initial entry a certificate of insurance evidencing that Buyer and/or the persons entering the Property have procured and have in effect an all-risk public liability insurance policy meeting the following requirements: (1) the insurance shall be written on a per occurrence and not claims -made basis; (2) the amount of insurance shall be a combined single limit of not less than Two Million Dollars ($2,000,000.00) with a deductible or self -insured retention amount of not more than One Hundred Thousand Dollars ($100,000); (3) the policy shall name or be endorsed to Seller and the City and their respective officers, officials, members, employees, agents, and representatives (collectively, "Seller/City & Seller/City Personnel") as additional insureds; (4) the insurance shall not contain any special limitations on the scope of protection afforded to Seller/City & Seller/City Personnel; (5) the policy shall not be canceled by the insurer or Buyer unless there is a minimum of thirty (30) days prior written notice to Seller; (6) the insurer shall waive subrogation rights against the Seller/City & Seller/City Personnel; and (7) the insurance shall be primary insurance and not contributory with any insurance any of the Seller/City & Seller/City Personnel may have; and (8) the insurance shall apply separately to each insured against whom a claim is made or suit is brought, except with respect to the limits of the insurer's liability; and (vi) following Buyer's entry, repair any and all damage to the Property caused by such inspections or investigations in a timely manner. (c) Buyer shall promptly pay and discharge all demands for payment relating to Buyer's entry on and investigation of the Property and take all other steps to avoid the assertion of claims of lien against the Property. In the event a claim of lien is recorded by reason of Buyer's entry on the Property, Buyer, within twenty (20) days of such recordation, shall either (i) record or deliver a surety bond sufficient to release such claim or lien in accordance with applicable law; or (ii) provide Seller with such other assurance as Seller may require for the payment of the claim or lien. Seller may elect to record and post notices of non - responsibility from time to time on and about the Property. (d) Buyer agrees to indemnify, defend, protect and hold Seller/City & Seller/City Personnel and the Property, free and harmless from any and all loss, liability, claims, action, suit, proceeding, deficiency, fine, penalty, damages and expenses (including, but not limited to, reasonable attorneys' fees, expert witness fees and costs) arising directly or indirectly from: (i) the exercise of said entry, (ii) Buyer's failure to comply with the conditions to Buyer's entry onto the Property provided herein, and (iii) the presence of any Hazardous Materials (as defined in Section 15 herein) on, under, in or about the Property occurring prior to or after the Close of Escrow resulting from the activities of Buyer or Buyer Representatives on the Property prior to the Close of Escrow. Such undertaking of indemnity shall survive Close of Escrow or the termination of this Agreement for any reason. 31.1 -4- (e) Prior to expiration of the Due Diligence Period, Buyer shall notify Seller in writing ("Buyer's Property Objection Notice") of any objections Buyer may have to any physical or environmental conditions of the Property (the "Disapproved Property Matters"). Buyer's approval or disapproval of the physical and environmental conditions of the Property may be granted or withheld in Buyer's sole and absolute discretion. Buyer's failure to provide Seller with a Buyer's Property Objection Notice shall constitute Buyer's approval of the condition of the Property. Seller shall have a period of fifteen (15) days after receipt of Buyer's Property Objection Notice in which to deliver written notice to Buyer ("Seller's Response") of Seller's election to either (i) agree to remove the objectionable items prior to the Close of Escrow, or (ii) decline to remove the objectionable items and terminate Escrow and the obligations of Buyer and Seller to purchase and sell the Property under this Agreement. Seller's failure to provide Buyer with Seller's Response within said period shall constitute Seller's election to terminate. If Seller notifies Buyer of its election to terminate rather than remove the objectionable items, Buyer shall have the right, by written notice delivered to Seller within five (5) days after Buyer's receipt of Seller's Response, to agree to accept the Property subject to the objectionable items, in which event Seller's election to terminate shall be of no effect, and Buyer shall take title at the Close of Escrow subject to such objectionable items without any adjustment to or credit against the Purchase Price. Buyer's inspections and investigations of the Property shall be conducted upon the terms and conditions set forth in this Agreement. 3.2 Confidentiality. Any and all information made available to Buyer under this Agreement or discovered by Buyer during its investigation of the Property shall be treated as confidential by Buyer and such information shall not be disclosed prior to the Close of Escrow without the prior written consent of Seller; provided, however, that Buyer may disclose said information (1) to any attorney, accountant, engineer or consultant providing services to Buyer in the normal and ordinary course of business, (ii) to a court or any other official body if said confidential information is subpoenaed by that court or official body; provided that Buyer notifies Seller, in writing, of the receipt of such subpoena, and (iii) if required to disclose such information pursuant to the California Public Records Act or other applicable law. Seller shall be permitted to pursue, at Seller's cost, such confidentiality order with or without Buyer. Additionally, if this Agreement terminates for any reason whatsoever, Buyer shall return to Seller all written information delivered by Seller to Buyer pursuant hereto, and all copies of such information made by Buyer, within ten (10) days after termination hereof. The provisions of this Section 3.2 shall survive any termination of this Agreement. 4. CLOSE OF ESCROW. 4.1 Close of Escrow, Closing Date. Provided that all of the conditions of this Agreement precedent to the Close of Escrow (as hereinafter defined) have been satisfied (or waived by the appropriate party) prior to or on the Closing Date (as hereinafter defined), the Closing (as hereinafter defined) of this transaction for the sale and purchase of the Property shall take place on the date which is five (5) days after the date on which all of Buyer's Conditions to Closing and all of Seller's Conditions to Closing have been satisfied (or waived by the 882/015610-0043 _5 325160.03 PM03 appropriate party); provided, however, in no event shall the Closing occur, if at all, later than the date which is one -hundred eighty (180) days after the expiration of the Due Diligence Period ("Closing Date"). The terms "Close of Escrow" and the "Closing" are used herein to mean the time Seller's grant deed conveying fee title to the Property to Buyer is recorded in the Official Records of the Office of the County Recorder of Riverside ("Official Records"). If Escrow is not in a condition to close by the Closing Date, either party not then in default hereunder may, upon five (5) days advance written notice to the other party and Escrow Holder, elect to terminate this Agreement and the Escrow. No such termination shall release either party then in default from liability for such default. If neither party so elects to terminate this Agreement and the Escrow, Escrow Holder shall close the Escrow as soon as possible. 4.2 Recordation: Release of Funds and Documents. 4.2.1 Escrow Holder is directed, on the Closing Date, to record in the Official Records, the following documents in the order listed: (i) the "Tract Map" (as defined in Section 8 below); (ii) the grant deed in the form of the attached Exhibit "B" transferring title to the Property to Buyer ("Grant Deed"); (iii) the "Option Agreement" (as defined in Section 18 hereof); and (iv) such other and further documents as may be directed jointly by Buyer and Seller. 4.2.2 Upon the Closing, Escrow Holder shall deliver (i) the Purchase Price, less any of Seller's closing costs, to Seller, and (ii) conformed copies of all recorded documents to both Buyer and Seller. 5. DELIVERY OF DOCUMENTS REQUIRED FROM BUYER AND SELLER. 5.1 Buyer's Obligations. Buyer agrees that on or before 5:00 p.m. of the last business day immediately preceding the Closing Date, Buyer shall deposit or cause to be deposited with Escrow Holder the following: (a) the Purchase Price; (b) the executed and acknowledged "Option Agreement" (as defined in Section 18 hereof); (c) the "Tract Map" (as defined in Section 8 below); and (d) any and all additional funds, instruments or other documents required from Buyer (executed and acknowledged where appropriate) as may be reasonably necessary in order for the Escrow Holder to comply with the terms of this Agreement. 5.2 Seller's Obligations. Seller agrees that on or before 5:00 p.m. of the last business day immediately preceding the Closing Date, Seller shall deposit or cause to be deposited with Escrow Holder each of the following: (a) the executed and acknowledged Grant Deed; 3'' 1 882/015610-0043 g(A1 325160.03 15M03 -6 y.: (b) a Certificate of Non -Foreign Status (the "Non -Foreign Affidavit") executed and acknowledged by Seller in the form attached hereto as Exhibit "C"; and (c) all other funds, items, and instruments required from Seller (executed and acknowledged where appropriate) as may be reasonably necessary in order for Escrow Holder to comply with the provisions of this Agreement. 6. TITLE INSURANCE POLICY. 6.1 Title Policy. At the Closing Date, First American Title Insurance Company (the "Title Company"), as insurer, shall issue an ALTA owner's standard coverage policy of title insurance ("Title Policy"), in favor of Buyer, as insured, with liability in the amount of the Purchase Price, subject to the following: (a) non -delinquent real property taxes and assessments; (b) title exceptions approved or deemed approved by Buyer pursuant to Section 3.1.1 above; (c) title exceptions, if any, resulting from Buyer's entry onto the Property pursuant to the provisions of Section 3.1.2 above; (d) any other exceptions approved by Buyer; and (e) the standard printed conditions and exceptions contained in the ALTA standard owner's policy of title insurance regularly issued by the Title Company. 6.2 Payment for Title Policy. Seller shall be responsible for the charges for the Title Policy with coverage up to the amount of the Purchase Price. Buyer shall pay any additional coverage or endorsements it requests. Buyer may, at its election, request an ALTA extended policy of title insurance. Buyer shall pay the difference for the charges between the premium for the extended coverage title policy and the premium for the standard coverage title policy that Seller is responsible for hereunder. Buyer shall also pay for the ALTA survey, if applicable. 7. REAL PROPERTY TAXES. Buyer shall pay all property taxes and assessments. The Property is currently exempt from the payment of property taxes and assessments due to Seller's status as a public agency. In the event, however, property taxes or assessments are mistakenly assessed against the Property after the Closing for any period prior to the Closing, Buyer shall be responsible for timely payment thereof but Buyer may apply for a refund for that portion of taxes and assessments allocated to any period prior to the Closing, in accordance with the applicable provisions of the Revenue and Taxation Code. Seller shall cooperate with Buyer, at no cost to Seller, to effect such refund. 8. PROJECT ENTITLEMENTS. Prior to, and as both a Seller Condition to Closing and a Buyer Condition to Closing as set forth in Section 10, Buyer shall (i) prepare a tract map subdividing the Property from adjacent real property owned by the Seller (the "Tract Map"), (ii) 882/015610-0043 3 r 325160.03 PM03 -7 Ogg prepare and obtain approval from the City of La Quinta ("City") covenants, conditions, and restrictions providing for maintenance of all commonly -owned property within .the "Project" (as that term is defined in Section 17.1) by a homeowners' association ("CC&Rs"), which CC&Rs provide that the City and Seller are third party beneficiaries with the right, but not the obligation, to enforce the terms thereof, and (and (ii) obtain from the City all permits and entitlements necessary for the Project as required in this Agreement, by applicable State law, by City code, and all other applicable law, including but not limited to a site development plan, a Specific Plan, any conditional use permit, any zone change, any variance, any vacation of public rights of way, and any approvals or certifications as required by the California Environmental Quality Act (California Public Resources Code § 21000 et seq.), the approval of which by the City of La Quinta is subject to the City's legislative discretion (all of the foregoing, the "Project Entitlements"). Seller agrees to fully cooperate with, and assist, Buyer in its pursuit of Project Entitlements, subject to Seller's exercise of its legislative discretion and without any representation, warranty, or guaranty by Seller that the City will issue, or will issue with conditions, any Project Entitlement. Without limiting the generality of the foregoing, Seller shall review all submittals by Buyer in a timely manner and shall provide Buyer with all information, in Seller's possession or control, that Buyer may reasonably request in writing in connection with the Project Entitlements (or the pursuit thereof). In addition, Seller shall prepare, with funds deposited by Buyer, all necessary environmental documents as required by applicable law, including but not limited to the California Environmental Quality Act, for approval or certification, as the case may be, by the City of La Quinta. 9. BUYER'S EVIDENCE OF PROJECT FINANCING. Prior to, and as a Seller Condition to Closing set forth in Section 10.2, Buyer shall submit to Seller, and obtain approval from Seller, which approval shall not be unreasonably withheld or delayed, of, verifiable written evidence that Buyer has or has obtained sufficient equity capital or has arranged for financing for the acquisition and construction, and permanent financing, necessary to undertake the development of the Project ("Buyer's Evidence of Financing"). The Buyer's Evidence of Financing shall include the following: (a) (1) a copy of a legally binding, firm, and enforceable loan commitment obtained by Buyer from one or more financing institutions for the mortgage loan or loans for financing to fund the acquisition and development of the Project, subject to the such lender's customary and normal conditions and terms, and/or (ii) a certification from Buyer's chief financial officer that Buyer has, or upon the funding of all applicable loan proceeds Buyer will have, sufficient funds for such acquisition of the Property and development of the Project and that such funds have been committed for the acquisition and development; and (b) such other documentation reasonably required by Seller as evidence that Developer has adequate funds or third party commitments for funds for the acquisition of the Property and development of the Project. 10. CONDITIONS PRECEDENT TO CLOSING. 10.1 Conditions Precedent to Buyer's Obligations. The obligations of Buyer under this Agreement to purchase the Property and close the Escrow shall be subject to the satisfaction or signed written waiver by Buyer of each and all of the following conditions precedent (collectively "Buyer's Conditions to Closing"): 882/015610-0043 -g- 01 9 325160.03 PM03 (a) on the Closing Date, the Title Company shall be irrevocably committed to issue the Title Policy pursuant to Section 6 above insuring fee title to the Property as being vested in Buyer; (b) Escrow Holder holds all instruments and funds required for the Closing and will deliver to Buyer the instruments and funds, if any, accruing to Buyer pursuant to this Agreement; (c) except as otherwise permitted by this Agreement, all representations and warranties by the Seller in this Agreement shall be true on and as of the Closing Date as though made at that time and all covenants of Seller pursuant to this Agreement shall have been fulfilled by the Closing Date; (d) Buyer has obtained the Project Entitlements from the City of La Quinta, and that any of the Project Entitlements that are required to be recorded in the Official Records are ready to and shall record concurrently with the Grant Deed in accordance with Section 4.2.1; (e) City has issued to Buyer and Seller, with a copy to Escrow Holder, a letter signed by the City Manager, Community Development Director, or Assistant Community Development Director confirming that the conditions set forth in clause (d) above have been satisfied or have been waived by City in its sole and absolute discretion; (f) Seller is not in material default of any term or condition of this Agreement. In the event that any of Buyer's Conditions to Closing are not satisfied, deemed satisfied, or waived in a writing signed by Buyer prior to the expiration of the applicable period for satisfaction or waiver, Buyer may terminate this Agreement. In the event Buyer elects to terminate this Agreement as provided herein, Buyer shall not be entitled to obtain specific performance and Seller shall not be liable for any "out of pocket," economic, or consequential damages of any kind or nature; provided, however, that in the event Buyer or Seller is in breach or default hereunder, the provisions of Section 13 shall apply. 10.2 Conditions Precedent to Seller's Obliizations. The obligations of Seller under this Agreement shall be subject to the satisfaction or signed written waiver by Seller of each and all of the following conditions precedent ("Seller's Conditions to Closing"): 882/015610-0043 325160.03 PM03 (a) Escrow Holder holds the Purchase Price and all other instruments and funds required for the Closing and will deliver to Seller the instruments and funds, including but not limited to the Purchase Price (less Seller's closing costs) accruing to Seller pursuant to this Agreement; (b) except as otherwise permitted by this Agreement, all representations and warranties by the Buyer in this Agreement shall be true on and as of the Closing Date as though made at that time and all covenants of Buyer pursuant to this Agreement shall have been fulfilled by the Closing Date; 0 Ono (c) Buyer has obtained the Project Entitlements from the City of La Quinta, and that any of the Project Entitlements that are required to be recorded in the Official Records are ready to and shall record concurrently with the Grant Deed in accordance with Section 4.2.1; (d) City has issued, to Buyer and Seller with a copy to Escrow Holder, a letter signed by the City Manager, Community Development Director, or Assistant Community Development Director, confirming that the conditions set forth in clause (c) above have satisfied or have been waived by City in its sole and absolute discretion; (e) Seller has approved Buyer's Evidence of Financing as referred to in Section 9; and (f) Buyer is not in material default of any term or condition of this Agreement. In the event that any of Seller's Conditions to Closing are not satisfied, deemed satisfied, or waived in a writing signed by Seller prior to the expiration of the applicable period for satisfaction or waiver, Seller may terminate this Agreement. In the event Buyer or Seller is in breach or default hereunder, the provisions of Section 13 shall apply. 11. POSSESSION. Possession of the Property shall be delivered by Seller to Buyer on the Closing Date. 12. ALLOCATION OF COSTS. 12.1 Buyer's Costs. Buyer shall pay the following costs: (a) fifty percent (50%) of Escrow Holder's escrow fee; (b) Buyer's own attorney's fees incurred in connection with this Agreement and the transactions contemplated hereby; (c) fifty percent (50%) of all the charges for recording the Grant Deed, if any; (d) the premium difference between the ALTA extended policy of title insurance and the ALTA standard coverage policy of title insurance if Buyer requests an extended policy; and (e) any additional title insurance coverages Seller is not required to pay for plus any title endorsements requested by Buyer. 12.2 Seller's Costs. Seller shall pay: (a) fifty percent (50%) of the Escrow Holder's escrow fee; 882/015610-0043 325160.03 PM03 -10- (b) Seller's own attorney's fees in connection with this Agreement and the transactions contemplated hereby; (c) Any documentary transfer taxes associated with the conveyance; (d) fifty percent (50%) of all the charges for recording the Grant Deed, if any; and (e) the premium for the Title Policy that Seller is required to pay pursuant to this Agreement. 13. REMEDIES. 13.1 Seller's Default-, Limitation on Buyer's Remedies. In the event that Seller materially breaches its obligations under this Agreement and as a result of such breach Buyer terminates this Agreement, Buyer's sole and complete remedy shall be limited to a payment by Seller to Buyer in the amount of "Buyer's Cost Reimbursement" (as defined below) (hereinafter referred to as "Seller's Default Payment"). Seller's payment to Buyer of Seller's Default Payment shall be the sole remedy available to Buyer if Buyer terminates this Agreement due to a material default of Seller, and in no event shall Seller be liable to Buyer for any monetary damages, costs, expenses, lost profits, loss of tax benefits, or consequential or punitive damages, and Seller shall not be entitled to any equitable remedies including the remedy of specific performance. To be eligible to receive Buyer's Cost Reimbursement, Buyer, within fifteen (15) days after Buyer has terminated this Agreement due to a material default of Seller, shall submit to Seller in writing verifiable evidence (such as paid invoices and invoices for eligible costs incurred but not yet paid) of Buyer's actual third party architectural, engineering, and environmental consulting costs incurred for preparation of the Parcel Map (excluding all legal costs incurred by Buyer, all employee staff time, overhead, and similar costs and charges) to the date of Buyer's written notice of termination to Seller (hereinafter, "Buyer's Eligible Costs"). Seller, within ten (10) days of receipt of Buyer's submittal conforming to the requirements set forth above, shall review Buyer's submittal and shall notify Buyer in writing of Seller's acceptance of the evidence submitted or of any further evidence that Seller may reasonably require to permit Seller to confirm Buyer's Eligible Costs (in which case Buyer shall submit such additional documentation within ten (10) days of receipt of Buyer's notice). Buyer's Cost Reimbursement shall be an amount equal to the lesser of (i) Buyer's Eligible Costs, or (ii) Twenty -Five Thousand Dollars ($25,000). In the event of a Buyer termination pursuant to this Section 13.1, Buyer, not later than concurrently with receipt of Buyer's Cost Reimbursement, shall cancel the Escrow and shall provide a quitclaim deed or such other instrument reasonably required by a reputable title company to remove any cloud on title resulting from the Escrow or this Agreement. IN THE EVENT THAT SELLER BREACHES ITS OBLIGATIONS UNDER THIS AGREEMENT, THE DAMAGES THAT BUYER WILL INCUR BY REASON THEREOF ARE AND WILL BE IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTABLISH. BUYER AND SELLER, IN A REASONABLE EFFORT TO ASCERTAIN WHAT BUYER'S DAMAGES WOULD BE IN THE EVENT OF SUCH A DEFAULT BY SELLER, HAVE AGREED THAT SUCH DAMAGES SHALL BE THE AMOUNT OF "SELLER'S DEFAULT PAYMENT" AS DEFINED IN THIS SECTION 13.1, AND THAT UPON SUCH DEFAULT BY SELLER, BUYER, AS LIQUIDATED DAMAGES, 37 882/015610-0043 325160.03 PM03 -1 1- 022 SHALL BE ENTITLED TO SELLER'S DEFAULT PAYMENT. THESE LIQUIDATED DAMAGES SHALL BE BUYER'S SOLE REMEDY FOR SELLER'S DEFAULT. IF BUYER, FOLLOWING BUYER'S RECEIPT OF SELLER'S DEFAULT PAYMENT, WRONGFULLY REFUSES TO CAUSE ESCROW HOLDER TO CANCEL THE ESCROW AND PROVIDE SUCH INSTRUMENT TO REMOVE ANY CLOUD ON TITLE CAUSED BY THE ESCROW OR THIS AGREEMENT, SELLER SHALL BE ENTITLED TO ALL COSTS AND EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES INCURRED BY SELLER WITH RESPECT TO THOSE CONSEQUENTIAL DAMAGES, IF ANY, WHICH MAY BE INCURRED BY SELLER BY REASON OF THE CLOUD ON TITLE TO THE PROPERTY WHICH MAY RESULT FROM BUYER'S WRONGFUL FAILURE TO CANCEL THE ESCROW AND PROVIDE SUCH INSTRUMENT TO REMOVE SUCH CLOUD ON TITLE. THE FOREGOING LIQUIDATED DAMAGES PROVISION SHALL NOT APPLY TO NOR LIMIT THE INDEMNITY PROVISIONS OF SECTION 14 OF THIS AGREEMENT. SELLER AND BUYER ACKNOWLEDGE AND AGREE THAT THEY HAVE READ AND UNDERSTAND THE PROVISIONS OF THIS SECTION 13.1, INCLUDING THIS CAPITALIZED LANGUAGE, AND BY THEIR INITIALS AGREE TO BE BOUND BY ITS TERMS. Buyer's Initials Seller's Initials 13.2 Buyer's Default. IN THE EVENT THAT BUYER BREACHES ITS OBLIGATIONS UNDER THIS AGREEMENT, THE DAMAGES THAT SELLER WILL INCUR BY REASON THEREOF ARE AND WILL BE IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTABLISH. BUYER AND SELLER, IN A REASONABLE EFFORT TO ASCERTAIN WHAT SELLER'S DAMAGES WOULD BE IN THE EVENT OF SUCH A DEFAULT BY BUYER, HAVE AGREED THAT SUCH DAMAGES SHALL BE IN AN AMOUNT EQUAL TO THE SUM OF TWENTY-FIVE THOUSAND DOLLARS ($25,000) ("BUYER'S DEFAULT PAYMENT") AND THAT UPON SUCH DEFAULT, BUYER, AS LIQUIDATED DAMAGES, SHALL DELIVER BUYER'S DEFAULT PAYMENT TO SELLER. THESE LIQUIDATED DAMAGES SHALL BE SELLER'S SOLE REMEDY THEREFOR, UNLESS BUYER WRONGFULLY REFUSES TO CAUSE ESCROW HOLDER TO CANCEL THE ESCROW AND PROVIDE SUCH INSTRUMENT AS MAY BE REASONABLY NECESSARY TO REMOVE ANY CLOUD ON TITLE AS IS CAUSED BY THE ESCROW AND THIS AGREEMENT, IN WHICH INSTANCE SELLER SHALL ALSO BE ENTITLED TO ALL COSTS AND EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES INCURRED BY SELLER WITH RESPECT TO THOSE CONSEQUENTIAL DAMAGES, IF ANY, WHICH MAY BE INCURRED BY SELLER BY REASON OF THE CLOUD ON TITLE TO THE PROPERTY WHICH MAY RESULT FROM BUYER'S WRONGFUL FAILURE TO CANCEL THE ESCROW AND TO PROVIDE SUCH INSTRUMENT TO REMOVE SUCH CLOUD ON TITLE. THE FOREGOING LIQUIDATED DAMAGES PROVISION SHALL NOT APPLY TO NOR LIMIT THE INDEMNITY PROVISIONS OF SECTION 14 OF THIS AGREEMENT. SELLER AND BUYER ACKNOWLEDGE AND AGREE THAT THEY HAVE READ AND UNDERSTAND THE PROVISIONS OF THIS SECTION 13.2 AND BY THEIR INITIALS AGREE TO BE BOUND BY ITS TERMS. 882/015610-0043 325160.03 PM03 -12- 023 3,77 Buyer's Initials Seller's Initials 14. INDEMNITY. Buyer shall indemnify, defend, and hold harmless Seller/City & Seller/City Personnel from and against any and all claims, liabilities, damages, and losses, including without limitation reasonable attorneys' fees and litigation expenses, including court courts and expert witness fees (collectively, "Claims"), due to the death or personal injury of any person, or physical damage to any person's real or personal property, caused by the construction of improvements by, or construction -related activities of, Buyer or Buyer representatives, on the Property, or for any construction defects in any improvements constructed by Buyer or Buyer Representatives on the Property; provided, however, that the foregoing indemnification shall not apply to the extent such Claims are proximately caused by the negligence or willful misconduct of Seller subject to any immunities which may apply to Seller with respect to such Claims. The foregoing indemnification provision shall survive the termination of this Agreement. 15. "AS -IS". Buyer acknowledges that during the Due Diligence Period Buyer shall have had an adequate opportunity to inspect the Property and to investigate its physical characteristics and condition and to conduct such other independent investigations as Buyer requires to determine that it is prepared to complete the purchase of the Property on the terms and conditions stated herein. Seller hereby warrants and represents that, to Seller's actual knowledge, there are no Hazardous Substances generated, released, stored, buried or deposited over, beneath, in or upon the Property, except to the extent permitted by law after obtaining all necessary permits and licenses thereof, nor has Seller or the City received any notice from any governmental agency alleging that the Property is currently in violation of any governmental requirements relating to Hazardous Materials (as hereinafter defined). As used in the preceding sentence, the term "knowledge" shall mean the actual (not constructive or imputed) knowledge of Thomas Genovese (Seller's Executive Director), without any investigation or inquiry or duty of investigation or inquiry. Subject to the limited representations and warranties of Seller set forth in this Agreement, Buyer acknowledges that the purchase of the Property will be based on Buyer's own investigation and that Buyer must perform its own due diligence with respect to all environmental matters relating to the Property, and that Buyer is not relying on any environmental audits or assessments performed by or on behalf of Seller. "Hazardous Materials" shall mean and include any pollutants, flammable, explosives, petroleum products, radioactive materials, hazardous wastes, dangerous or toxic substances or related materials, including substances defined as or included in the definition of toxic or hazardous substances, wastes or materials under any federal, state or local laws, ordinances, regulations or guidelines which relate to pollution, the environment or the protection of public health and safety, or limiting, prohibiting or otherwise regulating the presence of such materials. The foregoing representation and warranty by Seller shall survive the execution and delivery of this Agreement, the recording of the Grant Deed and the Closing. 882/015610-0043 325160,03 PM03 -13- ,1 8 024. Except as provided herein, and subject to the limited representations and warranties of Seller set forth in this Agreement, Buyer acknowledges that Buyer is purchasing the Property with no representation or warranty by Seller, express or implied, regarding the presence of uncompacted fill, the condition of the soil, the geology, seismology, hydrology, or similar matters on, under, or affecting the Property, the existence or condition of any improvements in, on, or under the Property, the presence or absence of any Hazardous Materials in, on, under, or affecting the Property, or that the Property is suitable for Buyer's contemplated use. Buyer acknowledges that Seller has undertaken no investigation, and does not intend to undertake any investigation, concerning any aspect of the physical or environmental condition of the Property and in no event shall Seller have any obligation under this Agreement to cure or correct any physical defects or problems with respect to the Property. Except for the warranties of Seller set forth in this Agreement, Buyer is acquiring the Property in an "AS -IS, WHERE -IS, WITH ALL FAULTS" condition. Buyer hereby agrees that, concurrent with the Close of Escrow, Buyer shall release Seller from any claims that Buyer has against Seller regarding the physical or environmental condition of the Property (except for those provisions which expressly provide that they survive termination); provided, however, such release shall not apply to any matters arising out of, or related to, any fraud or intentional misrepresentations or warranties made by Seller in this Agreement. 16. DAMAGE DESTRUCTION AND CONDEMNATION. 16.1 Risk of Physical Loss. Seller, prior to the Closing, shall promptly notify Buyer in writing of any fire, casualty, or other damage (other than de minimis damage) to the Property of which Seller has knowledge (as that term is defined in Section 15). In the event of fire, casualty, or other damage (insured or not) to the Property which is reasonably estimated to cost One Hundred Thousand Dollars ($100,000) or more to repair, restore, or remediate, then Buyer, may on written notice to Seller terminate this Agreement and the Escrow; provided that Buyer shall not have caused such fire, casualty, or other damage. If any such occurrence costs less than One Hundred Thousand Dollars ($100,000), or if Buyer does not so terminate this Agreement pursuant to its rights under this Section 16.1, this Agreement and the Escrow shall continue in effect and Seller shall assign all available insurance proceeds to Buyer, if any, received by Seller related to such fire, casualty, or other damage (other than de minimis damage). 16.2 Condemnation. In the event that, prior to the Close of Escrow, any governmental entity shall commence any proceedings of or leading to eminent domain or similar type proceedings to take all or any portion of the Property, Buyer or Seller shall promptly meet and confer in good faith to evaluate the effect of such action on the purposes of this Agreement and following such meeting either Buyer or Seller may terminate this Agreement. 17. DEVELOPMENT OF PROJECT,• TRANSFER RESTRICTIONS. 17.1 General. Buyer and Seller agree that the Property is being sold by Seller for the purpose of Buyer's development of a residential project containing thirty-six (36) single family homes and related landscaping and other improvements on the Property as conceptually described in the Conceptual Site Plan and Conceptual Elevations attached hereto as Exhibit "D" and as to be further described in the Project Entitlements (the "Project"). Buyer shall be responsible for all costs of developing the Project. 35,3 882/015610-0043 325160.03 PM03 -14- I 1 / r 17.2 Utilities. Seller shall not be responsible for the relocation of any on -site utilities required to accommodate Buyer's intended development of the Property. 17.3 Public Rights of Way. Seller shall exercise its best efforts to cause the City to vacate all public rights -of -way within the boundaries of the Property, if any, on or prior to the Close of Escrow. 17.4 Transfer Restrictions. The qualifications and identity of the Buyer are of particular interest to the Seller. It is because of these qualifications and identity that the Seller has entered into this Agreement with the Buyer. Consequently, no person, whether a voluntary or involuntary successor of Buyer shall acquire any rights or powers under this Agreement nor shall the Buyer assign all or any part of this Agreement or the Property without the prior written approval of the Seller. A voluntary or involuntary sale or transfer of any interest in the Buyer of the Property prior to the issuance of a Certificate of Completion for the Project shall be deemed to constitute an assignment or transfer for the purposes of this Section 17, and the written approval of the Seller shall be required prior to effecting such an assignment or transfer. Any purported transfer, voluntarily or by operation of law, except with the prior written consent of the Seller, shall render this Agreement absolutely null and void and shall confer no rights whatsoever upon any purported assignee or transferee. Prior to the issuance of a Certificate of Completion for the Project on the Property, the Buyer shall not, except as permitted by this Agreement, assign or attempt to assign this Agreement or any rights or duties herein, nor make any total or partial sale, transfer, conveyance, or assignment of the whole or any part of the Property or any of the improvements thereon, without the prior written approval of the Seller. Notwithstanding any other provision of this Agreement to the contrary, Seller approval of an assignment of this Agreement or transfer of the Property, or any interest therein shall not be required in connection with: (a) the conveyance or dedication of any portion of the Property to the City of La Quinta, or other appropriate governmental agency, including public utilities, where the granting of such easements permits or facilitates the development of the Property; or (b) any assignment of this Agreement or transfer of the Property, or any of the improvements located thereon to a limited liability company in which Buyer has a greater than fifty percent (50%) ownership and management interest; and (c) any assignment of this Agreement, or transfer of the Property and the improvements located thereon to a limited partnership in which Buyer is a general partner with a greater than fifty percent (50%) ownership and management interest. Notwithstanding anything in this Section 17 to the contrary, no transfer or assignment by Buyer or any successor shall be effective unless and until the transferor and transferee execute and deliver to Seller an assignment and assumption agreement in a form and with content reasonably acceptable to Seller's legal counsel. This Section 17 shall not be applicable to the sales of single-family homes to home buyers in accordance with this Agreement and no assignment and assumption agreement shall be required for the conveyance of a home to a buyer. This Section 17 shall become inapplicable for each lot in the Property as to which the City has issued a Certificate of Occupancy for the single-family home constructed thereon. 882/015610-0043 4-1325160.03 PM03 -15 O 1. 18. OPTION TO REPURCHASE. In addition to any other rights and remedies available to Seller hereunder, Seller shall be entitled, in its sole and absolute discretion, to repurchase the Property, under the terms described in an option agreement to be recorded against the Property at the closing, the forms of which is attached hereto and incorporated herein as Exhibit "E" (the "Option Agreement"). 19. INSURANCE. Commencing with Effective Date hereof and ending on the sale of the last single family home to a homebuyer, Buyer shall procure and maintain, at its sole cost and expense, in a form and content satisfactory to Seller's Executive Director, the following policies of insurance: A policy of commercial general liability insurance written on a per occurrence basis in an amount not less than: (A) for death and bodily injury, either (i) a combined single limit of Three Million Dollars ($3,000,000.00) or (ii) Three Million Dollars ($3,000,000) per person and Three Million Dollars ($3,000,000.00) per occurrence, and Three Million Dollars ($3,000,000.00) in the aggregate, and (B) for property damage, Three Million Dollars ($3,000,000.00) per occurrence. A policy of worker's compensation insurance in such amount as will fully comply with the laws of the State of California and which shall indemnify, insure, and provide legal defense for both the Buyer and Seller against any loss, claim or damage arising from any injuries or occupational diseases occurring to any worker employed by or any persons retained by Buyer in the course of carrying out the work or services contemplated in this Agreement. A policy of comprehensive automobile liability insurance written on a per occurrence basis in an amount not less than either (i) bodily injury liability limits of Three Million Dollars ($3,000,000.00) per person and Three Million Dollars ($3,000,000.00) per occurrence, and property damage liability limits of Three Million Dollars ($3,000,000.00) per occurrence and Three Million Dollars ($3,000,000.00) in the aggregate or (ii) combined single limit liability of Three Million Dollars ($3,000,000.00). Said policy shall include coverage for owned, non -owned, leased, and hired cars. The following additional requirements shall apply to all of the above policies of insurance: All of the above policies of insurance shall be primary insurance and, except the Worker's Compensation insurance, shall name Seller/City & Seller/City Personnel as additional insureds. The insurer shall waive all rights of subrogation and contribution it may have against Seller/City & Seller/City Personnel and their respective insurers. All of said policies of insurance shall provide that said insurance may not be amended or cancelled without providing thirty (30) days' prior written notice to Seller and City. In the event any of said policies of insurance are cancelled, the Buyer shall, prior to the cancellation date, submit new evidence of insurance in conformance with this Section to Seller's Executive Director. Not later than the Effective Date of this Agreement, Buyer shall provide Seller's Executive Director with Certificates of Insurance or appropriate insurance binders evidencing the above insurance 3r)_t 882/015610-0043 325160.03 PM03 -16- 0 12 ►i coverages and said Certificates of Insurance or binders shall be subject to the reasonable approval of Seller's Executive Director. The policies of insurance required by this Agreement shall be satisfactory only if issued by companies qualified to do business in California, rated "A" or better in the most recent edition of Best Rating Guide, The Key Rating Guide or in the Federal Register, and only if they are of a financial category Class VII or better, unless such requirements are waived by the Risk Manager of City ("Risk Manager") due to unique circumstances. The policies of insurance required by this Agreement shall not require Buyer to meet a deductible of more than One Hundred Thousand Dollars ($100,000) unless approved in writing by Seller's Executive Director in his or her sole and absolute discretion. Buyer agrees that the provisions of this Section shall not be construed as limiting in any way the extent to which Buyer may be held responsible for the payment of damages to any persons or property resulting from the Buyer's activities or the activities of any person or persons for which the Buyer is otherwise responsible. 20. MISCELLANEOUS. 20.1 Assignment. This Agreement shall be binding upon and shall inure to the benefit of Buyer and Seller and their respective heirs, personal representatives, successors and assigns. Neither party to this Agreement may assign this Agreement or any interest or right hereunder or under the Escrow without the prior written consent and approval of the other party, which consent and approval may be withheld in the sole and absolute discretion of either party; provided, however, that Seller may assign this Agreement to the City of La Quinta without Buyer's consent. No provision of this Agreement is intended nor shall in any way be construed to benefit any party not a signatory hereto or to create a third party beneficiary relationship; provided, however, that notwithstanding the foregoing, the City shall be an express third party beneficiary with respect to the indemnities and other matters set forth in this Agreement which specifically and expressly run to the City's benefit. 20.2 Attorney's Fees. In the event of any action between Buyer and Seller seeking enforcement of any of the terms and conditions to this Agreement or the Escrow or otherwise in connection with the Property, the prevailing party in such action shall be awarded, in addition to damages, injunctive or other relief, its reasonable costs and expenses, including without limitation its expert witness fees and reasonable attorney's fees. 20.3 Notices. All notices under this Agreement shall be effective upon personal delivery, via facsimile so long as the sender receives confirmation of successful transmission from the sending machine, or three (3) business days after deposit in the United States mail, registered, certified, postage fully prepaid and addressed to the respective parties as set forth below or as to such other address as the parties may from time to time designate in writing: 882/015610-0043 325160.03 PM03 -17 028 28 To Seller: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, California 92253 Attn: Executive Director Facsimile No.: (760) 777-7101 Copy to: Rutan & Tucker, LLP 611 Anton Boulevard, Suite 1400 Costa Mesa, California 92628-1950 Attn: M. Katherine Jenson, Esq. Facsimile No.: (714) 546-9035 To Buyer: Santa Rosa Development, Inc. 71084 Tamerisk Lane Rancho Mirage, CA 92270 Attn: Mr. Michael Shovlin Facsimile No: () - Copy to: Facsimile No: O 20.4 Fair Meaning. This Agreement shall be construed according to its fair meaning and as if prepared by both parties hereto. 20.5 Headinjas. The headings at the beginning of each numbered Section of this Agreement are solely for the convenience of the parties hereto and are not a part of this Agreement. 20.6 Choice of Laws, Litii4ation Matters. This Agreement shall be governed by the internal laws of the State of California and any question arising hereunder shall be construed or determined according to such law. The Municipal and Superior Courts of the State of California in and for the County of Riverside, or such other appropriate court in such county, shall have exclusive jurisdiction of any litigation between the parties concerning this Agreement. Service of process on Seller shall be made in accordance with California law. Service of process on Buyer shall be made in any manner permitted by California law and shall be effective whether served inside or outside California. 20.7 Nonliability of Seller Officials. No officer, official, member, employee, agent, or representatives of Seller shall be liable for any amounts due hereunder, and no judgment or execution thereon entered in any action hereon shall be personally enforced against any such officer, official, member, employee, agent, or representative. 882/015610-0043 325160.03 PM03 -18- O V .. tJ 20.8 Gender, Number. As used in this Agreement, masculine, feminine, and neuter gender and the singular or plural number shall be deemed to include the others wherever and whenever the context so dictates. 20.9 Survival. This Agreement and all covenants to be performed after the Closing, and, except as otherwise set forth herein, all representations and warranties contained herein shall survive the Closing Date and shall remain a binding contract between the parties hereto. 20.10 Time of Essence. Time is of the essence in this Agreement and in each and every term and provision hereof, it being understood that the parties hereto have specifically negotiated the dates for the completion of each obligation herein. 20.11 Waiver or Modification. A waiver of a provision hereof, or modification of any provision herein contained, shall be effective only if said waiver or modification is in writing, and signed by both Buyer and Seller. No waiver of any breach or default by any party hereto shall be considered to be a waiver of any breach or default unless expressly provided herein or in the waiver. 20.12 Broker's Fees. Seller and Buyer represent and warrant to the other that neither Buyer nor Seller has employed any broker and/or finder to represent its interest in this transaction. Each party agrees to indemnify and hold the other free and harmless from and against any and all liability, loss, cost, or expense (including court costs and reasonable attorney's fees) in any manner connected with a claim asserted by any individual or entity for any commission or finder's fee in connection with the conveyance of the Property arising out of agreements by the indemnifying party to pay any commission or finder's fee. 20.13 Duplicate Originals. This Agreement may be executed in any number of duplicate originals, all of which shall be of equal legal force and effect. 20.14 Severability. If any term, covenant or condition of this Agreement or the application thereof to any person, entity, or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term, covenant, or condition to persons, entities, or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant or condition of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 20.15 Exhibits. The following exhibits are attached hereto and incorporated herein by this reference: Exhibit "A" Legal Description of Property Exhibit `B" Grant Deed Exhibit "C" Non -Foreign Affidavit Exhibit "D" Conceptual Site Plan & Conceptual Elevations Exhibit "E" Option Agreement 20.16 Covenants of Seller. Seller agrees that during the period between the Effective Date of this Agreement and the Closing Date: 882/015610-0043 325160.03 PM03 -19- n� P,, v (a) Seller shall maintain the Property in not less than the state of repair as that existing on the Effective Date (excepting ordinary wear and tear); (b) Seller shall not convey, grant, lease, assign, mortgage, hypothecate, encumber, or otherwise transfer (on or off record) the Property or any interest therein; (c) Seller shall not alter the physical condition of the Property or introduce or release, or permit the introduction or release, of any Hazardous Material in, from, under, or on the Property; (d) Prior to Closing, Seller shall provide written notice to Buyer of any actions that it or the City of La Quinta has agendized for action that is inconsistent with the purposes of this Agreement and Buyer's intended development on the Property. (e) Prior to Closing, Seller shall maintain Seller's existing insurance on the Property. 20.17 Corporate Authority. The person(s) executing this Agreement on behalf of each of the parties hereto represent and warrant that (i) such party is duly organized and existing, (ii) they are duly authorized to execute and deliver this Agreement on behalf of said party, (iii) by so executing this Agreement such party is formally bound to the provisions of this Agreement, and (iv) the entering into this Agreement does not violate any provision of any other agreement to which such party is bound. 20.18 Covenant Against Discrimination. Buyer covenants that in its performance of this Agreement that it shall not discriminate against any person or group of persons on account of any impermissible classification including but not limited to race, color, creed, gender, religion, marital status, national origin, or ancestry. 20.19 Entire Agreement; Amendment. Except as set forth above, this Agreement and the exhibits incorporated herein contain the entire agreement of Buyer and Seller with respect to the matters contained herein, and no prior agreement or understanding pertaining to any such matter shall be effective for any purpose. No provisions of this Agreement may be amended or modified in any manner whatsoever except by an agreement in writing signed by duly authorized officers or representatives of each of the parties hereto. IN WITNESS WHEREOF, Buyer and Seller each hereby represents that it has read this Agreement, understands it, and hereby executes this Agreement to be effective as of the day and year first written above. [END -- SIGNATURE PAGE FOLLOWS] 882/015610-0043 325160.03 PM03 -20- .031 ATTEST: Agency Secretary APPROVED AS TO FORM: RUTAN & TUCKER, LLP LN Agency Counsel 882/015610-0043 325160.03 PM03 LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic Executive Director "Buyer" SANTA ROSA DEVELOPMENT, INC., a California corporation By: Name: Its: 3 P; r -21- 0 !"), 2 First American Title Company agrees to act as Escrow Holder in accordance with the terms of this Agreement. FIRST AMERICAN TITLE COMPANY IM Name: Its: 3 G 7 882/015610-0043 rl� 325160.03 PM03 -22- 0 3 ", EXHIBIT "A" LEGAL DESCRIPTION OF PROPERTY [See Following Page] 882/015610-0043 325160.03 PM03 EXHIBIT "B" FORM OF GRANT DEED [SEE FOLLOWING PAGES] 3F�9 882/015610-0043 325160.03 PM03 �i i Recording Requested By and When Recorded Return to: Santa Rosa Development, Inc. 71084 Tamerisk Lane Rancho Mirage, CA 92770 Attn: Michael Shovlin MAIL TAX STATEMENTS TO: Santa Rosa Development, Inc. 71084 Tamerisk Lane Rancho Mirage, CA 92770 Attn: Michael Shovlin SPACE ABOVE THIS LINE FOR RECORDER'S USE In accordance with Section 11932 of the California Revenue and Taxation Code, Grantor has declared the amount of the transfer tax which is due by a separate statement which is not being recorded with this Grant Deed. GRANT DEED FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic, organized and existing under the California Community Redevelopment Law (Health & Safety Code Section 33000 et seq.) (the "Grantor"), hereby grants to SANTA ROSA DEVELOPMENT, INC., a California corporation ("Grantee"), that certain real property ("Property") located in the City of La Quinta, County of Riverside, State of California, described in the legal description attached hereto as Attachment No. 1 and incorporated herein by this reference, subject to all matters of record, and is further subject to the following: A. Reservation of Subsurface Rights. Grantor excepts and reserves from the conveyance herein described all interest of the Grantor in oil, gas, hydrocarbon substances, and minerals of every kind and character lying more than five hundred (500) feet below the surface, together with the right to drill into, through, and across, and to use and occupy all parts of the Property lying more than five hundred (500) feet below the surface thereof for any and all purposes incidental to the exploration for and production of oil, gas, hydrocarbon substances, or minerals from the Property or other lands, but without, however, any right to use the surface of the Property or any portion of the Property within five hundred (500) feet below the surface of the Property for such exploration. 3w0 �J 882/015610-0043 1 325160.03 PM03 B. Conveyance in Accordance With Redevelopment Plan. The Property is conveyed in accordance with and subject to the Redevelopment Plan for Project Area No. 2 ("Redevelopment Plan"), a copy of which is on file with the City Clerk of the City of La Quinta, California. All uses on the Property shall conform to the uses permitted by the Redevelopment Plan. The foregoing shall remain in effect until the expiration of the Redevelopment Plan. C. Nondiscrimination. Grantee, on behalf of itself and its successors and assigns to all or any portion of the Property, covenants and agrees as follows: 1. There shall be no discrimination against, or segregation of, any persons, or group of persons, on account of race, color, creed, religion, sex, marital status, ancestry, or national origin in the sale, lease, or rental or in the use, occupancy, or enjoyment of the Property, nor shall the grantee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees, or vendees of the Property or any portion thereof, The foregoing covenants shall run with the land and shall remain in effect in perpetuity. 2. The grantee shall refrain from restricting the rental, sale, or lease of any portion of the Property, or contracts relating to the Property, on the basis of race, color, creed, religion, sex, marital status, age, ancestry, or national origin of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: a. In deeds: "The grantee herein covenants by and for itself, its heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, age, ancestry, or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the land herein conveyed, nor shall the grantee itself, or any persons claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the land herein conveyed. The foregoing covenants shall run with the land." b. In leases: "The lessee herein covenants by and for itself, its heirs, executors, administrators, and assigns, and all persons claiming under or through it, and this lease is made and accepted upon and subject to the following conditions: `That there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, age, ancestry, or national origin in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the land herein leased, nor shall the lessee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the land herein leased."' C. In contracts pertaining to the realty: "There shall be no discrimination against or segregation of any persons or group of persons on account of race, 3'71 882/015610-0043 { 325160.03 PM03 -2- color, creed, religion, sex, marital status, age, ancestry, or national origin in the sale, lease, transfer, use, occupancy, tenure, or enjoyment of land, nor shall the transferee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees, or vendees of land." The foregoing nondiscrimination covenants shall remain in effect in perpetuity. D. Covenants Run With The Land. All covenants contained in this Grant Deed shall be covenants running with the land. E. Covenants for Benefit of Grantor. All covenants set forth in this Grant Deed, without regard to technical classification or designation, shall be binding for the benefit of the Grantor, and such covenants shall run in favor of Grantor for the entire period during which such covenants shall be in force and effect, without regard to whether the Grantor is or remains an owner of any land or interest therein to which such covenants relate. Grantor, in the event of any breach of any such covenants, shall have the right to exercise all the rights and remedies and to maintain any actions at law or equity or other property proceedings to enforce the curing of such breach. [end — signature page follows] 011A 882/015610-0043 325160.03 PM03 -3- "Grantor" LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic Lm ATTEST: Agency Secretary APPROVED AS TO FORM: RUTAN & TUCKER, LLP Agency Counsel Executive Director "Grantee" SANTA ROSA DEVELOPMENT, INC., a California corporation By: _ Name: Its: 371 882/015610-0043 4 325160.03 PM03 STATE OF CALIFORNIA ) ss: COUNTY OF ) On 5 , before me, the undersigned, a Notary Public in and for said County and State, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Notary Public [SEAL] STATE OF CALIFORNIA ) ss: COUNTY OF ) On , before me, the undersigned, a Notary Public in and for said County and State, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Notary Public [SEAL] 882/015610-0043 325160.03 PM03 -5- 374 n�.r} ATTACHMENT NO. 1 LEGAL DESCRIPTION OF PROPERTY [TO BE INSERTED] 3774 882/015610-0043 325160.03 PM03 Attachment I t0 Grant Deed 041. EXHIBIT "C" AFFIDAVIT OF NON -FOREIGN ENTITY TO: SANTA ROSA DEVELOPMENT, INC. ("Buyer") The Internal Revenue Code of 1954 ("Code") (26 U.S.C. Sections 1445, 7701) provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. To inform the transferee that withholding of tax is not required upon transfer of that certain U.S. real property interest described in Exhibit "A" to the Agreement for Purchase and Sale and Escrow Instructions dated , 2002, and incorporated herein by reference ("Property"), that the undersigned ("Seller") hereby certifies the following: 1. Seller is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations); and 2. The U.S. taxpayer identification number for Seller is 95-3740431; and 3. The address for mailing purposes of Seller is: 78-495 Calle Tampico, La Quinta, California 92253; and 4. Seller understands that this certification may be disclosed to the Internal Revenue Service by Buyer and that any false statement contained herein could be punished by fine, imprisonment, or both. Under penalties of perjury, I declare that I have examined this Certification and to the best of my knowledge and belief, it is true, correct, and complete, and I further declare that I have authority to sign this document on behalf of Seller. Dated: , 2002 LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic Thomas Genovese, Executive Director 882/015610-0043 325160.03 PM03 37C r) 4-- 2 EXHIBIT "D" CONCEPTUAL SITE PLAN & CONCEPTUAL ELEVATIONS [SEE FOLLOWING PAGES] 882/015610-0043 325160.03 PM03 -2- �� REPLACE THIS PAGE WITH CONCEPTUAL PLANS 882/015610-0043 325160.03 PM03 EXHIBIT "E" OPTION AGREEMENT [See following pages] 882/015610-0043 325160.03 PM03 FREE RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, CA 92253 Attn: Executive Director (SPACE ABOVE THIS LINE FOR RECORDING USE) (EXEMPT FROM RECORDING FEE PER GOV. CODE § 6103) OPTION AGREEMENT SUBORDINATED NOTICE: This OPTION AGREEMENT contains a subordination clause which may result in your security interest in the property becoming subject to and of lower priority than the lien of some other or later security instrument. THIS OPTION AGREEMENT ("Option Agreement") is made this day of , (the "Effective Date"), by SANTA ROSA DEVELOPMENT, INC., a California corporation ("Developer"), and the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"). RECITALS A. Developer has entered into an Agreement for Purchase and Sale and Escrow Instructions ("Purchase Agreement") dated with the La Quinta Redevelopment Agency ("Agency"), pursuant to which Agency conveyed to Developer that certain real property located at the corner of Avenue 48th and Adams Street, in the City of La Quinta, County of Riverside, State of California (the "Site"). All defined terms used herein shall have the same meaning as set forth in the Purchase Agreement unless otherwise stated. The Site is legally described in Exhibit "A" attached hereto and incorporated herein. B. As a condition to the Agency's conveyance of the Site to Developer, Developer was required to grant to Agency an option to repurchase the Site from Developer, if Developer fails to commence, continuously proceed with, or complete construction within certain specified time frames, all as further described herein. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and incorporating the above recitals and all of the terms and conditions contained in the Purchase Agreement, Developer hereby grants to Agency the following repurchase options: 3�O 882/015610-0043 325160.03 PM03 1. Repurchase Option I - Failure to Commence Construction Developer hereby grants to Agency an exclusive option to repurchase the Site ("Repurchase Option I") if Developer fails to commence construction of the Project (for the purposes of this Option Agreement, "commencement of construction of the Project" shall be defined as Developer's substantial commencement, and thereafter uninterrupted continuation, of excavation work on the Site) within one hundred eighty (180) days after the Effective Date, subject to Section 4(h) below. In the event of Developer's failure to commence construction within such one hundred eighty (180) day time period, Agency shall be entitled to exercise, but is not obligated to exercise, the foregoing option for a period of ninety (90) days following the expiration of the one hundred eighty (180) day period described above ("Repurchase Option I Period"). (a) Exercise of Option Agency shall exercise the Repurchase Option I by giving written notice to Developer ("Agency's Notice of Option 1 Exercise"), in accordance with Section 5 of this Option Agreement, prior to the expiration of the Repurchase Option I Period. Failure of Agency to exercise the Repurchase Option I shall constitute a waiver by Agency of its exercise of this Repurchase Option I only, and shall not constitute a waiver by Agency of any remedies it may have under the terms of the Purchase Agreement or of any other agreement for Developer's failure to timely commence construction (as defined herein or as such term may be defined in any other agreement). Any Agency waiver as described in the preceding sentence shall not be deemed a waiver of any other Developer breach of the terms or conditions of the Purchase Agreement. (b) Repurchase Price and Escrow - Repurchase Option I Agency's repurchase price for the Site ("Repurchase Option I Repurchase Price") shall be Developer's Purchase Price for the Site ($801,358.00) less the sum of (i) Agency's costs of sale, including but not limited to Agency's escrow costs, real estate commissions, attorney fees incurred to negotiate and draft the Purchase Agreement, and other costs under Section 12.2 of the Purchase Agreement; and (ii) Agency's escrow costs and transaction fees to repurchase the Site in accordance with this Option Agreement. Within five (5) business days after Agency has exercised Repurchase Option I, or as soon thereafter as reasonably practicable, an escrow shall be opened with an escrow company selected by Agency for the reconveyance of the Site to Agency. Agency shall deposit the Repurchase Option I Repurchase Price in escrow not later than one (1) business day prior to the anticipated close of escrow date. The escrow shall be subject to Agency's approval of a then -current preliminary title report and, at Agency's option, environmental and other site testing. Any monetary lien(s) or encumbrance(s) shown on such preliminary title report that is (are) created concurrent with or after the Close of Escrow that conveyed the Site from Agency to Developer shall be removed by Developer at its sole expense prior to the close of escrow pursuant to this Section 1(b) unless such exception(s) is (are) accepted by Agency in its sole discretion; provided, however, that Agency shall accept the following exceptions to title: (i) current taxes not yeti , 882/015610-0043 325160.03 PM03 -2 ;i delinquent, (ii) matters affecting title existing on the date of recordation of the Grant Deed to the Site (Exhibit `B" to the Purchase Agreement); and (iii) matters shown as printed exceptions in the standard form ALTA policy of title insurance. In the event the Site is encumbered by a mortgage or deed of trust, Agency shall be permitted to unilaterally instruct the escrow agent to satisfy the indebtedness secured thereby out of the proceeds payable to Developer through the foregoing escrow. Any additional amount necessary to satisfy such indebtedness shall be paid by Developer. Agency and Developer shall each pay one-half (1/2) of the escrow fees; provided, however, that Agency shall deduct its share from the price paid to Developer to repurchase the Site, as described above. Developer shall pay for documentary tax stamps, recording fees, and for an ALTA standard form owner's policy of title insurance in the amount of the Repurchase Option I Repurchase Price showing title vested in Agency free and clear of all liens and encumbrances except those permitted by this paragraph. (Agency shall pay the portion of the title insurance premium attributable to any extra or extended coverages or if the amount of insurance requested by Agency is higher than the Repurchase Option I Repurchase Price.) Any other costs and expenses shall be allocated between the parties in the manner customary for a commercial property conveyance in Riverside County. Agency shall have thirty (30) days after exercise of the Repurchase Option I to enter upon the Site to conduct any tests, inspections, investigations, or studies of the condition of Site. Developer shall permit Agency access to the Site for such purposes. Agency shall indemnify, defend, and hold harmless Developer and its officers, directors, shareholders, employees, agents, and representatives from and against all claims, liabilities, or damages, and including expert witness fees and reasonable attorney's fees and costs, arising out of any such testing, inspection, or investigatory activity on the Site. Escrow shall close promptly after acceptance by Agency of the condition of title and the physical and environmental condition of the Site. 2. Repurchase Option II - Failure to Continuously Proceed With or Complete Construction Developer hereby grants to Agency an exclusive option to repurchase the Site ("Repurchase Option II") if, after commencement of construction, Developer fails to continuously proceed with, and complete, construction of the Project on the Site (for purposes of this Option Agreement, "continuously proceed with construction" shall be defined as construction that is interrupted, if at all, for periods of no longer than one (1) month; and "completion of construction of the Project" shall be defined as the issuance by the City of La Quinta ("City") to Developer of a Certificate of Occupancy for the Project) within twenty-four (24) months after commencement of construction, subject to Section 4(h) below ("Completion Deadline"). In the event of Developer's failure to continuously proceed with, or to complete, construction of the Project by the Completion Deadline, Agency shall be entitled to exercise, but is not obligated to exercise, the foregoing option for a period of ninety (90) days following the Completion Deadline ("Repurchase Option 11 Period"). (a) Exercise of Option Agency shall exercise the Repurchase Option II by giving written notice to Developer, in accordance with Section 5 of this Option Agreement, prior to the expiration of the Repurchase Option II Period. Failure of Agency to exercise the Repurchase Option II shall constitute a waiver by Agency of Developer's breach of its obligation to timely complete construction. Any 3 3 p f- 882/015610-0043 _ 325160.03 PM03 -3 Agency waiver as described in the preceding sentence shall not be deemed a waiver of any other Developer breach of the terms or conditions of the Purchase Agreement. (b) Determination of Repurchase Price - Repurchase Option II Agency and Developer shall comply with the following terms and provisions to determine Agency's repurchase price for the Site ("Repurchase Option II Repurchase Price"), the clearance of unusable improvements, the escrow for the reconveyance, and other matters therein discussed: (1) Within ten (10) days after Agency's exercise of Repurchase Option II, Developer shall deliver to Agency a list of improvements, if any, constructed by Developer on the Site that are usable for the purposes for which the Site was conveyed to Developer ("Site Improvements"). (2) Developer, within fifteen (15) days after submission of the list of Site Improvements to Agency, shall deliver to Agency a statement of Developer's costs for each of the Site Improvements ("Statement of Costs"). (3) After Agency's receipt of the Site Improvements list and the Statement of Costs, Agency and Developer shall consult with each other in good faith the purpose of arriving at an agreement concerning the Site Improvements that are usable to Agency ("Usable Improvements") and the costs for those Usable Improvements. Developer agrees that the final determination of which of the Site Improvements are Usable Improvements shall be made by Agency in its sole discretion. The Site Improvements that are not included within the list of Usable Improvements shall be deemed "Unusable Improvements." The "Cost of the Usable Improvements" shall be the lesser of: (a) an amount equal to seventy-five percent (75%) of Developer's construction costs actually incurred as of the date of Agency's exercise of Repurchase Option II ("Construction Cost Percentage"), as verified by Developer's provision of all information pertaining to its cost of construction for the Project on the Site up to the date of Agency's exercise of Repurchase Option II, including construction contracts, invoices, and such other information and documents reasonably required by Agency to verify the Construction Cost Percentage; or (b) a cost mutually determined by Agency or Developer, or in the event Agency and Developer cannot arrive at a mutually agreeable determination of costs for the Usable Improvements, the cost shall be defined as the costs as listed in Developer's Statement of Costs unless Agency, in its sole discretion and at Agency's cost, obtains a written appraisal of the fair market value of the Usable Improvements from an independent and qualified MAI appraiser ("Agency's Usable Improvements Appraisal"). If Agency, in its sole discretion, decides to use Agency's Usable Improvements Appraisal as a basis for a portion of 882/015610-0043 r n 325160.03 PM03 the Repurchase Price as described below, Agency shall provide a copy of the Agency's Usable Improvements Appraisal to Developer and the following shall apply: (i) If Developer does not agree with Agency's Usable Improvement Appraisal, Developer shall notify Agency in writing within five (5) business days of receipt thereof. Within thirty (30) days thereafter, Developer, at its cost, shall deliver to Agency a written appraisal of the fair market value of the Usable Improvements prepared by an independent and qualified MAI appraiser ("Developer's Usable Improvements Appraisal"). (ii) If Developer fails to deliver Developer's Usable Improvements Appraisal to Agency within the time provided, Agency's Usable Improvements Appraisal shall constitute the final and binding determination of the fair market value of the Usable Improvements. (iii) If Developer delivers Developer's Usable Improvements Appraisal to Agency within the time provided, and such Developer's Usable Improvements Appraisal is lower than Agency's Usable Improvements Appraisal, then Developer's Usable Improvements Appraisal shall constitute the final and binding determination of the fair market value of the Usable Improvements. (iv) If Developer delivers Developer's Usable Improvements Appraisal to Agency within the time provided, and such Developer's Usable Improvements Appraisal is higher than Agency's Usable Improvements Appraisal, but less than or equal to five percent (5%) higher, the average of Developer's Usable Improvements Appraisal and Agency's Usable Improvements Appraisal shall constitute the final and binding determination of the fair market value of the Usable Improvements. (v) If Developer delivers Developer's Usable Improvements Appraisal to Agency within the time provided, and such Developer's Usable Improvements Appraisal is higher than Agency's Usable Improvements Appraisal, and is more than five percent (5%) higher, Agency and Developer shall appoint, and shall share the cost of, a third independent and qualified MAI appraiser who shall perform a review appraisal and shall render a determination of the fair market value of the Usable Improvements, which value cannot be higher than the amount of Developer's Usable Improvements Appraisal. If Agency and Developer cannot agree on a third appraiser, then an amount equal to twenty-five percent (25%) of the difference between Agency' 882/015610-0043 325160.03 PM03 -5 0 - , 0 and Developer's Usable Improvements Appraisals shall be added to Agency's Usable Improvements Appraisal and that sum shall constitute the final and binding determination of the fair market value of the Usable Improvements. Within ninety (90) days after Agency's exercise of the Repurchase Option II, but in no event prior to the conclusion of Agency's and Developer's consultations referred to hereinabove, Developer shall have the obligation, at its sole cost and expense, to remove from the Site all structures, buildings, pavings, landscaping, and other improvements except the Usable Improvements (collectively, the "Unusable Improvements") installed by Developer or its contractor(s). Any such work of removing the Unusable Improvements undertaken by Developer or its contractors shall be accomplished to the reasonable satisfaction of Agency. If Developer does not remove any of the Unusable Improvements prior to the close of escrow for the Repurchase Option II, Agency shall have the right to remove such Unusable Improvements not so removed by Developer. The amount of Agency's Repurchase Option II Repurchase Price for the Site, as described immediately below, shall be adjusted downward to reflect any costs incurred by Agency in removing any such Unusable Improvements. Agency's Repurchase Option II Repurchase Price for the Site shall be the sum of (1) and (ii): (i) the Repurchase Option I Repurchase Price; and (ii) the lesser of (A) the Cost of Usable Improvements (if any) or (B) the fair market value of Usable Improvements (if any) determined as set forth hereinabove. Within five (5) days after Agency has exercised Repurchase Option II, or as soon thereafter as reasonably practicable, an escrow shall be opened with an escrow company selected by Agency for the reconveyance of the Site to Agency. Agency shall deposit the Repurchase Option II Repurchase Price in escrow not later than one (1) business day prior to the anticipated close of escrow date. The escrow shall be subject to approval of a then -current preliminary title report and, at Agency's option, environmental and other site testing. Any monetary lien(s) or encumbrance(s) shown on such preliminary title report that is (are) created concurrent with or after the Close of Escrow that conveyed the Site from Agency to Developer shall be removed by Developer at its sole expense prior to the close of escrow pursuant to this Section 2(c) unless such exception(s) is (are) accepted by Agency in its sole discretion; provided, however, that Agency shall accept the following exceptions to title: (i) current taxes not yet delinquent, (ii) matters affecting title existing on the date of recordation of the Grant Deed to the Site (Exhibit "B" to the Purchase Agreement); and (iii) matters shown as printed exceptions in the standard form ALTA owner's policy of title insurance. In the event the Site or any portion thereof is encumbered by a mortgage or deed of trust, Agency shall be permitted to unilaterally instruct the escrow agent to satisfy the indebtedness secured thereby out of the proceeds payable to Developer through the foregoing escrow. Any additional amount necessary to satisfy such indebtedness shall be paid by Developer. Agency and Developer shall each pay one-half (1/2) of the escrow fees; provided, however, that Agency shall deduct its share from the price paid to Developer to repurchase the Site, as described above. Developer shall pay for documentary tax stamps, recording fees, and for a ALTA standard form owner's policy of title insurance in the amount of the Repurchase Option II Repurchase Price showing title vested in Agency free and clear of all liens and encumbrances except those permitted by this paragraph. Any other costs and expenses shall be allocated between the parties in the manner customary for a commercial `� 3251 6 0 0 Lam' 325160.P03 M03 -6 property conveyance in Riverside County. Agency shall have thirty (30) days after exercise of the Repurchase Option II, to enter upon the Site to conduct any tests, inspections, investigations, or studies of the condition of Site. Developer shall permit Agency access to the Site for such purposes. Agency shall indemnify, defend, and hold harmless Developer and its officers, directors, shareholders, employees, agents, and representatives from and against all claims, liabilities, or damages, and including expert witness fees and reasonable attorney's fees and costs, arising out of any such testing, inspection, or investigatory activity on the Site. Escrow shall close promptly after acceptance by Agency of the condition of title and the physical and environmental condition of the Site. 3. Repurchase Option III - Transfer of the Site Developer hereby grants to Agency an exclusive option to repurchase the Site (Repurchase Option III) if, prior to the time Agency issues a Certificate of Completion for the Project, Developer transfers or suffers an involuntary transfer of the Site in violation of the terms of the Purchase Agreement. In the event of Developer's transfer of the Site in violation of the Purchase Agreement, Agency shall be entitled to exercise, but is not obligated to exercise, the foregoing option for a period of ninety (90) days following the transfer that gives rise to Agency's option under this Section ("Repurchase Option III Period"). (a) Exercise of Option Agency shall exercise the Repurchase Option III by giving written notice to Developer ("Agency's Notice of Option III Exercise"), in accordance with Section 5 of this Option Agreement, prior to the expiration of the Repurchase Option III Period. Failure of Agency to exercise the Repurchase Option III shall constitute a waiver by Agency of its exercise of this Repurchase Option III only, and shall not constitute a waiver by Agency of any remedies it may have under the terms of the Purchase Agreement or of any other agreement for Developer's failure to timely commence construction (as defined herein or as such term may be defined in any other agreement). Any Agency waiver as described in the preceding sentence shall not be deemed a waiver of any other Developer breach of the terms or conditions of the Purchase Agreement. (b) Repurchase Price and Escrow - Repurchase Option III Agency's repurchase price for the Site ("Repurchase Option III Repurchase Price") shall be as follows: (i) In the event Developer has not yet commenced construction of the Project at the time Agency exercises its Repurchase Option III, Agency's Repurchase Option III Price shall be the Repurchase Option I Repurchase Price, as set forth in Section 1(b) of this Option Agreement. (ii) In the event Developer has commenced construction of the Project at the time Agency exercises its Repurchase Option III, Agency's Repurchase Option III Repurchase Price shall be the Repurchase Option II Repurchase Price, as set forth in Section 2(b) of this Option Agreement. 882/015610-0043 - 325160.03 PM03 -7- '`' 4. Additional Terms Applicable to the Repurchase Options The following additional terms shall apply to Repurchase Option I, Repurchase Option II, and Repurchase Option III, as applicable: (a) The Repurchase Option I, Repurchase Option II, and Repurchase Option III created hereby shall be irrevocable by Developer and, subject to any subordination by Agency in accordance with paragraph (i) below, shall be binding upon the successors and assigns of Developer. (b) Agency shall have sixty (60) days after exercising Repurchase Option I (or Repurchase Option III if Agency exercises Repurchase Option III and the Repurchase Option I Repurchase Price is the applicable repurchase price for the Site) to deliver to Developer a written commitment to close escrow, and escrow shall close no later than ninety (90) days after Agency's notice of commitment to close escrow, unless an extension to any of the foregoing time periods is/are required due to a delay not the fault of Agency, or the parties, each in its sole discretion, mutually agree to extend one or both of such periods (c) Agency shall have until the later of (i) sixty (60) days after exercising Repurchase Option II (or Repurchase Option III if Agency exercises Repurchase Option III and the Repurchase Option II Repurchase Price is the applicable repurchase price for the Site), or (ii) thirty (30) days after the determination of the purchase price pursuant to Section 2(b) of this Option Agreement (whether said purchase price is the Repurchase Option II Repurchase Price or the Repurchase Option III Repurchase Price), to deliver to Developer a written commitment to close escrow, and escrow shall close no later than ninety (90) days after Agency's notice of commitment, unless an extension to any of the foregoing time periods is/are required due to a delay not the fault of Agency, or the parties, each in its sole discretion, mutually agree to extend one or both of such periods (d) In the event that, at the time Agency exercises Repurchase Option II or Repurchase Option III Developer has obtained a Certificate of Completion from the City for one or more of the lots that comprise the Site, (i) the provisions of this Option Agreement shall apply only to that portion of the Site for which Certificates of Completion have not been issued ("Uncompleted Portion of the Site") and any calculations for determining the Repurchase Option II Repurchase Price or the Repurchase Option III Repurchase Price shall be based solely upon the Uncompleted Portion of the Site, and (ii) Developer agrees to cooperate with Agency to effect the subdivision of the Uncompleted Portion of the Site from the completed portions of the Site (those portions of the Site for which Certificates of Completion have been issued). 882/015610-0043 325160.03 PM03 882/015610-0043 325160.03 PM03 (e) Notwithstanding any covenant, term, or provision in this Section 4 to the contrary, Agency shall not be obligated to exercise Repurchase Option I, Repurchase Option II, or Repurchase Option III, or once exercised, to close escrow. Agency shall not be liable to Developer for any costs incurred by Developer occasioned by Agency's decision not to close escrow. (f) Agency, but not Developer, shall have the right of specific performance to enforce the terms of this Section 4. (g) In the event Developer commences and completes construction of the Project and Agency has not exercised Repurchase Option I, Repurchase Option II, or Repurchase Option III, Agency shall execute and record a termination of this Option Agreement within fifteen (15) business days after the final and permanent Certificate of Occupancy is issued by the City. (h) Notwithstanding anything to the contrary herein, in addition to specific provisions of this Option Agreement, performance by either party hereunder shall not be deemed to be in default where delays or defaults are due to war; insurrection; strikes; lock -outs; riots; floods; earthquakes; fires; casualties; supernatural causes; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority litigation; unusually severe weather; inability to secure necessary labor, materials or tools; acts of the other party; acts or the failure to act of a public or governmental agency or entity (except that acts or the failure to act of Agency shall not excuse performance by Agency unless the act or failure is caused by the acts or omissions of Developer); or any other causes beyond the reasonable control or without the fault of the party claiming an extension of time to perform. In the event of such a delay (herein "Enforced Delay"), the party delayed shall continue to exercise commercially reasonable efforts to minimize the period of the delay. An extension of time for any such cause shall be limited to the period of the Enforced Delay, and shall commence to run from the time of the commencement of the cause, provided notice by the party claiming such extension is sent to the other party within fifteen (15) days following the commencement of the cause. The following shall not be considered as events or causes beyond the control of Developer, and shall not entitle Developer to an extension of time to perform: (i) Developer's failure to obtain financing for the Project, (ii) Developer's failure to negotiate agreements with prospective tenants or users for the Project, (iii) interest rates or (iv) economic or market conditions. Times of performance under this Option Agreement may also be extended by mutual written agreement by Agency and Developer. Agency's Executive Director shall also have the authority on behalf of Agency to administratively approve extensions of time not to exceed a cumulative total of one (1) year. -9- (i) The Agency agrees to subordinate Repurchase Option II and Repurchase Option III to Developer's construction loan, provided that (i) the maximum cumulative principal amount of the construction loan shall not exceed ninety percent (90%) of the lender's appraised value of the Site upon completion of the Project, which amount shall be verified in writing to Agency Executive Director's reasonable satisfaction; (ii) the loan(s) shall obligate Developer to expend loan proceeds for no other purpose than the Project; and (iii) the loan(s) shall provide that any notice of a Developer breach or default shall also be sent to the Agency at the address listed in Section 5 and that upon receipt of such notice, Agency shall have the right to (A) cure the noticed breach or default, (B) negotiate with the lender regarding the noticed breach or default, and (C) purchase the Site from Developer subject to the construction lender's deed of trust, without the consent of Developer or the holder of the construction lender's deed of trust, that Agency's exercise of the foregoing rights shall not, in and of itself, give rise to any right on the part of the lender to accelerate the amounts due under the loan. 5. Notices Demands and Communications Between the Parties Formal notices, demands, and communications between Agency and Developer shall be given either by (i) personal service, (ii) delivery by reputable document delivery service such as Federal Express that provides a receipt showing date and time of delivery, or (iii) or by mailing in the United States mail, certified mail, postage prepaid, return receipt requested, addressed to: To Agency: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, CA 92253 Attn: Executive Director With a copy to: Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400 Costa Mesa, California 92626 Attn: M. Katherine Jenson, Esq. To Developer: Santa Rosa Development, Inc. 71084 Tamerisk Lane Rancho Mirage, CA 92270 Attn: Michael Shovlin With a copy to: Notices personally delivered or delivered by document delivery service shall be deemed effective upon receipt. Notices mailed in the manner provided above shall be deemed effective 3 � 882/015610-0043 325160.03 PM03 -1 0- on the second business day following deposit in the United States mail. Such written notices, demands, and communications shall be sent in the same manner to such other addresses as either party may from time to time designate by mail. 6. Agency's Option to Acquire Plans If Agency exercises Repurchase Option I, Repurchase Option II, or Repurchase Option III in accordance with this Agreement, at the option of the Agency, which may be exercised in the Agency's sole and absolute discretion, the Developer shall deliver to the Agency an executed assignment in a form reasonably acceptable to the Agency of the Developer's right to use all plans, blueprints, drawings, sketches, specifications, tentative or final subdivision maps, landscape plans, utilities plans, soils reports, noise studies, environmental assessment reports, grading plans and any other materials relating to the construction of the Project on the Site (the "Plans"), together with copies of all of the Plans, as have been prepared for the development of the Site to date of the termination. Notwithstanding the foregoing, however, Developer does not covenant to convey to the Agency the copyright or other ownership rights of third parties. Agency understands and agrees that the assignment to Agency under this Section 6 is subject and subordinate to any assignment which Developer may make to a lender providing financing for the Project, and Agency agrees to execute any documents required by such lender acknowledging and effectuating such subordination of Agency's rights in and to the assignment. Agency's acquisition or use of the Plans or any of them shall be without any representation or warranty by Developer as to the accuracy or completeness of any such Plans, and Agency shall assume all risks in the use of the Plans. 7. Applicable Law and Forum; Attorney's Fees The Municipal and Superior Courts of the State of California in the County of Riverside shall have the exclusive jurisdiction of any litigation between the parties arising out of this Option Agreement. This Option Agreement shall be governed by, and construed under, the laws of the State of California. In addition to any other rights or remedies, either party may take legal action, in law or in equity, to cure, correct, or remedy any default, to recover damages for any default, to compel specific performance of this Option Agreement, to obtain declaratory or injunctive relief, or to obtain any other remedy consistent with the purposes of this Option Agreement. The rights and remedies of the parties are cumulative and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. Service of process on Agency shall be made in the manner required by law for service on a public entity. Service of process on Developer shall be made in any manner permitted by law and shall be effective whether served within or outside of California. If either party to this Option Agreement is required to initiate or defend, or is made a party to, any action or proceeding in any way connected with this Option Agreement, the party prevailing in the final judgment in such action or proceeding, in addition to any other relief which may be granted, shall be entitled to reasonable attorney's fees. Attorney's fees shall include reasonable costs for investigating such action, conducting discovery, retaining expert witnesses, and all other necessary costs the court allows which are incurred in such litigation. 882/015610-0043 C 325160.03 PM03 8. Nonliability of Agency Officials and Employees No officer, official, employee, agent, or representative of Agency shall be personally liable to Developer or any successor in interest, in the event of any default or breach by Agency, or for any amount which may become due to Developer or its successor, or for breach of any obligation of the terms of this Option Agreement. 9. Nondiscrimination Developer covenants for itself, its heirs, executors, assigns, and all persons claiming under or through them, that there shall be no discrimination against any person on account of race, color, creed, religion, sex, marital status, national origin, or ancestry with respect to this Option Agreement or use of the Site. 10. Interpretation The terms of this Option Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of this Option Agreement or any other rule of construction which might otherwise apply. The Section headings are for purposes of convenience only, and shall not be construed to limit or extend the meaning of this Option Agreement. 11. Entire Agreement This Option Agreement integrates all of the terms and conditions mentioned herein, or incidental hereto, and supersedes all negotiations or previous agreements between the parties with respect to all or any part of the subject matter hereof. All waivers of the provisions of this Option Agreement must be in writing and signed by the appropriate authorities of the party to be charged, and all amendments and modifications hereto must be in writing and signed by the appropriate authorities of Agency and Developer. 12. Counterparts This Option Agreement may be executed in counterparts, each of which, after all the parties hereto have signed this Option Agreement, shall be deemed to be an original, and such counterparts shall constitute one and the same instrument. 13. Severability In the event any section or portion of this Option Agreement shall be held, found, or determined to be unenforceable or invalid for any reason whatsoever, the remaining provisions shall remain in effect, and the parties hereto shall take further actions as may be reasonably necessary and available to them to effectuate the intent of the parties as to all provisions set forth in this Option Agreement. 3 ,9.1 882/015610-0043 - 0 325160.03 PM03 -12- [END - SIGNATURES ON NEXT PAGE] 33? 882/015610-0043 325160.03 PM03 IN WITNESS WHEREOF, the parties have executed this Option Agreement as of the date first above written. "DEVELOPER" SANTA ROSA DEVELOPMENT, INC., a California corporation By: Name: Its: "AGENCY" LA QUINTA REDEVELOPMENT AGENCY a public body, corporate and politic Executive Director ATTEST: Agency Secretary APPROVED AS TO FORM: RUTAN & TUCKER, LLP Attorneys for the La Quinta Redevelopment Agency 393 882/015610-0043 f/ �j /�} 325160.03 PM03 -14- v STATE OF CALIFORNIA COUNTY OF On personally appeared ss before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. [SEAL] STATE OF CALIFORNIA COUNTY OF On personally appeared Notary Public ss before me, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 39 882/015610-0043 0-"' O 325160.03 PM03 -15- EXHIBIT "A" LEGAL DESCRIPTION OF THE SITE [TO BE INSERTED] 882/015610-0043 325160.03 PM03 - 16- TABLE OF CONTENTS Page 1. PURCHASE PRICE......................................................................................................... I 1.1 Amount...........................................................................................................1 1.2 Payment of Purchase Price..............................................................................1 2. ESCROW..........................................................................................................................1 2.1 Opening of Escrow.........................................................................................1 2.2 Escrow Instructions.........................................................................................2 3. DUE DILIGENCE............................................................................................................2 3.1 Due Diligence.................................................................................................2 3.2 Confidentiality................................................................................................ 5 4. CLOSE OF ESCROW......................................................................................................5 4.1 Close of Escrow; Closing Date....................................................................... 5 4.2 Recordation; Release of Funds and Documents ............................................. 6 5. DELIVERY OF DOCUMENTS REQUIRED FROM BUYER AND SELLER.............6 5.1 Buyer's Obligations........................................................................................ 6 5.2 Seller's Obligations.........................................................................................6 6. TITLE INSURANCE POLICY........................................................................................7 6.1 Title Policy......................................................................................................7 6.2 Payment for Title Policy................................................................................. 7 7. REAL PROPERTY TAXES.............................................................................................7 8. PROJECT ENTITLEMENTS...........................................................................................7 9. BUYER'S EVIDENCE OF PROJECT FINANCING..................................................... 8 10. CONDITIONS PRECEDENT TO CLOSING................................................................. 8 10.1 Conditions Precedent to Buyer's Obligations.................................................8 10.2 Conditions Precedent to Seller's Obligations.................................................9 11. POSSESSION.................................................................................................................10 12. ALLOCATION OF COSTS...........................................................................................10 12.1 Buyer's Costs................................................................................................10 12.2 Seller's Costs................................................................................................10 13. REMEDIES.....................................................................................................................11 13.1 Seller's Default; Limitation on Buyer's Remedies ....................................... I I ....................... Buyer's Initials Seller's Initials 12 13.2 Buyer's Default.............................................................................................12 882/015610-0043 325160.03 PM03 _1_ Page 14. INDEMNITY..................................................................................................................13 15."AS-IS"...........................................................................................................................13 16. DAMAGE, DESTRUCTION AND CONDEMNATION..............................................14 16.1 Risk of Physical Loss....................................................................................14 16.2 Condemnation...............................................................................................14 17. DEVELOPMENT OF PROJECT; TRANSFER RESTRICTIONS...............................14 17.1 General..........................................................................................................14 17.2 Utilities..........................................................................................................15 17.3 Public Rights of Way....................................................................................15 17.4 Transfer Restrictions...................................................................................15 18. OPTION TO REPURCHASE.........................................................................................16 19. INSURANCE..................................................................................................................16 20. MISCELLANEOUS.......................................................................................................17 20.1 Assignment...................................................................................................17 20.2 Attorney's Fees.............................................................................................17 20.3 Notices..........................................................................................................17 20.4 Fair Meaning.................................................................................................18 20.5 Headings.......................................................................................................18 20.6 Choice of Laws; Litigation Matters..............................................................18 20.7 Nonliability of Seller Officials......................................................................18 20.8 Gender; Number............................................................................................19 20.9 Survival.........................................................................................................19 20.10 Time of Essence............................................................................................19 20.11 Waiver or Modification.................................................................................19 20.12 Broker's Fees................................................................................................19 20.13 Duplicate Originals.......................................................................................19 20.14 Severability...................................................................................................19 20.15 Exhibits.........................................................................................................19 20.16 Covenants of Seller.......................................................................................19 20.17 Corporate Authority......................................................................................20 20.18 Covenant Against Discrimination.................................................................20 20.19 Entire Agreement; Amendment.................................................................... 20 EXHIBITS Exhibit A Legal Description of the Property Exhibit B Form of Grant Deed Exhibit C Form of Affidavit of Non -Foreign Entity Exhibit D Conceptual Site Plan and Elevations nn Exhibit E Option Agreement 882/015610-0043 325160.03 PM03 -11- r Page PURCHASEPRICE.........................................................................................................1 1.1 Amount. Subject to the terms of this Agreement, Buyer hereby agrees to purchase the Property from Seller, and Seller agrees to sell the Property to Buyer, for the purchase price of Eight Hundred One Thousand Three Hundred Fifty -Eight Dollars ($801,358.00) ("Purchase Price").........................................................................................1 1.2 Payment of Purchase Price. On or before 5:00 p.m. on the business day preceding the Closing Date (as that term is defined in Section 4.1) or such earlier time as required by Escrow Holder in order to close Escrow on the Closing Date, Buyer shall deposit with Escrow Holder the Purchase Price in Good Funds (as used in this Agreement, the term "Good Funds" shall mean a confirmed wire transfer of immediately available funds, cashier's or certified check drawn on or issued by the office of a financial institution located in Riverside County, or cash), and such additional funds as may be required to meet Buyer's portion of the closing costs as hereinafter provided..........................................................................................................1 2. ESCROW..........................................................................................................................1 2.1 Opening of Escrow. Closing of the sale of the Property shall take place through an escrow ("Escrow") to be established within three (3) business days after the execution of this Agreement by the parties hereto, with First American Title Company ("Escrow Holder") at its office located at 3625 Fourteenth Street, Riverside, CA 92502-0986. The opening of the Escrow (the "Opening of Escrow") shall be deemed to be the date that a fully executed copy of this Agreement is delivered to the Escrow Holder. Escrow Holder is instructed to notify Buyer and Seller in writing of the date ofthe Opening of Escrow...............................................................................1 2.2 Escrow Instructions. This Agreement, once deposited in Escrow, shall constitute the joint escrow instructions of Buyer and Seller to Escrow Holder. Additionally, if Escrow Holder so requires, Buyer and Seller agree to execute the form of escrow instructions that Escrow Holder customarily requires in real property escrows administered by it. In the event of any conflict or inconsistency between Escrow Holder's standard instructions and the provisions of this Agreement, the provisions of this Agreement shall supersede andbe controlling...........................................................................................2 3. DUE DILIGENCE............................................................................................................2 3.1 Due Diligence. As used herein, the term "Due Diligence Period" shall refer to a period of time to expire upon the date that is sixty (60) days after the Opening of Escrow. Buyer's obligation to consummate the transactions contemplated by this Agreement is subject to and conditioned upon Buyer's approval, deemed approval 882/015610-0043 325160.03 PM03 -111- 3,9,9 4 0`_ Page or waiver of the right to approve of the following contingencies set forth in this Section 3.1 (collectively, the "Contingencies"): ........................ 2 3.2 Confidentiality. Any and all information made available to Buyer under this Agreement or discovered by Buyer during its investigation of the Property shall be treated as confidential by Buyer and such information shall not be disclosed prior to the Close of Escrow without the prior written consent of Seller; provided, however, that Buyer may disclose said information (i) to any attorney, accountant, engineer or consultant providing services to Buyer in the normal and ordinary course of business, (ii) to a court or any other official body if said confidential information is subpoenaed by that court or official body; provided that Buyer notifies Seller, in writing, of the receipt of such subpoena, and (iii) if required to disclose such information pursuant to the California Public Records Act or other applicable law. Seller shall be permitted to pursue, at Seller's cost, such confidentiality order with or without Buyer. Additionally, if this Agreement terminates for any reason whatsoever, Buyer shall return to Seller all written information delivered by Seller to Buyer pursuant hereto, and all copies of such information made by Buyer, within ten (10) days after termination hereof. The provisions of this Section 3.2 shall survive any termination of this Agreement..................................................... 5 4. CLOSE OF ESCROW......................................................................................................5 4.1 Close of Escrow, Closing Date. Provided that all of the conditions of this Agreement precedent to the Close of Escrow (as hereinafter defined) have been satisfied (or waived by the appropriate party) prior to or on the Closing Date (as hereinafter defined), the Closing (as hereinafter defined) of this transaction for the sale and purchase of the Property shall take place on the date which is five (5) days after the date on which all of Buyer's Conditions to Closing and all of Seller's Conditions to Closing have been satisfied (or waived by the appropriate party); provided, however, in no event shall the Closing occur, if at all, later than the date which is one -hundred eighty (180) days after the expiration of the Due Diligence Period ("Closing Date"). The terms "Close of Escrow" and the "Closing" are used herein to mean the time Seller's grant deed conveying fee title to the Property to Buyer is recorded in the Official Records of the Office of the County Recorder of Riverside ("Official Records"). If Escrow is not in a condition to close by the Closing Date, either party not then in default hereunder may, upon five (5) days advance written notice to the other party and Escrow Holder, elect to terminate this Agreement and the Escrow. No such termination shall release either party then in default from liability for such default. If neither party so elects to terminate this 39 ,� 882/015610-0043 F "' 325160.03 PM03 -iv- Page Agreement and the Escrow, Escrow Holder shall close the Escrow assoon as possible..........................................................................................5 4.2 Recordation, Release of Funds and Documents ............................................. 6 5. DELIVERY OF DOCUMENTS REQUIRED FROM BUYER AND SELLER.............6 5.1 Buyer's Obligations. Buyer agrees that on or before 5:00 p.m. of the last business day immediately preceding the Closing Date, Buyer shall deposit or cause to be deposited with Escrow Holder thefollowing: .................................................................................................. 6 5.2 Seller's Obli atg_ions. Seller agrees that on or before 5:00 p.m. of the last business day immediately preceding the Closing Date, Seller shall deposit or cause to be deposited with Escrow Holder eachof the following: ..................................................................................... 6 6. TITLE INSURANCE POLICY........................................................................................7 6.1 Title Policy. At the Closing Date, First American Title Insurance Company (the "Title Company"), as insurer, shall issue an ALTA owner's standard coverage policy of title insurance ("Title Policy"), in favor of Buyer, as insured, with liability in the amount of the Purchase Price, subject to the following: .............................................. 7 6.2 Payment for Title Policy. Seller shall be responsible for the charges for the Title Policy with coverage up to the amount of the Purchase Price. Buyer shall pay any additional coverage or endorsements it requests. Buyer may, at its election, request an ALTA extended policy of title insurance. Buyer shall pay the difference for the charges between the premium for the extended coverage title policy and the premium for the standard coverage title policy that Seller is responsible for hereunder. Buyer shall also pay for the ALTA survey, if applicable........................................................................................ 7 7. REAL PROPERTY TAXES. Buyer shall pay all property taxes and assessments. The Property is currently exempt from the payment of property taxes and assessments due to Seller's status as a public agency. In the event, however, property taxes or assessments are mistakenly assessed against the Property after the Closing for any period prior to the Closing, Buyer shall be responsible for timely payment thereof but Buyer may apply for a refund for that portion of taxes and assessments allocated to any period prior to the Closing, in accordance with the applicable provisions of the Revenue and Taxation Code. Seller shall cooperate with Buyer, at no cost to Seller, to effect suchrefund..................................................................................................... PROJECT ENTITLEMENTS. Prior to, and as both a Seller Condition to Closing and a Buyer Condition to Closing as set forth in Section 10, Buyer shall (i) prepare a tract map subdividing the Property from adjacent real property owned by the Seller (the "Tract Map"), (ii) prepare and obtain approval from the City of La Quinta ("City") covenants, conditions, and 882/015610-0043 325160.03 PM03 -v- ............ 7 restrictions providing for maintenance of all commonly -owned property within the "Project" (as that term is defined in Section 17.1) by a homeowners' association ("CC&Rs"), which CC&Rs provide that the City and Seller are third party beneficiaries with the right, but not the obligation, to enforce the terms thereof, and (and (ii) obtain from the City all permits and entitlements necessary for the Project as required in this Agreement, by applicable State law, by City code, and all other applicable law, including but not limited to a site development plan, a Specific Plan, any conditional use permit, any zone change, any variance, any vacation of public rights of way, and any approvals or certifications as required by the California Environmental Quality Act (California Public Resources Code § 21000 et seq.), the approval of which by the City of La Quinta is subject to the City's legislative discretion (all of the foregoing, the "Project Entitlements"). Seller agrees to fully cooperate with, and assist, Buyer in its pursuit of Project Entitlements, subject to Seller's exercise of its legislative discretion and without any representation, warranty, or guaranty by Seller that the City will issue, or will issue with conditions, any Project Entitlement. Without limiting the generality of the foregoing, Seller shall review all submittals by Buyer in a timely manner and shall provide Buyer with all information, in Seller's possession or control, that Buyer may reasonably request in writing in connection with the Project Entitlements (or the pursuit thereof). In addition, Seller shall prepare, with funds deposited by Buyer, all necessary environmental documents as required by applicable law, including but not limited to the California Environmental Quality Act, for approval or certification, as the case may be, by the City of La Quinta................ 9. BUYER'S EVIDENCE OF PROJECT FINANCING. Prior to, and as a Seller Condition to Closing set forth in Section 10.2, Buyer shall submit to Seller, and obtain approval from Seller, which approval shall not be unreasonably withheld or delayed, of, verifiable written evidence that Buyer has or has obtained sufficient equity capital or has arranged for financing for the acquisition and construction, and permanent financing, necessary to undertake the development of the Project ("Buyer's Evidence of Financing"). The Buyer's Evidence of Financing shall include the following: (a) (i) a copy of a legally binding, firm, and enforceable loan commitment obtained by Buyer from one or more financing institutions for the mortgage loan or loans for financing to fund the acquisition and development of the Project, subject to the such lender's customary and normal conditions and terms, and/or (ii) a certification from Buyer's chief financial officer that Buyer has, or upon the funding of all applicable loan proceeds Buyer will have, sufficient funds for such acquisition of the Property and development of the Project and that such funds have been committed for the acquisition and development; and (b) such other documentation reasonably required by Seller as evidence that Developer has adequate funds or third party commitments for funds for the acquisition of the Property and development of the Project....................................................... 10. CONDITIONS PRECEDENT TO CLOSING .................................................. Page ..... 7 ........ 8 .1 882/015610-0043 n 325160.03 PM03 -vl- F 1 Page 10.1 Conditions Precedent to Buyer's Obligations. The obligations of Buyer under this Agreement to purchase the Property and close the Escrow shall be subject to the satisfaction or signed written waiver by Buyer of each and all of the following conditions precedent (collectively "Buyer's Conditions to Closing"): .......................................... 8 10.2 Conditions Precedent to Seller's Obligations. The obligations of Seller under this Agreement shall be subject to the satisfaction or signed written waiver by Seller of each and all of the following conditions precedent ("Seller's Conditions to Closing"): ............................ 9 11. POSSESSION.................................................................................................................10 12. ALLOCATION OF COSTS...........................................................................................10 12.1 Buyer's Costs. Buyer shall pay the following costs: ................................... 10 12.2 Seller's Costs. Seller shall pay: .................................................................... 10 13. REMEDIES.....................................................................................................................11 13.1 Seller's Default.• Limitation on Buyer's Remedies. In the event that Seller materially breaches its obligations under this Agreement and as a result of such breach Buyer terminates this Agreement, Buyer's sole and complete remedy shall be limited to a payment by Seller to Buyer in the amount of "Buyer's Cost Reimbursement" (as defined below) (hereinafter referred to as "Seller's Default Payment"). Seller's payment to Buyer of Seller's Default Payment shall be the sole remedy available to Buyer if Buyer terminates this Agreement due to a material default of Seller, and in no event shall Seller be liable to Buyer for any monetary damages, costs, expenses, lost profits, loss of tax benefits, or consequential or punitive damages, and Seller shall not be entitled to any equitable remedies including the remedy of specific performance. To be eligible to receive Buyer's Cost Reimbursement, Buyer, within fifteen (15) days after Buyer has terminated this Agreement due to a material default of Seller, shall submit to Seller in writing verifiable evidence (such as paid invoices and invoices for eligible costs incurred but not yet paid) of Buyer's actual third party architectural, engineering, and environmental consulting costs incurred for preparation of the Parcel Map (excluding all legal costs incurred by Buyer, all employee staff time, overhead, and similar costs and charges) to the date of Buyer's written notice of termination to Seller (hereinafter, "Buyer's Eligible Costs"). Seller, within ten (10) days of receipt of Buyer's submittal conforming to the requirements set forth above, shall review Buyer's submittal and shall notify Buyer in writing of Seller's acceptance of the evidence submitted or of any further evidence that Seller may reasonably require to permit Seller to confirm Buyer's Eligible Costs (in which case Buyer shall submit such additional documentation within ten 4 882/015610-0043 325160.03 PM03 -vii- i�,, Page (10) days of receipt of Buyer's notice). Buyer's Cost Reimbursement shall be an amount equal to the lesser of (i) Buyer's Eligible Costs, or (ii) Twenty -Five Thousand Dollars ($25,000). In the event of a Buyer termination pursuant to this Section 13.1, Buyer, not later than concurrently with receipt of Buyer's Cost Reimbursement, shall cancel the Escrow and shall provide a quitclaim deed or such other instrument reasonably required by a reputable title company to remove any cloud on title resulting from the Escrow or this Agreement. IN THE EVENT THAT SELLER BREACHES ITS OBLIGATIONS UNDER THIS AGREEMENT, THE DAMAGES THAT BUYER WILL INCUR BY REASON THEREOF ARE AND WILL BE IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTABLISH. BUYER AND SELLER, IN A REASONABLE EFFORT TO ASCERTAIN WHAT BUYER'S DAMAGES WOULD BE IN THE EVENT OF SUCH A DEFAULT BY SELLER, HAVE AGREED THAT SUCH DAMAGES SHALL BE THE AMOUNT OF "SELLER'S DEFAULT PAYMENT" AS DEFINED IN THIS SECTION 13.1, AND THAT UPON SUCH DEFAULT BY SELLER, BUYER, AS LIQUIDATED DAMAGES, SHALL BE ENTITLED TO SELLER'S DEFAULT PAYMENT. THESE LIQUIDATED DAMAGES SHALL BE BUYER'S SOLE REMEDY FOR SELLER'S DEFAULT. IF BUYER, FOLLOWING BUYER'S RECEIPT OF SELLER'S DEFAULT PAYMENT, WRONGFULLY REFUSES TO CAUSE ESCROW HOLDER TO CANCEL THE ESCROW AND PROVIDE SUCH INSTRUMENT TO REMOVE ANY CLOUD ON TITLE CAUSED BY THE ESCROW OR THIS AGREEMENT, SELLER SHALL BE ENTITLED TO ALL COSTS AND EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES INCURRED BY SELLER WITH RESPECT TO THOSE CONSEQUENTIAL DAMAGES, IF ANY, WHICH MAY BE INCURRED BY SELLER BY REASON OF THE CLOUD ON TITLE TO THE PROPERTY WHICH MAY RESULT FROM BUYER'S WRONGFUL FAILURE TO CANCEL THE ESCROW AND PROVIDE SUCH INSTRUMENT TO REMOVE SUCH CLOUD ON TITLE. THE FOREGOING LIQUIDATED DAMAGES PROVISION SHALL NOT APPLY TO NOR LIMIT THE INDEMNITY PROVISIONS OF SECTION 14 OF THIS AGREEMENT. SELLER AND BUYER ACKNOWLEDGE AND AGREE THAT THEY HAVE READ AND UNDERSTAND THE PROVISIONS OF THIS SECTION 13.1, INCLUDING THIS CAPITALIZED LANGUAGE, AND BY THEIR INITIALS AGREE TO BE BOUNDBY ITS TERMS............................................................................11 882/015610-0043 325160.03 PM03 -vlll- 4 fl,'# 0 "1 Page Buyer's Initials Seller's Initials 12 13.2 Buyer's Default. IN THE EVENT THAT BUYER BREACHES ITS OBLIGATIONS UNDER THIS AGREEMENT, THE DAMAGES THAT SELLER WILL INCUR BY REASON THEREOF ARE AND WILL BE IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTABLISH. BUYER AND SELLER, IN A REASONABLE EFFORT TO ASCERTAIN WHAT SELLER'S DAMAGES WOULD BE IN THE EVENT OF SUCH A DEFAULT BY BUYER, HAVE AGREED THAT SUCH DAMAGES SHALL BE IN AN AMOUNT EQUAL TO THE SUM OF TWENTY-FIVE THOUSAND DOLLARS ($25,000) ("BUYER'S DEFAULT PAYMENT") AND THAT UPON SUCH DEFAULT, BUYER, AS LIQUIDATED DAMAGES, SHALL DELIVER BUYER'S DEFAULT PAYMENT TO SELLER. THESE LIQUIDATED DAMAGES SHALL BE SELLER'S SOLE REMEDY THEREFOR, UNLESS BUYER WRONGFULLY REFUSES TO CAUSE ESCROW HOLDER TO CANCEL THE ESCROW AND PROVIDE SUCH INSTRUMENT AS MAY BE REASONABLY NECESSARY TO REMOVE ANY CLOUD ON TITLE AS IS CAUSED BY THE ESCROW AND THIS AGREEMENT, IN WHICH INSTANCE SELLER SHALL ALSO BE ENTITLED TO ALL COSTS AND EXPENSES, INCLUDING REASONABLE ATTORNEYS' FEES INCURRED BY SELLER WITH RESPECT TO THOSE CONSEQUENTIAL DAMAGES, IF ANY, WHICH MAY BE INCURRED BY SELLER BY REASON OF THE CLOUD ON TITLE TO THE PROPERTY WHICH MAY RESULT FROM BUYER'S WRONGFUL FAILURE TO CANCEL THE ESCROW AND TO PROVIDE SUCH INSTRUMENT TO REMOVE SUCH CLOUD ON TITLE. THE FOREGOING LIQUIDATED DAMAGES PROVISION SHALL NOT APPLY TO NOR LIMIT THE INDEMNITY PROVISIONS OF SECTION 14 OF THIS AGREEMENT. SELLER AND BUYER ACKNOWLEDGE AND AGREE THAT THEY HAVE READ AND UNDERSTAND THE PROVISIONS OF THIS SECTION 13.2 AND BY THEIR INITIALS AGREE TO BEBOUND BY ITS TERMS......................................................................12 14. INDEMNITY..................................................................................................................13 15."AS-IS"...........................................................................................................................13 Buyer acknowledges that during the Due Diligence Period Buyer shall have had an adequate opportunity to inspect the Property and to investigate its physical characteristics and condition and to conduct such other independent investigations as Buyer requires to 4 �_) 4 determine that it is prepared to complete the purchase of the 882/015610-0043 0 ; n 325160.03 PM03 -ix- Page Property on the terms and conditions stated herein. Seller hereby warrants and represents that, to Seller's actual knowledge, there are no Hazardous Substances generated, released, stored, buried or deposited over, beneath, in or upon the Property, except to the extent permitted by law after obtaining all necessary permits and licenses thereof, nor has Seller or the City received any notice from any governmental agency alleging that the Property is currently in violation of any governmental requirements relating to Hazardous Materials (as hereinafter defined). As used in the preceding sentence, the term "knowledge" shall mean the actual (not constructive or imputed) knowledge of Thomas Genovese (Seller's Executive Director), without any investigation or inquiry or duty of investigationor inquiry.................................................................................13 16. DAMAGE, DESTRUCTION AND CONDEMNATION..............................................14 16.1 Risk of Physical Loss. Seller, prior to the Closing, shall promptly notify Buyer in writing of any fire, casualty, or other damage (other than de minimis damage) to the Property of which Seller has knowledge (as that term is defined in Section 15). In the event of fire, casualty, or other damage (insured or not) to the Property which is reasonably estimated to cost One Hundred Thousand Dollars ($100,000) or more to repair, restore, or remediate, then Buyer, may on written notice to Seller terminate this Agreement and the Escrow; provided that Buyer shall not have caused such fire, casualty, or other damage. If any such occurrence costs less than One Hundred Thousand Dollars ($100,000), or if Buyer does not so terminate this Agreement pursuant to its rights under this Section 16.1, this Agreement and the Escrow shall continue in effect and Seller shall assign all available insurance proceeds to Buyer, if any, received by Seller related to such fire, casualty, or other damage (other than de minimis damage) ....................................... 16.2 Condemnation. In the event that, prior to the Close of Escrow, any governmental entity shall commence any proceedings of or leading to eminent domain or similar type proceedings to take all or any portion of the Property, Buyer or Seller shall promptly meet and confer in good faith to evaluate the effect of such action on the 14 purposes of this Agreement and following such meeting either Buyer or Seller may terminate this Agreement.............................................14 17. DEVELOPMENT OF PROJECT; TRANSFER RESTRICTIONS...............................14 17.1 General. Buyer and Seller agree that the Property is being sold by Seller for the purpose of Buyer's development of a residential project containing thirty-six (36) single family homes and related landscaping and other improvements on the Property as conceptually described in the Conceptual Site Plan and Conceptual Elevations attached hereto as Exhibit "D" and as to be further (� 882/015610-0043 325160.03 PM03 -x- described in the Project Entitlements (the "Project"). Buyer shall be responsible for all costs of developing the Project .......................... 17.2 Utilities. Seller shall not be responsible for the relocation of any on -site utilities required to accommodate Buyer's intended development of the Property................................................................ 17.3 Public Rights of Way. Seller shall exercise its best efforts to cause the City to vacate all public rights -of -way within the boundaries of f t th 01 f E crow Page ........14 ......15 the Property, any, any, on or prior o e ose o s .......................... 17.4 Transfer Restrictions. The qualifications and identity of the Buyer are of particular interest to the Seller. It is because of these qualifications and identity that the Seller has entered into this Agreement with the Buyer. Consequently, no person, whether a voluntary or involuntary successor of Buyer shall acquire any rights or powers under this Agreement nor shall the Buyer assign all or any part of this Agreement or the Property without the prior written approval of the Seller. A voluntary or involuntary sale or transfer of any interest in the Buyer of the Property prior to the issuance of a Certificate of Completion for the Project shall be deemed to constitute an assignment or transfer for the purposes of this Section 17, and the written approval of the Seller shall be required prior to effecting such an assignment or transfer. Any purported transfer, voluntarily or by operation of law, except with the prior written consent of the Seller, shall render this Agreement absolutely null and void and shall confer no rights whatsoever upon any purported assignee or transferee. Prior to the issuance of a Certificate of Completion for the Project on the Property, the Buyer shall not, except as permitted by this Agreement, assign or attempt to assign this Agreement or any rights or duties herein, nor make any total or partial sale, transfer, conveyance, or assignment of the whole or any part of the Property or any of the improvements thereon, without 15 the prior written approval of the Seller.........................................................15 18. OPTION TO REPURCHASE.........................................................................................16 19. INSURANCE..................................................................................................................16 20. MISCELLANEOUS.......................................................................................................17 20.1 Assignment. This Agreement shall be binding upon and shall inure to the benefit of Buyer and Seller and their respective heirs, personal representatives, successors and assigns. Neither party to this Agreement may assign this Agreement or any interest or right hereunder or under the Escrow without the prior written consent and approval of the other party, which consent and approval may be withheld in the sole and absolute discretion of either party; provided, however, that Seller may assign this Agreement to the City of La Quinta without Buyer's consent. No provision of this 882/015610-0043 325160.03 PM03 -xi- 20.2 20.3 20.4 20.5 20.6 Paae Agreement is intended nor shall in any way be construed to benefit any party not a signatory hereto or to create a third party beneficiary relationship; provided, however, that notwithstanding the foregoing, the City shall be an express third party beneficiary with respect to the indemnities and other matters set forth in this Agreement which specifically and expressly run to the City's benefit...........................................................................................................17 Attorney's Fees. In the event of any action between Buyer and Seller seeking enforcement of any of the terms and conditions to this Agreement or the Escrow or otherwise in connection with the Property, the prevailing party in such action shall be awarded, in addition to damages, injunctive or other relief, its reasonable costs and expenses, including without limitation its expert witness fees and reasonable attorney's fees............................................................... Notices. All notices under this Agreement shall be effective upon personal delivery, via facsimile so long as the sender receives confirmation of successful transmission from the sending machine, or three (3) business days after deposit in the United States mail, registered, certified, postage fully prepaid and addressed to the respective parties as set forth below or as to such other address as the parties may from time to time designate in writing: ........................ Fair Meaning. This Agreement shall be construed according to its fair meaning and as if prepared by both parties hereto .......................... Headings. The headings at the beginning of each numbered Section of this Agreement are solely for the convenience of the parties hereto and are not a part of this Agreement ........................................... Choice of Laws: Litigation Matters. This Agreement shall be governed by the internal laws of the State of California and any question arising hereunder shall be construed or determined according to such law. The Municipal and Superior Courts of the State of California in and for the County of Riverside, or such other appropriate court in such county, shall have exclusive jurisdiction of any litigation between the parties concerning this Agreement. Service of process on Seller shall be made in accordance with California law. Service of process on Buyer shall be made in any manner permitted by California law and shall be effective whether served inside or outside California.................................................... 20.7 Nonliability of Seller Officials. No officer, official, member, employee, agent, or representatives of Seller shall be liable for any amounts due hereunder, and no judgment or execution thereon entered in any action hereon shall be personally enforced against any such officer, official, member, employee, agent, or representative..................................................................................... 20.8 Gender: Number. As used in this Agreement, masculine, feminine, and neuter gender and the singular or plural number shall be 882/015610-0043 325160.03 PM03 -X11- 17 ......17 Page deemed to include the others wherever and whenever the context so dictates..........................................................................................................19 20.9 Survival. This Agreement and all covenants to be performed after the Closing, and, except as otherwise set forth herein, all representations and warranties contained herein shall survive the Closing Date and shall remain a binding contract between the partieshereto.................................................................................................19 20.10 Time of Essence. Time is of the essence in this Agreement and in each and every term and provision hereof, it being understood that the parties hereto have specifically negotiated the dates for the completion of each obligation herein............................................................19 20.11 Waiver or Modification. A waiver of a provision hereof, or modification of any provision herein contained, shall be effective only if said waiver or modification is in writing, and signed by both Buyer and Seller. No waiver of any breach or default by any party hereto shall be considered to be a waiver of any breach or default unless expressly provided herein or in the waiver........................................19 20.12 Broker's Fees. Seller and Buyer represent and warrant to the other that neither Buyer nor Seller has employed any broker and/or finder to represent its interest in this transaction. Each party agrees to indemnify and hold the other free and harmless from and against any and all liability, loss, cost, or expense (including court costs and reasonable attorney's fees) in any manner connected with a claim asserted by any individual or entity for any commission or finder's fee in connection with the conveyance of the Property arising out of agreements by the indemnifying party to pay any commission or finder's fee............................................................................19 20.13 Duplicate Originals. This Agreement may be executed in any number of duplicate originals, all of which shall be of equal legal forceand effect.............................................................................................19 20.14 Severability. If any term, covenant or condition of this Agreement or the application thereof to any person, entity, or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term, covenant, or condition to persons, entities, or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant or condition of this Agreement shall be valid and enforceable to the fullest extent permitted by law ........... 19 20.15 Exhibits. The following exhibits are attached hereto and incorporated herein by this reference:...........................................................19 20.16 Covenants of Seller. Seller agrees that during the period between the Effective Date of this Agreement and the Closing Date: ........................ 19 20.17 Corporate Authority. The person(s) executing this Agreement on behalf of each of the parties hereto represent and warrant that (i) such party is duly organized and existing, (ii) they are duly 882/015610-0043 325160.03 PM03 -xiii- l 20.18 20.19 Page authorized to execute and deliver this Agreement on behalf of said party, (ill) by so executing this Agreement such party is formally bound to the provisions of this Agreement, and (iv) the entering into this Agreement does not violate any provision of any other agreement to which such party is bound.......................................................20 Covenant Against Discrimination. Buyer covenants that in its performance of this Agreement that it shall not discriminate against any person or group of persons on account of any impermissible classification including but not limited to race, color, creed, gender, religion, marital status, national origin, or ancestry......................................20 Entire Agreement; Amendment. Except as set forth above, this Agreement and the exhibits incorporated herein contain the entire agreement of Buyer and Seller with respect to the matters contained herein, and no prior agreement or understanding pertaining to any such matter shall be effective for any purpose. No provisions of this Agreement may be amended or modified in any manner whatsoever except by an agreement in writing signed by duly authorized officers or representatives of each of the parties hereto..............20 4ol? 882/015610-0043 -xlv- fl >�, r 325160.03 PM03 � l Name of Participant(s): Property Address: Agency Loan Amount: BORROWER DISCLOSURE STATEMENT Dollars ($) I/we ("Participant") are obtaining financial assistance (the "Agency Loan") from the La Quinta Redevelopment Agency (the "Agency") to assist me/us to purchase the above described property (the "Property"). I/we understand that the Agency Loan is conditional on a number of factors, including, but not limited to: • I/we have signed or will sign an Affordable Housing Agreement, Memorandum Re Option to Purchase, Promissory Note Secured by Deed of Trust ("Promissory Note"), and Deed of Trust with Assignment of Rents and Rider to Deed of Trust Attached Hereto ("Deed of Trust") in connection with the Agency Loan. I/we have read or had explained to us the terms and conditions of all of those documents. I/we understand that all of those documents impose binding legal obligations on me/us. • I/we understand that interest will accrue on the Agency Loan in the amount of seven percent (7%) per annum, compounded annually, but that the Agency Loan will be forgiven and the Promissory Note will be canceled forty-five years after I/we sign the Affordable Housing Agreement unless before that time I/we sell or otherwise transfer the Property, refinance the Promissory Note, refinance the primary loan for the Property in a manner not permitted by the Affordable Housing Agreement, no longer live in the Property as my/our primary residence, or otherwise violate the Promissory Note or Affordable Housing Agreement or the other documents we have signed in connection with the Agency Loan. • I/we understand that if I/we attempt to sell the Property to a person who does not qualify as both a senior citizen and an affordable buyer or if I/we attempt to sell the Property at a price that exceeds the Affordable Housing Cost such sale will be null and void, and that I/we may be required to pay to the Agency a penalty that equals the difference between the sale price for the Property and an "Affordable Housing Cost" (as that term is defined in the Affordable Housing Agreement). • I/we understand that the Promissory Note, Deed of Trust, Memorandum Re Option to Purchase, and Affordable Housing Agreement contain an option to purchase that may be exercised by the Agency to purchase the Property at an Affordable Housing Cost in the following situations: 4r� 882/015610-0043 - I - J 349562.02 PM02 ■ during the period after I/we place the place the Property for sale and before I/we enter into an agreement to sell the Property to a senior citizen who is also an affordable buyer; or ■ upon my/our sale of the Property to a person who does not qualify as both a senior citizen and an affordable buyer. I/we understand that the Agency's option to purchase will remain in effect for forty-five (45) years after I/we sign the Affordable Housing Agreement. I/we further understand that I/we may be liable to pay damages to any noneligible buyer to whom I/we sell the Property if the Agency exercises its option to purchase the Property from the noneligible buyer. • I/we must qualify for a home loan from a reputable institutional lender acceptable to Agency. • I/we must make a down payment of at least three percent (3%) of the home purchase price, plus closing costs. • I/we understand that Agency loans are available on a first come, first served basis. • I/we must qualify as a "Moderate Income Household" under the guidelines of the Program. • I/we understand that after I/we close escrow for the Property, my/our assets must not exceed the sum of. (i) an amount equal to six (6) months of reserves for mortgage payments, taxes, homeowner's association dues, if any, and insurance; and (ii) $5,000. • I am/we are at least 55 years of age or older and any person who will live with me at the Property will qualify as either a "Qualified Permanent Resident" or a "Permitted Health Care Resident" (as those terms are defined in Civil Code Sections 51.3(b)(3) and 51.3(b)(7)). • My/our monthly payments for housing expenses may not be less than $28% of my/our gross income nor exceed 35% times 110% of the Riverside County median; or, if my/our income is greater than 110% but less than 120% of the Riverside County median, my/our monthly payments for housing expenses may not exceed 35% of the gross income of my/our household, as more specifically defined by Health and Safety Code Section 50052.5 and the Affordable Housing Cost Worksheet available from Agency. • During the term of the Affordable Housing Agreement, I/we must continuously occupy the Property and I/we shall not rent or lease the Property. • Agency shall not be held responsible for any costs associated with the home I/we purchase with such assistance including, but not limited to, any loan fees or 882/015610-0043 349562.02 PM02 _2- charges, any charges for appraisals or any escrow costs or other costs relating to the transfer of the Property. • Agency shall not be responsible for the competitiveness of the terms of the Agency Loan. I/we assume all responsibility for determining whether I/we will inform myself/ourselves as to the availability and terms of other public or private loans. • The Agency financial assistance I/we receive under the Affordable Housing Agreement may be considered to be income for purposes of federal or state income taxes and Agency shall not be held responsible for the payment of any taxes which I/we may incur by virtue of the receipt of such financial assistance. • I/We have a right to cancel or rescind the Agency Loan at any time prior to midnight on the third business day after the Promissory Note is signed by sending a notice in the form which is attached to this Borrower Disclosure Statement of my/our decision to rescind or cancel the Agency Loan to: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, CA 92253 • I/We are responsible for payment of the cost of a title insurance policy insuring the Deed of Trust to be recorded against the Property to secure Agency's right to repayment of the Agency Loan. • I/We are responsible for payment and deposit into escrow of $550.00 as a loan servicing fee to be paid to Agency at the close of escrow. • Agency cannot ensure that information provided by or on my/our behalf will be kept confidential. • Agency shall not be responsible for the selection of a home (except that homes eligible for an Agency Loan shall be those approved by Agency), the selection of a lender providing funds assisting in the purchase of the home (provided that such lender shall be a reputable institutional lender approved by Agency), or providing information concerning other public or private sources of loans. • Agency shall not be charged with the knowledge of the contents of the documents of the lender. • All loans and funding requests must be approved by the Executive Director of Agency. Therefore, a minimum 30 day escrow may be necessary. IM Printed Name: Dated: 4 1 t 882/015610-0043 349562.02 PM02 -3 CMW Printed Name: Dated: NOTICE OF RIGHT OF RESCISSION (Identification of Transaction) Notice To Customer Required By Federal Law: You have entered into a transaction on , , which may result in a lien, mortgage or other security interest on your home. You have a legal right under federal law to cancel this transaction, if you desire to do so, without any penalty or obligation within three (3) business days from the above date or any later date on which all material disclosures required under the Truth in Lending Act have been given to you. If you so cancel the transaction, any lien, mortgage or other security interest on your home arising from this transaction is automatically void. You are also entitled to receive a refund of any down payment or other consideration if you cancel. If you decide to cancel this transaction, you may do so by notifying La Quinta Redevelopment Agency (Name of Creditor) at 78-495 Calle Tampico, La Quinta, CA 92253 (Address of Creditor's Place of Business) by mail or telegram sent not later than midnight on (Date) You may also use any other form of written notice identifying the transaction if it is delivered to the above address not later than that time. This notice may be used for that purpose by dating and signing below. I hereby cancel this transaction. (Date) (Owner's Signature) SEE NEXT PAGE FOR IMPORTANT INFORMATION ABOUT YOUR RIGHT OF RESCISSION 4z,? 882/015610-0043 J n r 349562.02 PM02 -4- l' ACKNOWLEDGMENT OF RECEIPT OF TWO COPIES OF NOTICE Each of the undersigned hereby acknowledges receipt of two completed copies of the Notice of Right of Rescission. (Owner's Signature) (Owner's Signature) (Date) (Date) EFFECT OF RESCISSION. When a customer exercises his right to rescind he is not liable for any finance or other charge and any security interest becomes void upon such a rescission. Within ten (10) days after receipt of a notice of rescission, the creditor shall return to the customer any money or property given as earnest money, down payment or otherwise, and shall take any action necessary or appropriate to reflect the termination of any security interest created under the transaction. If the creditor has delivered any property to the customer, the customer may retain possession of it. Upon the performance of the creditor's obligations under this section, the customer shall tender the property to the creditor, except that if return of the property in kind would be impracticable or inequitable, the customer shall tender its reasonable value. Tender shall be made at the location of the property or at the residence of the customer, at the option of the customer. If the creditor does not take possession of the property within ten (10) days after tender by the customer, ownership of the property vests in the customer without obligation on his part to pay for it. C �-? 882/015610-0043 `� -' 349562.02 PM02 -6- PROMISSORY NOTE SECURED BY DEED OF TRUST NOTICE TO MAKER: A PENALTY CONSISTING OF THE DIFFERENCE BETWEEN MAKER'S SALE PRICE AND AN AFFORDABLE HOUSING COST SHALL BE DUE AND PAYABLE IF CERTAIN EVENTS OCCUR. Property Address: La Quinta, CA La Quinta, California FOR VALUE RECEIVED, the undersigned ("Maker") promises to pay to the La Quinta Redevelopment Agency ("Holder"), at 78-495 Calle Tampico, La Quinta, California 92253, or at such other address as Holder may direct from time to time in writing, NO/100 Dollars ($) (the "Note Amount"), together with interest thereon as hereafter set forth. All sums hereunder shall be payable in lawful money of the United States of America. This Promissory Note Secured by Deed of Trust ("Promissory Note" or "Note") is secured by a Deed of Trust with Assignment of Rents and Rider to Deed of Trust Attached Hereto ("Deed of Trust"). 1. Loan Agreement. This Promissory Note is made and delivered pursuant to and in implementation of the Affordable Housing Agreement entered into by and between the Holder and the Maker dated and recorded on , as Instrument No. , in the Official Records of the County of Riverside (the "Agreement"), a copy of which is on file as a public record with the Holder and is incorporated herein by reference. The Maker acknowledges that but for the execution of this Promissory Note, the Holder would not enter into the Agreement or make the loan contemplated therein. Unless definitions of terms have been expressly set out at length herein, each term shall have the same definition as set forth in the Agreement. 2. Interest Rate. The Note Amount shall accrue interest at the rate of seven percent (7%) per annum, compounded annually. 3. Time of Payment. The term of this Note shall be forty-five (45) years from the date of recordation of the Agreement ("Covenant Period"). At the end of the Covenant Period, this Note shall be cancelled and the Note Amount, together with interest thereon, shall be forgiven and the Deed of Trust reconveyed unless prior to that time an "Event of Acceleration" (as that term is defined in Section 4 below) has occurred. 4. Events of Acceleration. The Note Amount shall become due and immediately payable irrespective of any provisions herein to the contrary upon the occurrence of any one of the following events of acceleration ("Event of Acceleration"): (i) "Transfer" of the Property (as defined in Section 3 of the Agreement), except a Transfer which under applicable law, would not, by itself, permit Holder to exercise a due on sale or due on encumbrance clause, or (ii) such time if or when Maker (or upon a Transfer of the Property by Maker that constitutes a "Permitted Transfer," [as defined in Section 3 of the Agreement] Maker's transferee) is no longer in 41 r 882/015610-0043 349725.01 PM02 compliance with the occupancy requirements set forth in Section 9 of the Agreement or is in default of any other obligation under the Agreement, this Note, or the Deed of Trust. Notwithstanding the above, however, the following Transfers of the Property shall not be an Event of Acceleration: a. A Transfer to Maker's Spouse; b. An "Involuntary Transfer" (as defined in Section 3 of the Agreement) that satisfies both of the following: (i) The transferee(s) gives notice to Holder of such event within thirty (30) days after its occurrence and the transferee(s) assumes the Maker's obligations under the Agreement, by execution of an assignment and assumption agreement to be provided by Holder; and (ii) Where the transferee is not a "Qualified Permanent Resident" (as that term is defined in California Civil Code Section 51.3(b)(2) and described in Section 9 of the Agreement), or an "Eligible Buyer" (as defined below), and such transferee Transfers the Property to an Eligible Buyer within one hundred eighty (180) days after the transferee obtains title to the Property. Holder's Executive Director may, in his or her sole and absolute discretion, waive some or all of the requirements of this Section 4. For purposes of this Note, an "Eligible Buyer" is a person who is both of the following: (1) a "senior citizen" (as defined in California Civil Code Section 51.3(b)(1)) who is 55 years of age or older; and (ii) a "person or family of moderate income" who currently earns less than 120% of the current annual "area median income" for the Riverside County area, adjusted for family size appropriate for the unit (as those terms are defined in California Health and Safety Code Section 50093). 5. Sale of Property; Holder's Option to Purchase. a. If Maker desires to sell, exchange, quitclaim or in any manner dispose of the Property or any part thereof ("Proposed Sale"), Maker shall first notify Holder in writing no later than ten (10) days prior to the date each time the Property is placed on the market for a Proposed Sale. b. Maker shall not sell or transfer the Property until such time as Holder has determined (i) the proposed buyer is an Eligible Buyer; (ii) the proposed buyer intends to occupy the Property as its principal residence; and (iii) the Proposed Sale is at an "Affordable Housing Cost" (as defined below). If Maker identifies a buyer whom the Maker believes to be an Eligible Buyer, Maker shall cooperate with and reasonably assist Holder with the determination of whether the proposed buyer is an Eligible Buyer. Within ten (10) days after Maker locates the proposed buyer, Maker shall submit to Holder (1) information evidencing the proposed buyer's identity and income in order that Holder may make a preliminary determination regarding the buyer's household income status ("Preliminary Determination"); and (2) the price at whic Maker proposes to sell the Property (less the value of any personal property or equipmen 882/015610-0043 e ti 349725.01 PM02 _2_ J J included in said price). In the event Holder makes a Preliminary Determination that the buyer qualifies as an Eligible Buyer, Maker may proceed with opening an escrow for a Proposed Sale; provided, however, that not less than twenty (20) days prior to the date escrow is scheduled to close for the Proposed Sale, Maker shall submit to Holder adequate information to enable the Holder to make a final determination regarding whether the buyer qualifies as an Eligible Buyer and whether the Property is available to such buyer at an Affordable Housing Cost ("Final Determination"). Such information shall include the identity of the proposed buyer, the purchase and sale agreement pursuant to which Maker proposes to sell the Property to the proposed buyer, and information evidencing the income of the proposed buyer including, but not limited to, original or true copies of pay stubs, income tax records or other financial documents. Holder may request additional information reasonably required to make a Final Determination regarding the proposed buyer's status. If Holder is unable to make a Final Determination regarding the proposed buyer's income as provided herein prior to the date set for the Proposed Sale, then the proposed buyer's income shall be deemed to exceed the maximum allowable income limit for Eligible Buyer status and Maker may not conclude the Proposed Sale. As used herein, the term "Affordable Housing Cost" shall be that purchase price which would result in an annual "Purchase Housing Cost" (as defined below) which does not exceed one of the following calculations, as applicable: (i) For moderate income purchasers earning not more than one hundred ten percent (110%) of Riverside County median income adjusted for family size appropriate to the unit, Affordable Housing Cost shall be not less than twenty-eight percent (28%) of the gross income of the household nor exceed the product of thirty-five percent (35%) times one hundred ten percent (110%) of Riverside County median income adjusted for family size appropriate for the unit; or (ii) For moderate income purchasers earning more than one hundred ten percent (110%) but less than one hundred twenty percent (120%) of the Riverside County median income, Affordable Housing Cost shall be the product of thirty-five percent (35%) of the actual gross income of the household. "Purchase Housing Cost" shall be a cost that includes all of the following associated with the Property, estimated or known as of the date of the Proposed Sale of the Property: (1) Principal and interest payments on a mortgage loan including any rehabilitation loans and any loan insurance fees associated therewith. (2) Property taxes and assessments. (3) Fire and casualty insurance covering replacement value of property improvements. (4) Any homeowner association fees. (5) A reasonable utility allowance. ¢ 1 882/015610-0043 349725.01 PM02 -3- For purposes of this Note, the term "adjusted for family size appropriate to the unit" shall mean a household of one person in the case of a studio unit, two persons in the case of a one - bedroom unit, three persons in the case of a two -bedroom unit, four persons in the case of a three -bedroom unit, and five persons in the case of a four bedroom unit. Maker shall contact the Holder to determine the applicable Affordable Housing Cost for a particular proposed Eligible Purchaser. C. Upon (i) Maker's sale of the Property to a person who is an Eligible Buyer (provided that person's status as an Eligible Buyer has been verified by Holder pursuant to this Section 5) at an Affordable Housing Cost, and (ii) the Eligible Buyer's execution of an assignment and assumption agreement in a form satisfactory to Holder's legal counsel, this Note shall be assigned to the Eligible Buyer. d. At any time prior to the time Maker enters into a binding agreement with an Eligible Buyer for a Proposed Sale, Holder shall have an option to (i) purchase all of the Property from Maker at the Affordable Housing Cost set forth in paragraph b(i) above, or (ii) to cause the purchase of all of the Property by an Eligible Buyer at an Affordable Housing Cost. Holder's exercise of such option to purchase shall be made by delivery of written notice to Maker. In the event Holder either purchases the Property or arranges the purchase by an Eligible Buyer, an escrow shall be established to close within forty-five (45) days after delivery of Holder's notice of exercise, subject to any extensions, at Holder's option, for causes outside the control of Holder. In the event Holder exercises its option to purchase the Property pursuant to paragraph b(i) above, the balance of the Note Amount and any accrued interest thereon shall be due and payable to Holder prior to or at the close of escrow. In the event Holder arranged the purchase by an Eligible Buyer pursuant to paragraph b(ii) above, the Eligible Buyer shall be required to execute an assignment and assumption agreement in a form satisfactory to Holder's legal counsel. C. In the event Maker sells the Property to a purchaser who does not qualify as an Eligible Buyer, Holder shall have an option to purchase the Property from the purchaser at the Affordable Housing Cost set forth in paragraph b(i) above. f. Holder's option to purchase set forth in paragraphs d and e of this Section 5 shall terminate and be of no further force or effect on the date that is forty-five (45) years after the recordation of the Agreement. Holder's option to purchase set forth in this Section shall be memorialized by the Memorandum Re Option to Purchase substantially in the form as distributed to Maker prior to receiving the Note Amount to be recorded against the Property concurrently herewith. MAKER UNDERSTANDS THAT THE DETERMINATION OF THE AFFORDABLE HOUSING COST CAN BE MADE ONLY AT THE TIME OF THE PROPOSED SALE, AND THAT THE AFFORDABLE HOUSING COST PERMITTED HEREUNDER MAY BE LESS THAN THE FAIR MARKET VALUE OF THE PROPERTY AND MAY NOT INCREASE OR DECREASE IN THE SAME MANNER AS OTHER SIMILAR REAL PROPERTY WHICH IS NOT ENCUMBERED BY THE AFFORDABILITY COVENANTS IN THIS NOTE. MAKER FURTHER I i q e 5 882/015610-0043 349725.01 PM02 -4- ACKNOWLEDGES THAT IN SETTING THE AFFORDABLE HOUSING COST THE PRIMARY OBJECTIVE OF HOLDER AND THIS AGREEMENT IS TO PROVIDE HOUSING TO ELIGIBLE BUYERS AT AN AFFORDABLE HOUSING COST. MAKER'S INITIALS 6. Liquidated Damages for Prohibited Transfer. In the event Holder seeks monetary damages for a Prohibited Transfer, Maker shall be required, to the extent permitted by law, to pay to Holder the entire amount of the "Sale Price" (as defined below) received in excess of the Affordable Housing Cost permitted pursuant to this Agreement; provided, however, that nothing herein shall be deemed to limit Holder's remedy for a Prohibited Transfer to seeking monetary damages, and Holder shall be entitled to pursue any other equitable remedy permitted by law, including specific performance or injunctive relief, to prevent a Prohibited Transfer. For purposes of this Section 6, the "Sale Price" is the price to be paid by the buyer of the Property to Maker for Maker's interest in the Property, after deduction of escrow fees, recording fees, transfer taxes, title insurance costs, broker's commissions, loan fees or any other closing or transaction costs paid by Maker. THE PARTIES HERETO AGREE THAT THE AMOUNT SET FORTH IN THIS SECTION 6 (THE "DAMAGE AMOUNT") CONSTITUTES A REASONABLE APPROXIMATION OF THE ACTUAL DAMAGES THAT HOLDER WOULD SUFFER DUE TO THE DEFAULTS BY MAKER SET FORTH IN THIS SECTION 6, CONSIDERING ALL OF THE CIRCUMSTANCES EXISTING ON THE EFFECTIVE DATE OF THIS NOTE, INCLUDING THE RELATIONSHIP OF THE DAMAGE AMOUNTS TO THE RANGE OF HARM TO HOLDER AND ACCOMPLISHMENT OF HOLDER'S PURPOSE OF ASSISTING IN THE PROVISION OF AFFORDABLE HOUSING TO ELIGIBLE BUYERS THAT REASONABLY COULD BE ANTICIPATED AND THE ANTICIPATION THAT PROOF OF ACTUAL DAMAGES WOULD BE COSTLY OR INCONVENIENT. THE DAMAGE AMOUNT SET FORTH IN THIS SECTION 6 SHALL BE THE SOLE DAMAGES REMEDIES FOR THE DEFAULTS SET FORTH IN THIS SECTION 6, BUT NOTHING IN THIS SECTION 6 SHALL BE INTERPRETED TO LIMIT HOLDER'S REMEDY FOR SUCH DEFAULT TO SUCH A DAMAGES REMEDY. IN PLACING ITS INITIAL AT THE PLACES PROVIDED HEREINBELOW, EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY HAS BEEN REPRESENTED BY COUNSEL OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED BY COUNSEL TO EXPLAIN THE CONSEQUENCES OF THE LIQUIDATED DAMAGES PROVISION AT OR PRIOR TO THE TIME EACH EXECUTED THIS AGREEMENT. MAKER'S INITIALS: HOLDER'S INITIALS: Notwithstanding any of the above, nothing herein is intended to preclude the Holder's recovery of its attorneys' fees and costs incurred to enforce this Section, as provided in Section 12. 4..c� 0 .' Ei 882/015610-0043 349725.01 PM02 -5- 7. Security for Note. This Promissory Note is secured by a second deed of trust of even date herewith, executed by Maker as Trustor in favor of Holder as Trustee. 8. Prepayment of Note. Maker may prepay this Note to Holder, provided that any prepayment must be in full and not in part. Prepayment will be treated in the same manner as refinancing of the Property. 9. Holder May Assign. Holder may, at its option, assign its right to receive payment under this Promissory Note without necessity of obtaining the consent of the Maker. 10. Maker Assignment. In no event shall Maker assign or transfer any portion of this Promissory Note without the prior express written consent of the Holder, which consent shall be given by the Holder only in the event that the Holder determines that the assignee or transferee is an Eligible Buyer, that the assignee's or transferee's monthly housing payments are at an Affordable Housing Cost, and that the assignee or transferee has expressly assumed this Promissory Note and the Agreement by execution of a written assignment document to be provided by the Holder. 11. Joint and Several. The undersigned, if more than one, shall be jointly and severally liable hereunder. 12. Attorneys' Fees and Costs. In the event that any action is instituted to enforce payment under this Promissory Note, the parties agree the non -prevailing party shall be responsible for and shall pay to the prevailing party all court costs, including expert witness fees, and all attorneys' fees incurred in enforcing this Note. 13. Amendments. This Note may not be modified or amended except by an instrument in writing expressing such intention executed by the parties sought to be bound thereby, which writing must be so firmly attached to this Note so as to become a permanent part thereof. 14. Maker's Waivers. Maker waives any rights to require the Holder to: (a) demand payment of amounts due (known as "presentment"), (b) give notice that amounts due have not been paid (known as "notice of dishonor"), and (c) obtain an official certification of nonpayment (known as "protest"). 15. Notice. Any notice that must be given to Maker under this Note shall be given by personal delivery or by mailing it by certified mail addressed to Maker at the Property Address above or such other address as Maker shall direct from time to time in writing. Failure or delay in giving any notice required hereunder shall not constitute a waiver of any default or late payment, nor shall it change the time for any default or payment. Any notice to Holder shall be given by certified mail at Holder's address stated in the preamble to this Note. 16. Successors Bound. This Promissory Note shall be binding upon the parties hereto and their respective heirs, successors and assigns. [END — SIGNATURE PAGE FOLLOWS] 0 ,) f nn > ry 882/015610-0043 349725.01 PM02 -6- IN WITNESS WHEREOF, Maker has executed this Promissory Note. "Maker" By: Printed Name: By: Printed Name: Dated: Dated: The foregoing Promissory Note is approved, and consented to, by the Holder. "Holder" LA QUINTA REDEVELOPMENT AGENCY an Executive Director Dated: 882/015610-0043 349725.01 PM02 -7- Order No. Escrow No. Loan No. WHEN RECORDED MAIL TO: LA QUINTA REDEVELOPMENT AGENCY 78-495 Calle Tampico La Quinta, CA 92253 Attn: City Clerk (Space Above This Line For Recorder's Use) (Exempt From Recording Fees Pursuant To Government Code Section 6103) DEED OF TRUST WITH ASSIGNMENT OF RENTS AND RIDER TO DEED OF TRUST ATTACHED HERETO This DEED OF TRUST WITH ASSIGNMENT OF ("Deed of Trust"), made this day of _ PARTICIPANT, whose address is INSURANCE COMPANY, a California corporation, AGENCY, herein called BENEFICIARY, RENTS AND RIDER TO DEED OF TRUST ATTACHED HERETO . between herein called herein called TRUSTEE, and THE FIRST AMERICAN TITLE LA QUINTA REDEVELOPMENT WITNESSETH: That Participant grants to Trustee in trust, with power of sale, that property in the City of La Quinta, County of Riverside, State of California, described in the legal description attached hereto as Exhibit "A", together with rents, issues and profits thereof, subject, however, to the right, power and authority hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues and profits for the purpose of securing (1) payment of the sum of $ , with interest thereon according to the terms of a promissory note or notes of even date herewith made by Participant, payable to order of Beneficiary, and extensions or renewals thereof; (2) the performance of each agreement of Participant incorporated by reference or contained herein; and (3) payment of additional sums and interest thereon which may hereafter be loaned to Participant, or his successors or assigns, when evidenced by a promissory note or notes reciting that they are secured by this Deed of Trust. A. To protect the security of this Deed of Trust, Participant agrees: 1) To keep said property in good condition and repair, not to remove or demolish any building thereon; to complete or restore promptly and in a good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor, to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property may be reasonably necessary, the specific enumerations herein not excluding the general. 2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary. The amount collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured hereby and in such order as Beneficiary may determine, or at the option of Beneficiary the entire amount so collected or any part thereof may be released to Participant. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. 3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed. 4) To pay: at least ten days before delinquency all taxes and assessments affecting said property, including assessments on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on said property or any part thereof, which appear to be prior or superior hereto; all costs, fees and expenses of this Trust. Should Participant fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Participant and without releasing Participant from any obligation hereof, may: make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Benefi r9)cq Trustee being authorized to enter upon said property for such purposes; appear in and defend any action or proceeding purporrHa ff 349576 vl f 9 affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees. 5) To pay immediately upon demand all sums so expended by Beneficiary or Trustee, with interest from date of expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof regarding the obligation secured hereby any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time when said statement is demanded. B. It is mutually agreed: 1) That any award in connection with any condemnation for public use of or injury to said property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such moneys received by him in the same manner and with the same effect as above provided for disposition of proceeds of fire or other insurance. 2) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive his right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay. 3) That at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed and said note for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of said property; consent to the making of any map or plat thereof; join in granting any easement thereon, or join in any extension agreement or any agreement subordinating the lien or charge hereof. 4) That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed and said note to Trustee for cancellation and retention or other disposition as Trustee in its sole discretion may choose and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The Grantee in such reconveyance may be described as "the person or persons legally entitled thereto." 5) That as additional security, Participant hereby gives to and confers upon Beneficiary the right, power and authority, during the continuance of this Trust, to collect the rents, issues and profits of said property, reserving unto Participant the right, prior to any default by Participant in payment of any indebtedness secured hereby or in the performance of any agreement hereunder, to collect and retain such rents, issues and profits as they become due and payable. Upon any such default, Beneficiary may at any time without notice, either in person, by agent, or by a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured, enter upon and take possession of said property or any part thereof, in his own name sue for or otherwise collect such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorney's fees, upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking possession of said property, the collecting of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. 6) That upon default by Participant in payment of any indebtedness secured hereby or in the performance of any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and of election to cause to be sold said property, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed, said note and all documents evidencing expenditures secured hereby. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Participant, shall sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Participant, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale. After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. (7) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed by the Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where said property is situatey>y r) shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties. Said instrument must contain the name of the original Participant, Trustee and Beneficiary hereunder, the book and page where this Deed is recorded and the name and address of the new Trustee. 8) That this Deed applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of the note secured hereby, whether or not named as Beneficiary herein. In this Deed, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. 9) That Trustee accepts this Trust when this Deed, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Participant, Beneficiary or Trustee shall be a party unless brought by Trustee. The undersigned Participant requests that a copy of any notice of default and of any notice of sale hereunder be mailed to him at his address hereinbefore set forth. Signature of Participant STATE OF CALIFORNIA COUNTY OF On } }ss } before me, Signature of Participant personally appeared personally known to me ( or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature (This area for official notarial seal) DO NOT RECORD REQUEST FOR FULL RECONVEYANCE TO FIRST AMERICAN TITLE INSURANCE COMPANY, TRUSTEE: The undersigned is the legal owner and holder of the note or notes and of all indebtedness secured by the foregoing Deed of Trust. Said note or notes, together with all other indebtedness secured by said Deed of Trust, have been fully paid and satisfied; and you are hereby requested and directed, on payment to you of any sums owing to you under the terms of said Deed of Trust, to cancel said note or notes above mentioned, an all other evidences of indebtedness secured by said Deed of Trust delivered to you herewith, together with the said Deed of Trust, and to reconvey, without warranty, to the parties designated by the terms of said Deed of Trust, all the estate now held by you under the same. Dated Please mail Deed of Trust, Note and Reconveyance to Do Not lose or destroy this Deed of Trust OR THE NOTE which it secures. Both must be delivered to the Trustee for cancellation before reconveyance will be made. W J a cn � v � � �� ?, W � W LL W � U) Oo �`~�Z) Q(L F- W � LU C) 4,:'F 882/015610-0043 349576.01 PM02 EXHIBIT "A" LEGAL DESCRIPTION [to be inserted] 882/015610-0043 349576.01 PM02 Exhibit «A„ RIDER TO DEED OF TRUST This Deed of Trust is subject to the terms and conditions of that certain Affordable Housing Agreement dated , and recorded on , as Instrument No. in the Official Records of the County of Riverside (the "Affordable Housing Agreement") and incorporated herein by reference, pursuant to which Beneficiary has agreed to loan Trustor the sum of Dollars ($_ (the "Agency Loan"). All terms in this Rider to Deed of Trust, if not separately defined herein, shall have the meanings as defined in the Affordable Housing Agreement. 1. Property Transfer Restrictions. a. Trustor shall not "Transfer" (as defined below) or permit the Transfer of the Property unless the Transfer is a "Permitted Transfer" (as defined below). A "Transfer" is (i) any sale, assignment, or transfer of an interest in the Property, including, without limitation, a fee simple interest, tenancy in common, joint tenancy, community property, tenancy by the entireties, life estate, or other limited estate, leasehold interest or any rental of the Property; (ii) any interest evidenced by a land contract; (iii) the refinancing of the lien of this Deed of Trust, or (iv) the refinancing of any lien to which the lien of this Deed of Trust is subordinated (the "First Lien") other than a "Permitted First Lien Refinance" (as defined in Section 7 of the Affordable Housing Agreement). b. Transfers shall be designated as voluntary or involuntary. Involuntary Transfers are Transfers that occur by operation of law, in the absence of an express conveyance by Trustor, and include, but are not limited to, Transfers by devise, inheritance, incompetency, marriage, and divorce (collectively, "Involuntary Transfers"). Voluntary Transfers occur by affirmative act of Trustor, and include Transfers by gift, sale and lease, any refinance that constitutes a Transfer, and any other Transfer that does not constitute an Involuntary Transfer. C. The following Transfers shall constitute "Permitted Transfers": (i) Voluntary Transfers to a spouse or to an "Eligible Buyer" (as defined in Section 2 below); and (ii) Involuntary Transfers. A Transfer that does not constitute a Permitted Transfer (a "Prohibited Transfer") is expressly prohibited by this Deed of Trust and shall be null and void and shall constitute a default of Trustor under this Agreement, entitling Beneficiary to exercise its right to purchase the Property from the new owner, as described in Section 3 herein, as well as all remedies available at law or equity, including without limitation the enforcement of the liquidated damages provision in Section 4 of this Rider to Deed of Trust. 2. Events of Acceleration. The Agency Loan shall become due and immediately payable irrespective of any provisions herein to the contrary upon the occurrence of any one of the following events of acceleration ("Event of Acceleration"): (i) Transfer of the Property (as defined in Section 1 above), except a Transfer which under applicable law, would not, by itself, permit Beneficiary to exercise a due on sale or due on encumbrance clause, or (ii) such time if or when Trustor (or upon Trustor's Transfer of the Property pursuant to a Permitted Transfer, Trustor's transferee) is no longer in compliance with the occupancy requirements set forth in Section 9 of the Affordable Housing Agreement or is in default of any other obligation under the Affordable Housing Agreement, the Note, or this Deed of Trust. Notwithstanding the above, however, the following Transfers of the Property shall not be an Event of Acceleration: 4 ) 882/015610-0043 (� 349576.01 PM02 a. A Transfer to Trustor's Spouse; b. An Involuntary Transfer that satisfies both of the following: (i) The transferee(s) gives notice to Beneficiary of such event within thirty (30) days of its occurrence and the transferee(s) assumes the Trustor's obligations under the Affordable Housing Agreement, by execution of an assignment and assumption agreement to be provided by Beneficiary; and (ii) Where the transferee is not a "Qualified Permanent Resident" (as that term is defined in Civil Code Section 51.3(b)(2) and described in Section 9 hereof), or an Eligible Buyer, and such transferee Transfers the Property to an Eligible Buyer within one hundred eighty (180) days after the transferee obtains title to the Property. Beneficiary's Executive Director may, in his or her sole and absolute discretion, waive some or all of the requirements of this Section 2. For purposes of this Rider to Deed of Trust, an "Eligible Buyer" is a person who is both of the following: (i) a "senior citizen" (as defined in California Civil Code Section 51.3(b)(1)) who is 55 years of age or older; and (ii) a "person or family of moderate income" who currently earns less than 120% of the current annual "area median income" for the Riverside County area adjusted for family size appropriate for the unit (as those terms are defined in California Health & Safety Code Section 50093). 3. Sale of Property; Beneficiary's Option to Purchase. a. If Trustor desires to sell, exchange, quitclaim or in any manner dispose of the Property or any part thereof ("Proposed Sale"), Trustor shall first notify Beneficiary in writing no later than ten (10) days prior to the date each time the Property is placed on the market for a Proposed Sale. b. Trustor shall not sell or transfer the Property until such time as Beneficiary has determined (i) the proposed buyer is an Eligible Buyer; (ii) the proposed buyer intends to occupy the Property as its principal residence; and (iii) the Proposed Sale is at an "Affordable Housing Cost" (as defined below). If Trustor identifies a buyer whom the Trustor believes to be an Eligible Buyer, Trustor shall cooperate with and reasonably assist Beneficiary with the determination of whether the proposed buyer is an Eligible Buyer. Within ten (10) days after Trustor locates the proposed buyer, Trustor shall submit to Beneficiary (1) information evidencing the proposed buyer's identity and income in order that Beneficiary may make a preliminary determination regarding the buyer's household income status ("Preliminary Determination"); and (2) the price at which Trustor proposes to sell the Property (less the value of any personal property or equipment included in said price). In the event Beneficiary makes a Preliminary Determination that the buyer qualifies as an Eligible Buyer, Trustor may proceed with opening an escrow for a proposed sale; provided, however, that not less than twenty (20) days prior to the date escrow is scheduled to close for the Proposed Sale, Trustor shall submit to Beneficiary adequate information to enable the Beneficiary to make a final determination regarding whether the buyer qualifies as an Eligible Buyer and whether the Property is available to such buyer at an Affordable Housing Cost ("Final Determination"). Such information shall include the identity of the proposed buyer, the purchase and sale agreement pursuant to which 882/015610-0043 349576.01 PM02 -2- Trustor proposes to sell the Property to the proposed buyer, and information evidencing the income of the proposed buyer including, but not limited to, original or true copies of pay stubs, income tax records or other financial documents. Beneficiary may request additional information reasonably required to make a Final Determination regarding the proposed buyer's status. If Beneficiary is unable to make a Final Determination regarding the proposed buyer's income as provided herein prior to the date set for the Proposed Sale, then the proposed buyer's income shall be deemed to exceed the maximum allowable income limit for Eligible Buyer status and Trustor may not conclude the Proposed Sale. As used herein, the term "Affordable Housing Cost" shall be that purchase price which would result in an annual "Purchase Housing Cost" (as defined below) which does not exceed one of the following calculations, as applicable: (i) For moderate income purchasers earning not more than one hundred ten percent (110%) of Riverside County median income adjusted for family size appropriate to the unit, Affordable Housing Cost shall be not less than twenty-eight percent (28%) of the gross income of the household nor exceed the product of thirty-five percent (35%) times one hundred ten percent (110%) of Riverside County median income adjusted for family size appropriate for the unit; or (ii) For moderate income purchasers earning more than one hundred ten percent (110%) but less than one hundred twenty percent (120%) of the Riverside County median income, Affordable Housing Cost shall be the product of thirty-five percent (35%) of the actual gross income of the household. "Purchase Housing Cost" shall be a cost that includes all of the following associated with the Property, estimated or known as of the date of the Proposed Sale of the Property: (1) Principal and interest payments on a mortgage loan including any rehabilitation loans and any loan insurance fees associated therewith. (2) Property taxes and assessments. (3) Fire and casualty insurance covering replacement value of property improvements. (4) Any homeowner association fees. (5) A reasonable utility allowance. For purposes of this Rider to Deed of Trust, the term "adjusted for family size appropriate for the unit" shall mean a household of one person in the case of a studio unit, two persons in the case of a one -bedroom unit, three persons in the case of a two -bedroom unit, four persons in the case of a three -bedroom unit, and five persons in the case of a four -bedroom unit. Trustor shall contact the Beneficiary to determine the applicable Affordable Housing Cost for a particular proposed Eligible Purchaser. s 882/015610-0043 349576.01 PM02 -3- C. Upon (i) Trustor's sale of the Property to a person who is an Eligible Buyer (provided that person's status as an Eligible Buyer has been verified by Beneficiary pursuant to this Section 3) at an Affordable Housing Cost, and (ii) the Eligible Buyer's execution of an assignment and assumption agreement in a form satisfactory to Beneficiary's legal counsel, the Agency Loan shall be assigned to the Eligible Buyer. d. At any time prior to the time Trustor enters into a binding agreement with an Eligible Buyer for a Proposed Sale, Beneficiary shall have an option to (i) purchase all of the Property from Trustor at the Affordable Housing Cost set forth in paragraph b(i) above, or (ii) cause the purchase of all of the Property by an Eligible Buyer at an Affordable Housing Cost. Beneficiary's exercise of such option to purchase shall be made by delivery of written notice to Trustor. In the event Beneficiary either purchases the Property or arranges the purchase by an Eligible Buyer, an escrow shall be established to close within forty-five (45) days after delivery of Beneficiary's notice of exercise, subject to any extensions, at Beneficiary's option, for causes outside the control of Beneficiary. In the event Beneficiary exercises its option to purchase the Property pursuant to paragraph (b)(i) above, the balance of the Agency Loan and any accrued interest thereon shall be due and payable to Beneficiary prior to or at the close of escrow. In the event Beneficiary arranges the purchase by an Eligible Buyer pursuant to paragraph b(ii) above, the Eligible Buyer shall be required to execute an assignment and assumption agreement in a form satisfactory to Beneficiary's legal counsel. e. IN THE EVENT TRUSTOR SELLS THE PROPERTY TO A PURCHASER THAT DOES NOT QUALIFY AS AN ELIGIBLE BUYER, BENEFICIARY SHALL HAVE AN OPTION TO PURCHASE THE PROPERTY FROM THE PURCHASER AT THE AFFORDABLE HOUSING COST SET FORTH IN PARAGRAPH b(ii) ABOVE. THE FOREGOING CONSTITUTES NOTICE TO ANY PURCHASER OF THE PROPERTY WHO HAS PURCHASED THE PROPERTY WITHOUT OBTAINING THE PRIOR APPROVAL OF COMMISSION. f. Beneficiary's option to purchase set forth in paragraphs d and e of this Section 3 shall terminate and be of no further force or effect on the date that is forty-five (45) years after the recordation of the Affordable Housing Agreement. Beneficiary's option to purchase set forth in this Section shall be memorialized by the Memorandum Re Option to Purchase substantially in the form as distributed to Trustor prior to receiving the Agency Loan to be recorded against the Property concurrently herewith. TRUSTOR UNDERSTANDS THAT THE DETERMINATION OF THE AFFORDABLE HOUSING COST CAN BE MADE ONLY AT THE TIME OF THE PROPOSED SALE, AND THAT THE AFFORDABLE HOUSING COST PERMITTED HEREUNDER MAY BE LESS THAN THE FAIR MARKET VALUE OF THE PROPERTY AND MAY NOT INCREASE OR DECREASE IN THE SAME MANNER AS OTHER SIMILAR REAL PROPERTY WHICH IS NOT ENCUMBERED BY THE AFFORDABILITY COVENANTS IN THIS DEED OF TRUST. TRUSTOR FURTHER ACKNOWLEDGES THAT IN SETTING THE AFFORDABLE HOUSING COST THE PRIMARY OBJECTIVE OF BENEFICIARY AND THIS AGREEMENT IS TO 882/015610-0043 349576.01 PM02 -4- PROVIDE HOUSING TO ELIGIBLE BUYERS AT AN AFFORDABLE HOUSING COST. TRUSTOR' S INITIALS 4. Liquidated Damages for Prohibited Transfer. In the event Beneficiary seeks monetary damages for a Prohibited Transfer, Trustor shall be required, to the extent permitted by law, to pay to Beneficiary the entire amount of the "Sale Price" (as defined below) received in excess of the Affordable Housing Cost permitted pursuant to this Agreement; provided, however, that nothing herein shall be deemed to limit Beneficiary's remedy for a Prohibited Transfer to seeking monetary damages, and Beneficiary shall be entitled to pursue any other equitable remedy permitted by law, including specific performance or injunctive relief, to prevent a Prohibited Transfer. For purposes of this Section 4, the "Sale Price" is the price to be paid by the buyer of the Property to Trustor for Trustor's interest in the Property, after deduction of escrow fees, recording fees, transfer taxes, title insurance costs, broker's commissions, loan fees or any other closing or transaction costs paid by Trustor. THE PARTIES HERETO AGREE THAT THE AMOUNT SET FORTH IN THIS SECTION 4 (THE "DAMAGE AMOUNT") CONSTITUTES A REASONABLE APPROXIMATION OF THE ACTUAL DAMAGES THAT BENEFICIARY WOULD SUFFER DUE TO THE DEFAULTS BY TRUSTOR SET FORTH IN THIS SECTION 4, CONSIDERING ALL OF THE CIRCUMSTANCES EXISTING ON THE EFFECTIVE DATE OF THIS DEED OF TRUST, INCLUDING THE RELATIONSHIP OF THE DAMAGE AMOUNTS TO THE RANGE OF HARM TO BENEFICIARY AND ACCOMPLISHMENT OF BENEFICIARY'S PURPOSE OF ASSISTING IN THE PROVISION OF AFFORDABLE HOUSING TO ELIGIBLE BUYERS THAT REASONABLY COULD BE ANTICIPATED AND THE ANTICIPATION THAT PROOF OF ACTUAL DAMAGES WOULD BE COSTLY OR INCONVENIENT. THE DAMAGE AMOUNT SET FORTH IN THIS SECTION 4 SHALL BE THE SOLE DAMAGES REMEDIES FOR THE DEFAULTS SET FORTH IN THIS SECTION 4, BUT NOTHING IN THIS SECTION 4 SHALL BE INTERPRETED TO LIMIT BENEFICIARY'S REMEDY FOR SUCH DEFAULT TO SUCH A DAMAGES REMEDY. IN PLACING ITS INITIAL AT THE PLACES PROVIDED HEREINBELOW, EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY HAS BEEN REPRESENTED BY COUNSEL OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED BY COUNSEL TO EXPLAIN THE CONSEQUENCES OF THE LIQUIDATED DAMAGES PROVISION AT OR PRIOR TO THE TIME EACH EXECUTED THIS AGREEMENT. TRUSTOR'S INITIALS: BENEFICIARY'S INITIALS: Notwithstanding any of the above, nothing herein is intended to preclude the Beneficiary's recovery of its attorneys' fees and costs incurred to enforce this Section. 5. Covenants Do Not Impair Lien. The Beneficiary agrees to subordinate the provisions of the Affordable Housing Agreement, that certain Declaration of Covenants ? '05 882/015610-0043 _t 349576.01 PM02 _5 Conditions, and Restrictions for Property, entered into by and between Trustor and Beneficiary and recorded concurrently herewith in the official records of Riverside County ("Declaration"), the Memorandum Re Option to Purchase, entered into by and between Trustor and Beneficiary and recorded concurrently herewith in the Official Records of Riverside County, and the deed of trust to any first trust deed for the purchase of the Property held by a reputable institutional lender ("First Lien") on the Property by recording a subordination agreement, in a form approved by Beneficiary's legal counsel ("Subordination Agreement"). Trustor agrees it shall instruct the Escrow Agent for the acquisition of the Property by the Trustor that the order of recording in the escrow for the purchase of the Property by the Trustor shall occur as follows: 1) the Affordable Housing Agreement; 2) the Memorandum Re Option to Purchase; 3) this Deed of Trust; 4) the First Lien; and 5) the Subordination Agreement. Trustor shall cause a Request for Notice to be recorded on the Property subsequent to the recordation of the First Lien deed of trust or mortgage requesting a statutory notice of default as set forth in the California Civil Code Section 29246. Such notice shall be sent to: La Quinta Redevelopment Agency, 78-495 Calla Tampico, La Quinta, California 92253, Attention: Executive Director. 6. Protection of Beneficiary's Rights in the Property. If Trustor fails to perform the covenants and agreements contained in this Deed of Trust, or there is a legal proceeding that may significantly affect Beneficiary's rights in the Property (such as a proceeding in bankruptcy, probate, for condemnation or forfeiture or to enforce laws or regulations), then Beneficiary may do and pay for whatever is necessary to protect the value of the Property and Beneficiary's rights in the Property. Beneficiary's actions may include paying any sums secured by a lien which has priority over this Deed of Trust, appearing in court, paying reasonable attorneys' fees and entering on the Property to make repairs. Although Beneficiary may take action under this Section 6, Beneficiary does not have to do so. Any amount disbursed by Beneficiary under this Section 6 shall become additional debt of Trustor secured by this Deed of Trust. Unless Trustor and Beneficiary agree to other terms of payment, these amounts shall bear interest from the date of disbursement at nine percent (9%) per annum or the maximum legal rate, whichever is less, and shall be payable, with interest, upon notice from Beneficiary to Trustor requesting payment. [End - Signature Page Follows] 41,3 C II 882/015610-0043 349576.01 PM02 -6- IN WITNESS WHEREOF, Trustor has executed this Rider to Deed of Trust as of the date set forth below. By: Printed Name: By: Printed Name: Dated: Dated: The foregoing Deed of Trust and Rider to Deed of Trust is approved, and consented to, by Beneficiary. By: LA QUINTA REDEVELOPMENT AGENCY Dated: Executive Director 434 I r 0 882/015610-0043 349576.01 PM02 -7- STATE OF CALIFORNIA ss. COUNTY OF On Public, personally appeared before me, Notary personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. [SEAL] STATE OF CALIFORNIA COUNTY OF On Public, personally appeared Notary Public ss. , before me, Notary personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 882/015610-0043 349576.01 PM02 -g- STATE OF CALIFORNIA ) SS. COUNTY OF ) On before me, , Notary Public, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 882/015610-0043 349576.01 PM02 -9- RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, California 92253 Attn: Executive Director Exempt From Recording Fee Pursuant to Government Code § 6103 AFFORDABLE HOUSING AGREEMENT THIS AFFORDABLE HOUSING AGREEMENT (the "Agreement") is made this day of 5 , by and between ("Participant") and the LA QUINTA REDEVELOPMENT AGENCY ("Agency"). RECITALS A. Participant has entered into an agreement (the "Purchase Agreement") to purchase a single family home located at , in the City of La Quinta ("City"), California (the "Property"). The Property is more particularly described in Exhibit "A" attached hereto and incorporated herein by this reference. B. The Property is located in a "senior citizen housing development," as that term is defined by California Civil Code Section 51.3(b)(4). C. Participant requires financial assistance from the Agency to purchase the Property and would not be able to purchase the Property without such assistance. Participant is both of the following: (i) a "person or family of moderate income" who currently earns less than 120% of the current annual "area median income" for the Riverside County area, adjusted for family size appropriate for the unit, as those terms are defined by California Health and Safety Code Section 50093; and (ii) a "senior citizen" who is 55 years of age or older, as that term is defined by California Civil Code Section 51.3(b)(1). D. Participant has represented to Agency that Participant shall reside in the Property as Participant's principal residence at all times throughout the term of this Agreement. E. Agency desires to assist "senior citizens" who are also "persons and families of moderate income" (collectively, "Eligible Buyers"), to purchase residential property and to increase, improve and preserve moderate -income housing available at "affordable housing cost" (as defined in Health and Safety Code Section 50052.5) within the territorial jurisdiction of Agency in accordance with the Community Redevelopment Law, Health and Safety Code Section 33000, et seq. F. Participant acknowledges that Agency and DC & TC, LLC, a California limited liability company ("Developer"), the developer of the Property, previously entered into an Affordable Housing Agreement, dated (the "AFA"), and that the Property is subject to affordability restrictions stemming from (i) the AFA, which require purchasers of the 882/015610-0043 346300.02 PM02 4j7 1�J3 Property to execute this Agreement in favor of Agency, and (ii) that certain Declaration of Covenants, Conditions, and Restrictions for Property, entered into by and between the Agency and Developer and recorded on , as Instrument No. , in the Official Records of Riverside County (the "Declaration"). G. Agency desires to lend to Participant, and Participant desires to borrow from Agency, funds in the form of a second trust deed mortgage assistance loan secured by a second lien deed of trust to assist Participant to purchase the Property pursuant to the Program and subject to the terms and conditions set forth herein. AGREEMENT NOW, THEREFORE, for good and valuable consideration the parties agree as follows: 1. Duration of Covenants. The covenants set forth in this Agreement shall remain in effect from the date this Agreement is recorded and continue thereafter for forty-five (45) years following the date of recordation ("Covenant Period"). 2. Agency Loan. Agency shall loan to Participant (the "Agency Loan") the amount of Dollars ($) subject to the conditions and restrictions set forth herein. Participant shall execute, as maker, and deliver to Agency a promissory note in favor of Agency, as holder, in the principal amount of the Agency Loan (the "Note Amount"), substantially in the form delivered to Participant prior to receiving the Agency Loan (the "Note" or "Promissory Note"). Interest on the Note Amount shall accumulate at the rate of seven percent (7%) per annum, compounded annually. At the expiration of the Covenant Period, the Note shall be cancelled and the Note Amount, together with interest thereon, shall be forgiven, unless prior to that time an "Event of Acceleration" (as that term is defined in Section 4 hereof) has occurred. Participant shall also execute and deliver to Agency a second deed of trust which shall secure the Note, in the form delivered to Participant prior to receiving the Agency Loan (the "Agency Deed of Trust"). As a further condition of the Agency making the Agency Loan to Participant, Participant shall execute and deliver to Agency (i) a memorandum re option to purchase ("Memorandum Re Option to Purchase"), and (ii) a Borrower Disclosure Statement and Notice of Rescission (collectively "Disclosure Statement"), both of which shall be in the form delivered to Participant prior to receiving the Agency Loan. 3. Property Transfer Restrictions. a. Participant shall not "Transfer" (as defined below) or permit the Transfer of the Property unless the Transfer is a "Permitted Transfer" (as defined below). A "Transfer" is (i) any sale, assignment, or transfer of an interest in the Property, including, without limitation, a fee simple interest, tenancy in common, joint tenancy, community property, tenancy by the entireties, life estate, or other limited estate, leasehold interest or any rental of the Property, (ii) any interest evidenced by a land contract, (iii) the refinancing of the lien of the Agency Deed of Trust, or (iv) the refinancing of any lien to which the lien of the Agency Deed of Trust is subordinated (the "First Lien") other than a "Permitted First Lien Refinance" (as defined in Section 7 hereof). 1 A 4.� 3 882/015610-0043 346300.02 PM02 -2- b. Transfers shall be designated as voluntary or involuntary. Involuntary Transfers are Transfers that occur by operation of law, in the absence of an express conveyance by Participant, and include, but are not limited to, Transfers by devise, inheritance, incompetency, marriage, and divorce (collectively, "Involuntary Transfers"). Voluntary Transfers occur by affirmative act of Participant, and include Transfers by gift, sale and lease, any refinance that constitutes a Transfer, and any other Transfer that does not constitute an Involuntary Transfer. C. The following Transfers shall constitute "Permitted Transfers": (i) Voluntary Transfers to a spouse or to an Eligible Buyer; and (ii) Involuntary Transfers. A Transfer that does not constitute a Permitted Transfer (a "Prohibited Transfer") is expressly prohibited by this Agreement and shall be null and void and shall constitute a default of Participant under this Agreement, entitling Agency to exercise its right to purchase the Property from the new owner, as described in Section 6 herein, as well as all remedies available at law or equity, including without limitation the enforcement of the liquidated damages provision in Section 18 of this Agreement. 4. Events of Acceleration. The Agency Loan shall become due and immediately payable irrespective of any provisions herein to the contrary upon the occurrence of any one of the following events of acceleration ("Event of Acceleration"): (i) Transfer of the Property (as defined in Section 3 above), except a Transfer which under applicable law, would not, by itself, permit Agency to exercise a due on sale or due on encumbrance clause, or (ii) such time if or when Participant (or upon Participant's Transfer of the Property pursuant to a Permitted Transfer, Participant's transferee) is no longer in compliance with the occupancy requirements set forth in Section 9 of this Agreement or is in default of any other obligation under this Agreement, the Note, or the Agency Deed of Trust. Notwithstanding the above, however, the following Transfers of the Property shall not be an Event of Acceleration: a. A Transfer to Participant's Spouse; b. An Involuntary Transfer that satisfies both of the following: (1) The transferee(s) gives notice to Agency of such event within thirty (30) days of its occurrence and the transferee(s) assumes the Participant's obligations under this Agreement, by execution of an assignment and assumption agreement to be provided by Agency; and (2) Where the transferee is not a "Qualified Permanent Resident" (as that term is defined in Civil Code Section 51.3(b)(2) and described in Section 9 hereof), or an Eligible Buyer, such transferee Transfers the Property to an Eligible Buyer within one hundred eighty (180) days after the transferee obtains title to the Property. Agency's Executive Director may, in his or her sole and absolute discretion, waive some or all of the requirements of this Section 4. 882/015610-0043 346300.02 PM02 -3- 5. Notice to Agency. Participant (or Participant's heirs following the death of Participant) agrees to notify Agency in writing not less than thirty (30) days prior to any Transfer of any interest in the Property. 6. Sale of Property; Agency's Option to Purchase. a. If Participant desires to sell, quitclaim, exchange, or in any manner dispose of the Property or any part thereof ("Proposed Sale"), Participant shall first notify Agency of its intent to transfer the Property, by sending to Agency the notification form attached hereto and incorporated herein as Exhibit "C", no later than ten (10) days prior to the date each time the Property is placed on the market for a Proposed Sale. b. Participant shall not sell or transfer the Property until such time as Agency has determined (i) the proposed buyer is an Eligible Buyer; (ii) the proposed buyer intends to occupy the Property as its principal residence; and (iii) the Proposed Sale is at an "Affordable Housing Cost" (as defined below). If Participant identifies a buyer whom the Participant believes to be an Eligible Buyer, Participant shall cooperate with and reasonably assist Agency with the determination of whether the proposed buyer is an Eligible Buyer. Within ten (10) days after Participant locates the proposed buyer, Participant shall submit to Agency (1) information evidencing the proposed buyer's identity and income in order that Agency may make a preliminary determination regarding the buyer's household income status ("Preliminary Determination"); and (2) the price at which Participant proposes to sell the Property (less the value of any personal property or equipment included in said price). In the event Agency makes a Preliminary Determination that the buyer qualifies as an Eligible Buyer, Participant may proceed with opening an escrow for a Proposed Sale; provided, however, that not less than twenty (20) days prior to the date escrow is scheduled to close for the Proposed Sale, Participant shall submit to Agency adequate information to enable the Agency to make a final determination regarding whether the buyer qualifies as an Eligible Buyer and whether the Property is available to such buyer at an Affordable Housing Cost ("Final Determination"). Such information shall include (a) a completed request for approval of buyer form in the form attached hereto and incorporated herein as Exhibit "D"; (b) the purchase and sale agreement pursuant to which Participant proposes to sell the Property to the proposed buyer; and (c) information evidencing the income of the proposed buyer including, but not limited to, original or true copies of pay stubs, income tax records or other financial documents. Agency may request additional information reasonably required to make a Final Determination regarding the proposed buyer's status. If Agency is unable to make a Final Determination regarding the proposed buyer's income as provided herein prior to the date set for the Proposed Sale, then the proposed buyer's income shall be deemed to exceed the maximum allowable income limit for Eligible Buyer status and Participant may not conclude the Proposed Sale. As used herein, the term "Affordable Housing Cost" shall be that purchase price which would result in an annual "Purchase Housing Cost" (as defined below) which does not exceed one of the following calculations, as applicable: 882/015610-0043 346300.02 PM02 -4-. (1) For moderate income purchasers earning not more than one hundred ten percent (110%) of Riverside County median income adjusted for family size appropriate to the unit, Affordable Housing Cost shall be not less than twenty-eight percent (28%) of the gross income of the household nor exceed the product of thirty-five percent (35%) times one hundred ten percent (110%) of Riverside County median income adjusted for family size appropriate to the unit; or (2) For moderate income purchasers earning more than one hundred ten percent (110%) but less than one hundred twenty percent (120%) of the Riverside County median income, Affordable Housing Cost shall be the product of thirty-five percent (35%) of the actual gross income of the household. "Purchase Housing Cost" shall be a cost that includes all of the following associated with the Property, estimated or known as of the date of the Proposed Sale of the Property: (1) Principal and interest payments on a mortgage loan including any rehabilitation loans and any loan insurance fees associated therewith. (2) Property taxes and assessments. (3) Fire and casualty insurance covering replacement value of property improvements. (4) Any homeowner association fees. (5) A reasonable utility allowance. (6) A reasonable property maintenance allowance. For purposes of this Agreement, the term "adjusted for family size appropriate to the unit" shall mean a household of one person in the case of a studio unit, two persons in the case of a one -bedroom unit, three persons in the case of a two -bedroom unit, four persons in the case of a three -bedroom unit, and five persons in the case of a four - bedroom unit. Participant shall contact the Agency to determine the applicable Affordable Housing Cost for a particular proposed Eligible Buyer. A sample calculation of an Affordable Housing Cost is attached hereto and incorporated herein as Exhibit `B". C. Upon (i) Participant's sale of the Property to a person who is an Eligible Buyer (provided that person's status as an Eligible Buyer has been verified by Agency pursuant to this Section 6) at an Affordable Housing Cost, and (ii) the Eligible Buyer's execution of an assignment and assumption agreement in a form satisfactory to Agency's legal counsel, the Agency Loan shall be assigned to the Eligible Buyer upon the close of escrow for such sale. 882/015610-0043 346300.02 PM02 -5- 411 7 7 d. At any time prior to the time Participant enters into a binding agreement with an Eligible Buyer for a Proposed Sale, Agency shall have an option to (i) purchase the Property from Participant at the Affordable Housing Cost set forth in paragraph b(1) above, or (ii) to cause the purchase of all the Property by an Eligible Buyer at an Affordable Housing Cost. Agency's exercise of such option to purchase shall be made by delivery of written notice to Participant. In the event Agency either purchases the Property or arranges the purchase by an Eligible Buyer, an escrow shall be established to close within forty-five (45) days after delivery of Agency's notice of exercise, subject to any extensions, at Agency's option, for causes outside the control of Agency. In the event Agency exercises its option to purchase the Property pursuant to (i) above, the balance of the Agency Loan and any accrued interest thereon shall be due and payable to Agency prior to or at the close of escrow. In the event Agency arranges the purchase by an Eligible Buyer pursuant to (ii) above, the Eligible Buyer shall be required to execute an assignment and assumption agreement in a form satisfactory to Agency's legal counsel. e. IN THE EVENT PARTICIPANT SELLS THE PROPERTY TO A BUYER WHO DOES NOT QUALIFY AS AN ELIGIBLE BUYER, AGENCY SHALL HAVE AN OPTION TO PURCHASE THE PROPERTY FROM THE BUYER AT THE AFFORDABLE HOUSING COST SET FORTH IN PARAGRAPH b(1) ABOVE. THE FOREGOING CONSTITUTES NOTICE TO ANY BUYER OF THE PROPERTY WHO HAS PURCHASED THE PROPERTY WITHOUT OBTAINING THE PRIOR APPROVAL OF AGENCY. f. Agency's option to purchase set forth in paragraphs d and e of this Section 6 shall terminate and be of no further force or effect on the date that is forty-five (45) years after the recordation of this Agreement. Agency's option to purchase set forth in this Section shall be memorialized by the Memorandum Re Option to Purchase substantially in the form as distributed to Participant prior to receiving the Agency Loan to be recorded against the Property concurrently herewith. PARTICIPANT UNDERSTANDS THAT THE DETERMINATION OF THE AFFORDABLE HOUSING COST CAN BE MADE ONLY AT THE TIME OF THE PROPOSED SALE, AND THAT THE AFFORDABLE HOUSING COST PERMITTED HEREUNDER MAY BE LESS THAN THE FAIR MARKET VALUE OF THE PROPERTY AND MAY NOT INCREASE OR DECREASE IN THE SAME MANNER AS OTHER SIMILAR REAL PROPERTY WHICH IS NOT ENCUMBERED BY THE AFFORDABILITY COVENANTS IN THIS AGREEMENT. PARTICIPANT FURTHER ACKNOWLEDGES THAT IN SETTING THE AFFORDABLE HOUSING COST, THE PRIMARY OBJECTIVE OF AGENCY AND THIS AGREEMENT IS TO PROVIDE HOUSING TO ELIGIBLE BUYERS AT AN AFFORDABLE HOUSING COST. PARTICIPANT'S INITIALS 41, 882/015610-0043 346300.02 PM02 -6- 7. Refinance of First Lien. a. Participant shall be permitted to refinance the First Lien for either of the following amounts (each, a "Permitted Refinance"): (i) not more than the then -current principal balance of the First Lien, or (ii) for more than the then -current principal loan balance of the First Lien (i.e., obtain a "cash out" refinance) in accordance with paragraph b below. b. In a "cash out" refinance, the new first mortgage loan principal shall not exceed the lesser of: (1) An amount which when combined with the principal of the Agency Loan (i.e., the total of the principal of the new first mortgage loan plus the principal of the Agency Loan) does not exceed seventy percent (70%) of the appraised value of the Property as evidenced by an appraisal (paid for by Participant) from a qualified appraiser, or based on other evidence acceptable to Agency's Executive Director or authorized designee in his/her sole and absolute discretion; (2) The maximum amount the Participant may borrow as the new first mortgage loan without the Participant exceeding "Affordable Housing Cost" (as described in Section 6 hereof); or (3) An amount equal to the sum of (x) the outstanding principal balance, at the time of the refinance, of the then -current First Lien that is being refinanced, plus (y) usual and customary closing costs paid by Participant but excluding loan origination points or loan origination fees, plus (z) Twenty -Five Thousand Dollars ($25,000.00). Notwithstanding the foregoing, the Agency Executive Director shall have the authority, in his/her sole and absolute discretion, on behalf of the Agency to approve the following: (i) with respect to subparagraph (1) above, an increase from 70% to up to 80% in the maximum loan -to -value ratio, and (ii) with respect to subparagraph (3) above, an increase from Twenty -Five Thousand Dollars ($25,000) to up to Fifty Thousand Dollars ($50,000); provided, however, in both cases, Participant shall have provided evidence satisfactory to Agency's Executive Director, in his/her sole and absolute discretion, that the additional amount is needed to remedy a specific and significant current or identifiable future adverse financial condition of Participant and Agency's Executive Director determines, in his/her sole and absolute discretion, that such additional amount shall not jeopardize the continuation of the property as an affordable housing unit. In the event Agency's Executive Director modifies the amount in either subparagraphs (1) or (3) above, the new first mortgage loan principal shall not exceed the lesser of (a) the amount in subparagraph (1) above if and as modified, or (b) the amount in subparagraph (2) above, or (c) the amount in subparagraph (3) above if and as modified. 41,' ,1 882/015610-0043 -- v 346300.02 PM02 -7- C. Participant may seek subordination of the Agency Deed Of Trust to the deed of trust of the new first mortgage loan not more than once every three (3) years; provided, however, this restriction may be waived if Participant provides evidence satisfactory to Agency's Executive Director, in his/her sole and absolute discretion, that waiver of this restriction is needed to remedy a specific and significant current or identifiable future adverse financial condition of Participant and Agency's Executive Director determines, in his/her sole and absolute discretion, that waiver of this requirement shall not jeopardize the continuation of the property as an affordable housing unit. d. Participant shall notify Agency not less than thirty (30) days prior to the date proposed for the closing of the refinance loan and shall execute such documents, and shall cause the new first mortgage lender to execute such documents, as Agency requires to effect the Agency's subordination of the Agency Deed of Trust (and related recorded regulatory agreements if necessary ) to the deed of trust of the new first mortgage lender. Agency shall only approve a subordination of the Agency Deed of Trust (and related documents if necessary) to the deed of trust of the new first mortgage lender upon confirmation of the new first loan amount and review of Participant's loan application and related material and documents. 8. Maintenance of Property. Participant shall maintain the improvements and landscaping on the Property in a manner consistent with community standards which will uphold the value of the Property, in accordance with the La Quinta Municipal Code. Participant also agrees to comply with the Declaration, and to comply with all applicable federal, state and local laws. 9. Occupancy Standards. a. The Property shall be used as the principal residence of Participant and for no other purpose; provided, however, that one or more persons who qualify as a "Qualified Permanent Resident" or a "Permitted Health Care Resident" are also permitted to reside at the Property. As used herein, the term "Qualified Permanent Resident" shall have the meaning set forth in Civil Code Section 51.3(b)(3) and, as of the date of this Agreement, includes, but is not limited to, a person who is 45 years of age or older, is a spouse, cohabitant, or person providing primary physical or economic support to Participant; and the term "Permitted Health Care Resident" shall have the meaning set forth in Civil Code Section 51.3(b)(7) and, as of the date of this Agreement, includes but is not limited to, a person hired to provide live-in, long-term, or terminal health care to Participant or a family member of Participant providing that care. Notwithstanding the above, a Permitted Health Care Resident shall only be permitted to reside at the Property during such time as the Permitted Health Care Resident is actually providing live-in, long-term or hospice health care to Participant "for compensation" (as defined below) or, if Participant is absent from the Property, only if both of the following are applicable: (1) Participant became absent from the Property due to hospitalization or other necessary medical treatment and expects to return to the Property within ninety (90) days from the date the absence began. 982/015610-0043 - 346300.02 PM02 -�- (2) Participant or an authorized person acting for Participant submits a written request to the Agency stating that Participant desires that the Permitted Health Care Resident be allowed to remain in order to be present when Participant returns to reside at the Property. Upon written request by Participant or an authorized person acting for the Participant, the Agency shall have the discretion to allow a Permitted Health Care Resident to remain for a time period longer than ninety (90) days from the date Participant's absence began, if it appears that Participant will return within a period of time not to exceed an additional ninety (90) days. For purposes of this Section, the phrase "for compensation" shall mean in exchange for payment, services or other remuneration of equal value, and shall include the provision of lodging and food in exchange for care. b. Participant shall not enter into an agreement for the rental or lease of the Property. C. The maximum occupancy of the Property shall not exceed the maximum occupancy allowed pursuant to the general requirements of the United States Department of Housing and Urban Development which as of the date of this Agreement is two persons per bedroom, plus one person. d. Participant shall, upon demand by Agency, submit to Agency an affidavit of occupancy verifying Participant's compliance with this Section 9. Said affidavit may be required by Agency on an annual basis. e. Notwithstanding the residency and occupancy restrictions set forth in this Section 9, guests of Participant and/or guests of a Qualified Permanent Resident shall be permitted to temporarily reside at the Property for a cumulative total of not more than ninety (90) days in any year. f. Agency may grant a temporary waiver of the above requirements for good cause, in Agency's sole and absolute discretion. 10. Income and Asset Information. Participant has submitted an application and additional information verifying income and asset eligibility to Agency prior to execution of this Agreement. Participant represents, warrants and declares under penalty of perjury to Agency that all information Participant has provided and will provide in the future to Agency is and will be true, correct and complete. Participant acknowledges that Agency is relying upon Participant's representations that Participant is an Eligible Buyer, and Agency would not have entered into this Agreement if Participant did not so qualify. Asset eligibility shall be determined pursuant to the Asset Limitation Requirements set forth in the La Quinta Housing Program Implementation Manual, as it may be amended from time to time. 11. Loan Servicing. Agency may contract with a private lender or other person or entity (the "Administrator") to originate and service the Agency Loan, and to carry out Agency's obligations under this Agreement. Any reference to the duties of Agency herein shall also apply to the Administrator. 4 882/015610-0043 346300.02 PM02 -9- 12. Participant Financing. As a condition to Agency's obligation to make the Agency Loan, Participant shall obtain first trust deed financing for the purchase of the Property from a reputable institutional lender (the "Lender"). In addition, Participant must make a down payment of not less than three percent (3 %) of the "Purchase Price" (as defined below). Nothing in this Agreement shall be construed as a promise or guaranty by Agency that the Participant will qualify for or receive such first trust deed financing. For purposes of this Section 12, "Purchase Price" is the original purchase price paid by the Participant to the seller of the Property for the seller's interest in the Property, together with all escrow fees, recording fees, transfer taxes, title insurance costs, broker's Agency, loan fees and any other closing or transaction costs paid by Participant. 13. Title Insurance. As a condition to disbursement of the Agency Loan, Participant, at no cost to Agency, shall obtain and cause to be delivered to Agency a standard form ALTA Lender's policy of Title Insurance, issued by a title company as may be mutually approved by Agency and Participant, in an amount not less than the Agency Loan, insuring the priority of the Agency Deed of Trust against all monetary liens and encumbrances against the Property, including but not limited to, mechanic's liens claims and excepting only (i) the lien of any non -delinquent property taxes; (ii) the Declaration recorded against the Property; (iii) the First Lien and Subordination Agreement referred to in Section 14; and (iv) other encumbrances and exceptions to title as may be approved by Agency in Agency's sole and absolute discretion. 14. Covenants Do Not Impair Lien. Agency agrees to subordinate the provisions of this Agreement, the Declaration, the Memorandum Re Option to Purchase, and the Agency Deed of Trust to any First Lien on the Property held by the Lender by recording a subordination agreement, in a form approved by Agency ("Subordination Agreement"). Participant agrees it shall instruct the Escrow Agent for the acquisition of the Property by the Participant that the order of recording in the escrow for the purchase of the Property by the Participant shall occur as follows: 1) this Agreement; 2) the Memorandum Re Option to Purchase; 3) the Agency Deed of Trust; (4) the First Lien; and (5) the Subordination Agreement. Participant shall cause a Request for Notice to be recorded on the Property subsequent to the recordation of the First Lien deed of trust or mortgage requesting a statutory notice of default as set forth in the California Civil Code Section 29246. Such notice shall be sent to: La Quinta Redevelopment Agency, 78-495 Calle Tampico, La Quinta, California 92253, Attention: Executive Director. 15. Indemnification. Participant shall defend, indemnify and hold harmless Agency and the City of La Quinta and their respective officers, officials, agents, members, employees, representatives, and volunteers from and against any loss, liability, claim, or judgment relating in any manner to the Property or this Agreement. The Participant shall remain fully obligated for the payment of taxes, liens and assessments related to the Property. There shall be no reduction in taxes for Participant, nor any transfer of responsibility to Agency to make such payments, by virtue of the Agency Loan. 16. Insurance. Participant shall maintain, during the term of the Agency Loan, an all-risk property insurance policy insuring the Property in an amount equal to the full 882/015610-0043 346300.02 PM02 -1 0- replacement value of the structures on the Property. The policy shall name Agency as loss payee and shall contain a statement of obligation on behalf of the carrier to notify Agency of any material change, cancellation or termination of coverage at least thirty (30) days in advance of the effective date of such material change, cancellation or termination. Participant shall transmit a copy of the certificate of insurance and loss payee endorsement to Agency within thirty (30) days of the effective date of this Agreement, and Participant shall annually transmit to Agency a copy of the certificate of insurance and a loss payee endorsement, signed by an authorized agent of the insurance carrier setting forth the general provisions of coverage. The copy of the certificate of insurance and loss payee endorsement shall be transmitted to Agency as follows: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, CA 92253 Attention: Executive Director Any certificate of insurance must be in a form, content and with companies approved by Agency. 17. Defaults. Failure or delay by either party to perform any term or provision of this Agreement which is not cured within thirty (30) days after receipt of notice from the other party constitutes a default under this Agreement; provided, however, if such default is of the nature requiring more than thirty (30) days to cure, the defaulting party shall avoid default hereunder by commencing to cure within such thirty (30) day period, and thereafter diligently pursuing such cure to completion. The party who so fails or delays must immediately commence to cure, correct or remedy such failure or delay, and shall complete such cure, correction or remedy with diligence. The injured party shall give written notice of default to the party in default, specifying the default complained of by the injured party. Except as required to protect against further damages, the injured party may not institute proceedings against the party in default until thirty (30) days after giving such notice. Failure or delay in giving such notice shall not constitute a waiver of any default, nor shall it change the time of default. 18. Liquidated Damages for Prohibited Transfer. In the event Agency seeks monetary damages for a Prohibited Transfer, Participant shall be required, to the extent permitted by law, to pay to Agency the entire amount of the "Sale Price" (as defined below) received in excess of the Affordable Housing Cost permitted pursuant to this Agreement; provided, however, that nothing herein shall be deemed to limit Agency's remedy for a Prohibited Transfer to seeking monetary damages, and Agency shall be entitled to pursue any other equitable remedy permitted by law, including specific performance or injunctive relief, to prevent a Prohibited Transfer. For purposes of this Section 18, the "Sale Price" is the price to be paid by the buyer of the Property to Participant for Participant's interest in the Property, after deduction of escrow fees, recording fees, transfer taxes, title insurance costs, broker's commissions, loan fees or any other closing or transaction costs paid by Participant. THE PARTIES HERETO AGREE THAT THE AMOUNT SET FORTH IN THIS SECTION 18 (THE "DAMAGE AMOUNT") CONSTITUTES A REASONABLE A 7 882/015610-0043 346300.02 PM02 -1 1- APPROXIMATION OF THE ACTUAL DAMAGES THAT AGENCY WOULD SUFFER DUE TO THE DEFAULTS BY PARTICIPANT SET FORTH IN THIS SECTION 18, CONSIDERING ALL OF THE CIRCUMSTANCES EXISTING ON THE EFFECTIVE DATE OF THIS AGREEMENT, INCLUDING THE RELATIONSHIP OF THE DAMAGE AMOUNTS TO THE RANGE OF HARM TO AGENCY AND ACCOMPLISHMENT OF AGENCY'S PURPOSE OF ASSISTING IN THE PROVISION OF AFFORDABLE HOUSING TO ELIGIBLE BUYERS THAT REASONABLY COULD BE ANTICIPATED AND THE ANTICIPATION THAT PROOF OF ACTUAL DAMAGES WOULD BE COSTLY OR INCONVENIENT. THE DAMAGE AMOUNT SET FORTH IN THIS SECTION 18 SHALL BE THE SOLE DAMAGES REMEDIES FOR THE DEFAULTS SET FORTH IN THIS SECTION 18, BUT NOTHING IN THIS SECTION 18 SHALL BE INTERPRETED TO LIMIT AGENCY'S REMEDY FOR SUCH DEFAULT TO SUCH A DAMAGES REMEDY. IN PLACING ITS INITIAL AT THE PLACES PROVIDED HEREINBELOW, EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY HAS BEEN REPRESENTED BY COUNSEL OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED BY COUNSEL TO EXPLAIN THE CONSEQUENCES OF THE LIQUIDATED DAMAGES PROVISION AT OR PRIOR TO THE TIME EACH EXECUTED THIS AGREEMENT. PARTICIPANT'S INITIALS: AGENCY'S INITIALS: Notwithstanding any of the above, nothing herein is intended to preclude the Agency's recovery of its attorney's fees and costs incurred to enforce this Section, as provided in Section 32. 19. Distribution of Insurance and Condemnation Proceeds. In the event the improvements on the Property are destroyed and insurance proceeds are distributed to Participant instead of being used to rebuild, or in the event of condemnation, if proceeds thereof are distributed to Participant, any surplus of proceeds so distributed remaining after payment of encumbrances of said Property, with the first claim accruing to the Lender, shall be distributed as follows: that portion of the surplus that is in excess of the Affordable Housing Cost permitted pursuant to this Agreement shall be distributed to Agency, and the balance of such surplus, if any, shall be distributed to Participant. 20. Covenant to Keep Property Drug Free. Participant represents to Agency that Participant shall maintain a drug free environment on the Property. Participant covenants to Agency that Participant and all persons residing on the Property shall not unlawfully manufacture, distribute, dispense, possess or use controlled substances, as said term is defined in 21 United States Code Section 812 and California Health and Safety Code Section 11007, including marijuana, heroin, cocaine, and amphetamines on the Property. If Participant or any person residing on the Property is convicted, pleads guilty or nolo contendere to a charge of unlawfully manufacturing, distributing, dispensing, possessing or using controlled substances on the Property, then such event shall be a default of this Agreement, which shall entitle Agency to exercise its option to purchase the Property at an Affordable Housing Cost as set forth in Section 6 of this Agreement within sixty (60) days after Agency's notice of said default. 418 882/015610-0043 346300.02 PM02 -12- 21. Rights and Remedies are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of its rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. 22. Covenants to Run with the Land. All conditions, covenants, and restrictions contained in this Agreement shall be covenants running with the land, and shall, in any event, and without regard to technical classification or designation, legal or otherwise, be, to the fullest extent permitted by law and equity, binding for the benefit and in favor of, and enforceable by, Agency and its successors and assigns, against Participant, its successors and assigns, to or of the Property or any portion thereof or any interest therein, and any party in possession or occupancy of said Property or portion thereof. In amplification and not in restriction of the provisions set forth hereinabove, it is intended and agreed that Agency shall be deemed a beneficiary of the agreements and covenants provided hereinabove both for and in its own right and also for the purposes of protecting the interests of the community. All covenants without regard to technical classification or designation shall be binding for the benefit of Agency and such covenants shall run in favor of Agency for the entire period during which such covenants shall be in force and effect, without regard to whether Agency is or remains an owner of any land or interest therein to which such covenants relate. Agency shall have the right, in the event of any breach of any such agreement or covenant, to exercise all the rights and remedies, and to maintain any action at law or suit in equity or other proper proceedings to enforce the curing of such breach of agreement or covenant. 23. Non -Waiver. Failure to exercise any right Agency may have or be entitled to, in the event of default hereunder, shall not constitute a waiver of such right or any other right in the event of a subsequent default. 24. Documents. Participant is aware that Agency has prepared certain documents to implement the Program and secure repayment of the Agency Loan. Participant has reviewed and agrees to execute the following documents in substantially the form as distributed to Participant prior to receiving the Agency Loan, and any other documents reasonably required by Agency or a participating entity to complete the transaction contemplated herein: a. Promissory Note; b. Agency Deed of Trust; C. Disclosure Statement and Notice of Rescission; d. Memorandum Re Option to Purchase; and e. Subordination Agreement. Participant agrees and acknowledges that this Agreement, the Agency Deed of Trust, the Memorandum Re Option to Purchase, and the Subordination Agreement shall be recorded 882/015610-0043 _ 346300.02 PM02 -13- against the Property with the County Recorder of the County of Riverside and shall appear of record with respect to and as encumbrances to the Property. 25. Compliance with La Quinta Housing Program Implementation Manual. In addition to the terms and conditions set forth herein and in the documents listed in Section 24 above, Participant acknowledges that its occupancy and any attempted Transfer of the Property shall be in accordance with the La Quinta Housing Program Implementation Manual. 26. Further Assurances. The Participant shall execute any further documents consistent with the terms of this Agreement, including documents in recordable form, as Agency shall from time to time find necessary or appropriate to effectuate its purposes in entering into this Agreement and making the Agency Loan. 27. Governing Law. The Participant hereby agrees to comply with all ordinances, rules and regulations of Agency and the City of La Quinta (the "City"). Nothing in this Agreement is intended to be, nor shall it be deemed to be, a waiver of any City ordinance, rule or regulation. This Agreement shall be governed by the laws of the State of California. Any legal action brought under this Agreement must be instituted in the Superior Court of the County of Riverside, State of California, in an appropriate municipal court in that county or in the Federal District Court in the District of California in which Riverside County is located. 28. Amendment to Agreement. No modification, rescission, waiver, release or amendment of any provision of this Agreement shall be made except by a written agreement executed by the Participant and Agency. 29. Agency May Assign. Agency may, at its option, assign its right to receive repayment of the Agency Loan proceeds without obtaining the consent of the Participant. 30. Participant Assignment Prohibited. In no event shall Participant assign or transfer any portion of this Agreement or any of the other agreements referred to herein without the prior express written consent of Agency, which consent shall be given by Agency only in the event that Agency determines that the assignee or transferee is an Eligible Buyer, that the assignee's or transferee's monthly housing payments are at an Affordable Housing Cost, and that the assignee or transferee has expressly assumed this Agreement by execution of a written assignment document to be provided by Agency. 31. Relationship of Participant and Agency. The relationship of Participant and Agency pursuant to this Agreement is that of debtor and creditor and shall not be or be construed to be a joint venture, equity venture, partnership, or other relationship. 32. Notices. Any notices, requests or approvals given under this Agreement from one party to another may be personally delivered or deposited with the United States Postal Service for mailing, postage prepaid, registered or certified mail, return receipt requested to the following address: To Participant: 882/015610-0043 346300.02 PM02 -14- To Agency: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, CA 92253 Attention: Executive Director Either party may change its address for notice by giving written notice thereof to the other party. 33. Attorneys' Fees and Costs. In the event that any action is instituted to enforce payment or performance under this Agreement, the parties agree the non -prevailing party shall be responsible for and shall pay all costs, including expert witness fees, and all attorneys' fees incurred by such prevailing party in enforcing this Agreement. 34. Nondiscrimination. Participant covenants by and for itself, its successors and assigns, and all persons claiming under or through them that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, nor shall Participant itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Property. Participant, its successors and assigns, shall refrain from restricting the rental, sale or lease of the Property on the basis of race, color, religion, sex, marital status, national origin or ancestry of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: a. In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself or herself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee or vendees in the land herein conveyed. The foregoing covenants shall run with the land." b. In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: There shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, sex, marital status, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the J 882/015610-0043 346300.02 PM02 -15 - premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the premises herein leased." C. In contracts: "There shall be no discrimination against or segregation of, any person or group of persons on account of race, color, religion, sex, marital status, ancestry or national origin, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee or vendees of the premises." Notwithstanding the foregoing, the Participant acknowledges and agrees that during the Covenant Period, the Promissory Note and Agency Deed of Trust executed pursuant thereto, Participant shall occupy the Property as Participant's principal residence and shall not rent or lease the Property. 35. Entire Agreement. This Agreement, together with all attachments hereto, constitutes the entire understanding and agreement of the parties. This Agreement integrates all of the terms and conditions mentioned herein or incidental thereto, and supersedes all prior negotiations, discussions and previous agreements between Agency and the Participant concerning all or any part of the subject matter of this Agreement. 36. Authority. Each signatory hereto warrants to the other party that it has authority to sign on behalf of the party for whom it purports to sign. 37. Non -Liability of Officers and Employees. No officer, official, member, employee, agent, or representative of Agency shall be personally liable to Participant, or any successor or assign of same, in the event of any default or breach by Agency, or for any amount which may become due to Participant, or any successor or assign of same, or for breach of any obligation of the terms of this Agreement. 38. Time of Essence. Time is of the essence of every portion of this Agreement in which time is a material part. 39. Interpretation; Severability. The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party hereto by reason of the authorship of this Agreement or any other rule of construction which might otherwise apply. The Section headings are for purposes of convenience only, and shall not be construed to limit or extend the meaning of this Agreement. Each provision of this Agreement shall be severable from the whole. If any provision of this Agreement shall be found contrary to law, the remainder of this Agreement shall continue in full force. 40. Integration; Amendment. It is understood that there are no oral agreements between the parties hereto affecting this Agreement, and this Agreement supersedes and cancels any and all previous negotiations, arrangements, agreements, and understandings, if any, 4J ti R1 � l 882/015610-0043 346300.02 PM02 -16- between the parties with respect to the subject matter hereof, and none shall be used to interpret this Agreement. This Agreement may be amended at any time by the mutual consent of the parties by an instrument in writing. 41. Counterparts. This Agreement may be executed in counterparts, each of which, when this Agreement has been signed by each of the parties hereto, shall be deemed to be an original. 4 882/015610-0043 346300.02 PM02 -17- IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written below. Date: Date: Date: ATTEST: Agency Secretary APPROVED AS TO FORM: RUTAN & TUCKER, LLP Agency Legal Counsel "Participant" By: Printed Name: By: Printed Name: "Agency" LA QUINTA REDEVELOPMENT AGENCY 44 882/015610-0043 346300.02 PM02 STATE OF CALIFORNIA ) ss. COUNTY OF ) On 5 , before me, , Notary Public, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. [SEAL] STATE OF CALIFORNIA ss. COUNTY OF On Notary Public before me, Notary Public, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 882/015610-0043 346300.02 PM02 -19- STATE OF CALIFORNIA ) ss. COUNTY OF ) .M , before me, Notary Public, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 45 r 882/015610-0043 346300.02 PM02 _20_ EXHIBIT "A" LEGAL DESCRIPTION OF THE PROPERTY [To be inserted] 882/015610-0043 346300.02 PM02 EXHIBIT "B" CALCULATION OF AFFORDABLE HOUSING COST "Affordable Housing Cost" for the purposes of the Affordable Housing Agreement is that purchase price (inclusive of the proceeds of the Homebuyer Assistance) which would result in a monthly housing cost which is not less than twenty-eight percent (28%) of the gross income of the purchaser and does not exceed the greater of (a) the product of thirty-five percent (35%) times one hundred ten percent (110%) of Riverside County median income adjusted for family size appropriate for the unit for Eligible Buyers earning not more than one hundred ten percent (110%) of Riverside County median income, or (b) the product of thirty-five percent (35%) of the actual gross income of the household for Eligible Buyers earning more than one hundred ten percent (110%) of Riverside County median income. The following is a worksheet of how to calculate Affordable Housing Cost using the two methods set forth above: A. All Moderate Income Buyers Monthly housing costs may not exceed 1/12 of 3 5 % x 110% of Riverside County Median Income adjusted for family size appropriate for the unit. For a two- bedroom housing Unit, monthly housing costs may not exceed 1/12 of 35% x 110% of Riverside County Median Income for a family of 3 (example of Median Income is $45,250 in Riverside County pursuant to regulations issued by the California Department of Housing and Community Development in February 2002, or $1,452). Monthly Housing Costs include: a. Mortgage Principal and Interest b. Private Mortgage Insurance C. Property Taxes d. Fire/Casualty Insurance e. Property Maintenance f. Utilities Allowance g. Homeowner's Association ("HOA") Fees For example, in the following situation, for a 2 bedroom housing Unit, assuming an 8% interest rate on a conventional loan, and assuming a down payment of at least 3% of the purchase price and a second trust deed loan from the Agency of $ , the maximum loan amount would be $ and the maximum purchase price would be $ (down payment of $ + Agency Loan of $ + first trust deed loan of $ The foregoing is based upon the following monthly housing costs: 882/015610-0043 4 346300.02 PM02 a. Mortgage Principal and Interest $ b. Private Mortgage Insurance (Included in $0.00 Mortgage Interest Rate) C. Property Taxes $ d. Fire/Casualty Insurance (Included in HOA) $0.00 e. Property Maintenance $20.00 f. Utilities Allowance $70.00 g. Homeowner's Association $50.00 TOTAL: $ 140.00 B. Buyer's Income is between 110% and 120% of Riverside County Median Income Under method (b), monthly housing costs may not exceed 1/12 of 3 5 % of the purchaser's income, instead of the formula set forth in paragraph (a) above. For example, if the purchaser is a three -person household earning $54,000 monthly housing costs may not exceed $1,575. The maximum sales price would be calculated in the same manner as in paragraph (a) above. For example, if all the other assumptions stated in that paragraph also apply herein, the purchaser's maximum loan amount would be $ , and the maximum purchase price, absent the Agency Second Trust Deed Loan would be $ The foregoing is based upon the following monthly housing costs: a. Mortgage Principal and Interest $ b. Private Mortgage Insurance (Included in $0.00 Mortgage Interest Rate) C. Property Taxes $ d. Fire/Casualty Insurance (Included in HOA) $0.00 e. Property Maintenance $20.00 f. Utilities Allowance $70.00 g. Homeowner's Association $50.00 TOTAL: $ 140.00 882/015610-0043 346300.02 PM02 -2- The foregoing are intended to be examples of how to calculate affordable housing cost, and the actual numbers will vary depending upon such factors as changes in median income, interest rates, amount of down payment, etc. Please see attached chart of Riverside County median income for moderate income purchasers, 4 r ii 882/015610-0043 346300.02 PM02 -3- RIVERSIDE COUNTY 2002 Affordable Housing Costs for Home Purchase Programs for Persons of Moderate Income (3) (Income figures based on Department of Housing and Community Development Income Limits dated February, 2002) 1 Person Household 2 Person Household 3 Person Household Median Median Median Income $35,200 Income $40,250 Income $45,250 Monthly Affordable Monthly Monthly Annual Housing Annual Affordable Annual Affordable Income(') Cost(2) Income Housing Cost Income Housing Cost $42,250 $1,129 $48,300 $1,291 $54,300 $1,452 4 Person Household 5 Person Household 6 Person Household Median Median Median Income $50,300 Income $54,300 Income $58,350 Monthly Monthly Monthly Annual Affordable Annual Affordable Annual Affordable Income Housing Cost Income Housing Cost I Income Housin Cost $60,350 $1,614 $65,200 $1,742 1 $70,000 $1,872 7 Person Household 8 Person Household Median Median Income $62,350 Income $66,400 Monthly Monthly Annual Affordable Annual Affordable Income Housing Cost Income HousingCost $74,850 $2,000 $79,650 $2,130 DEFINITIONS: 1. Annual Income: Gross income from all sources for all members of the household. 2. Monthly Housing Costs: Amount of mortgage payment principal and interest, mortgage insurance, property taxes, and property insurance. 3. Moderate Income Affordable Housing Costs: Assumes affordable housing costs computed at 35% of 110% of median income; may not be less than 28% of household's gross income. 882/015610-0043 346300.02 PM02 -4- EXHIBIT "C" NOTICE OF INTENT TO TRANSFER [See attached] 4r 882/015610-0043 346300.02 PM02 NOTICE OF INTENT TO TRANSFER NOTICE OF INTENT TO TRANSFER MUST BE DELIVERED TO THE LA QUINTA REDEVELOPMENT AGENCY PRIOR TO PROCEEDING WITH ANY TRANSFER OF THE PROPERTY. From: To: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, CA 92253 Attn: Project Officer Re: (street address) La Quinta, CA (the "Property") ("Owner") Owner desires to [sell, convey, transfer by inheritance or devise, lease, gift, otherwise transfer] (circle appropriate words) the Property. If the Agency has a program to help locate an Eligible Buyer, does the Owner want the Agency to help look for an Eligible Buyer to buy the Property? Yes No Date: Signature of Owner Day time telephone of Owner Date: Signature of Owner O Day time telephone of Owner lip. 882/015610-0043 346300.02 PM02 -1- EXHIBIT "D" REQUEST FOR APPROVAL OF PROPOSED BUYER [See attached] 4 t; 4 882/015610-0043 346300.02 PM02 REQUEST FOR APPROVAL OF PROPOSED BUYER THIS FORM MUST BE DELIVERED TO THE AGENCY BEFORE PROCEEDING WITH ANY TRANSFER OF THE PROPERTY. La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, CA 92253 Attn: Project Officer Re: Request for Approval of Proposed Buyer To Whom It May Concern: The undersigned is the owner of real property in La Quinta, located at (the "Property"), which was developed with assistance from the Agency ("Owner") The Owner now desires to transfer the Property and by this letter is requesting the Agency to approve the proposed buyer. 1. The Proposed Buyer is: Name: Current Address: Telephone Number: 2. The terms of the proposed transfer are (a) Sales price of $ . This sales price is based on the lesser of (i) Fair market value; or (ii) The maximum price at which the Purchase Housing Cost of the Proposed Buyer would not exceed Affordable Housing Cost. The calculation of the Sales Price under this subsection (ii) is illustrated in Exhibit `B" to the Declaration of Covenants, Conditions, and Restrictions for the Property. 882/015610-0043 346300.02 PM02 IN ORDER TO ANSWER QUESTION 2(b) YOU MUST CALCULATE THE PROPOSED SALES PRICE BASED ON AFFORDABLE HOUSING COST, TAKING INTO CONSIDERATION ALL ITEMS LISTED IN THE DEFINITION OF PURCHASE HOUSING COST. (b) Price of any personal property being sold by the Owner to the proposed buyer: $ . (If none, so state.) (c) The price of $ to be paid by the proposed buyer for any services of Owner. (If none, so state). (d) All other amounts of money or other consideration, if any, concerning the Property or any other matter to be paid by the proposed buyer to the Owner: $ (If none, so state.) (e) Sources of payment of sales price: Sales price $ Cash down payment $ 1 st loan $ 2nd loan $ Other (describe) $ Total $ (f) The financing obtained by the proposed buyer to purchase the Property is as follows: 1 st Loan: Loan amount $ Monthly payments: $ Interest rate If variable interest, describe adjustment mechanism: Due date: Balloon payment amount: Points and fees: 4 f; f; 882/015610-0043 346300.02 PM02 -2- Lender: Lender's address: 2nd Loan: Loan amount: $ Monthly payments: $ Interest rate If variable interest, describe adjustment mechanism: Due date: Balloon payment amount: Points and fees: Lender: Lender's address: Other Loans: (describe, if none, so state) (g) The monthly Purchase Housing Cost to be paid by the proposed transferee: 1 st loan monthly payment: $ 2nd loan monthly payment: $ Other loans monthly payment: $ Taxes and assessments (1/12 of yearly taxes and $ assessments): Insurance (1/12 of yearly premium): $ Homeowner's dues: $ Total: $ 3. The proposed buyer represents, warrants and covenants the following: (a) The Property will be the principal residence of the proposed transferee. 4r� 882/015610-0043 346300.02 PM02 -3- (b) The combined maximum annual income for all household members of the proposed buyer is $ . (This figure must include all sources of income.) (c) The proposed buyer will deliver to the Agency a signed financial statement on a form acceptable to the Agency. 4. The proposed buyer's household consists of the following persons who will reside in the Property: Adults (18 or over) - [name of each]: Minors (under 18) [name of each]: 5. The proposed transferee must submit to the Owner, on a form available from the Owner, an income certification so the Owner may determine if the proposed buyer is an "Eligible Buyer" (as that term is defined in the Agreement). 6. A true and correct copy of the proposed buyer's most recent tax return to the U.S. Internal Revenue Service is attached hereto. 7. A true and correct copy of the purchase and sale or other agreement between the Owner and the proposed buyer is attached hereto. 882/015610-0043 346300.02 PM02 -4- I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. OWNER: Date signature print name street address city PROPOSED BUYER: Date signature print name signature print name telephone state zip code signature print name street address telephone city state zip code 882/015610-0043 346300.02 PM02 -5- Owner's Certification Based on the Proposed Buyer's Certificate above, and all documents attached hereto, Owner hereby certifies that: (1) Proposed Buyer is an Eligible Buyer; and (2) The monthly Purchase Housing Cost to be paid by the Proposed Buyer shall not exceed the monthly Affordable Housing Cost. [Capitalized terms used above are defined in the Agreement to which this certificate is attached.] OWNER: [Name] Date: 04f 117 882/015610-0043 346300.02 PM02 -6- EXHIBIT "E" ASSIGNMENT AND ASSUMPTION AGREEMENT [See attached] 471 882/015610-0043 346300.02 PM02 Recording Requested By And When Recorded Mail To: La Quinta Redevelopment Agency 78-495 Calle Tampico La Quinta, California 92253 Attn: Executive Director (Space above for Recorder's use) (Exempt from Recording Fee Per Gov. Code § 6103) ASSIGNMENT AND ASSUMPTION AGREEMENT This Assignment and Assumption Agreement ("Agreement"), is made as of by and among the LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"), ("Seller" or "Assignor"), and ("Buyer" or "Assignee"). WITNESSETH: A. Seller is the owner in fee of that certain real property located in the City of La Quinta, County of Riverside, State of California described in Exhibit "A" attached hereto and made a part hereof (the "Property"). B. The Agency is the holder of that certain Promissory Note Secured by Deed of Trust (the "Promissory Note") dated , with a Note Amount of Dollars ($ ), made by Seller and payable to the order of Agency. The Promissory Note is secured by that certain Deed of Trust dated , from Seller as trustor to , as trustee, in favor of Agency as beneficiary, and recorded on as Instrument Number in the Official Records of Riverside County, California. (The Promissory Note and the Deed of Trust are sometimes hereinafter referred to collectively as the "Loan Documents".) The Deed of Trust encumbers the Property. C. Buyer is acquiring the Property from Seller and has met all of Agency's requirements to qualify therefor. Seller and Buyer desire that in connection with the sale of the Property from Seller to Buyer that Agency, as beneficiary under the Loan Documents, consent to the transfer of the obligation of the Loan Documents from Seller to Buyer. C. Agency will consent to such acquisition provided that (i) Buyer assumes the obligations of Seller under the Loan Documents, as set forth in this Agreement, and that (ii) Seller shall not be released from any liability or obligations under the Loan Documents as further provided herein. NOW THEREFORE, Agency, Seller and Buyer agree as follows: 1. Effective Date. As used in this Agreement, the "Effective Date" shall be 882/015610-0043 346300.02 PM02 2. Consent byAgency. As of the Effective Date, Agency consents to the transfer of the Property by Assignor/Seller to Assignee/Buyer. Such consent by Agency shall not constitute a consent to any further or subsequent sale, conveyance or transfer by Assignee/Buyer of the Property, or any part thereof, or any interest therein. 3. Assumption by Assignee/Buyer.� As of the Effective Date, Assignee/Buyer assumes and agrees to be bound by the Loan Documents. Assignee/Buyer shall fully and faithfully pay, perform and discharge, as and when payment, performance and discharge are due, all of the obligations of Assignor/Seller under the Loan Documents, and each of them. 4. No Release of Assignor/Seller. There shall be no release of Assignor/Seller from any liability or obligations arising under the Loan Documents. In the event of any default under the Loan Documents, whether prior to or after the Effective Date, Agency shall have the option, in its sole discretion, to pursue its remedies against Assignor/Seller, Assignee/Buyer or both. 5. Legal Effect. Except as modified by this Agreement, the Loan Documents are unchanged and, as so modified, the Loan Documents shall remain in full force and effect. The Deed of Trust (as modified by this Agreement) shall secure the Promissory Note, all extensions, renewals and modifications thereof, all substitutions therefor, and all other indebtedness and obligations recited in the Deed of Trust. 6. Entire Agreement. This Agreement contains the entire agreement among Agency, Assignor/Seller and Assignee/Buyer with respect to the subject matter hereof and supersedes all prior agreements, understandings, offers and negotiations, oral or written, with respect thereto. This Agreement shall bind and inure to the benefit of Agency, Assignor/Seller and Assignee/Buyer and their respective personal representatives, heirs, successors and assigns. This Agreement shall be governed and construed in accordance with the laws of the State of California. IN WITNESS WHEREOF, Agency, Assignee/Seller and Assignee/Buyer have executed this Agreement as of the date first hereinabove written. LA QUINTA REDEVELOPMENT AGENCY, a public body, corporate and politic Bv: Executive Director ASSIGNOR/SELLER ASSIGNEE/BUYER 4 7,3 882/015610-0043 346300.02 PM02 -2- EXHIBIT "A" LEGAL DESCRIPTION [TO BE INSERTED AT TIME FORM COMPLETED] 174 882/015610-0043 346300.02 PM02 -3- RECORDED AT THE REQUEST OF AND WHEN RECORDED RETURN TO: La Quinta Redevelopment Agency 78-495 Calle Tampico La Ouinta, CA 92253 (Space Above Line for Recorder's Use) Exempt From Recording Fee Pursuant to Government Code § 6103 MEMORANDUM RE OPTION TO PURCHASE This MEMORANDUM RE OPTION TO PURCHASE is entered into this day of , by and between ("Owner") and the LA QUINTA REDEVELOPMENT AGENCY ("Agency") with reference to the following: A. Participant is the fee owner of record of that certain real property (the "Property") located in the City of La Quinta, County of Riverside, State of California, legally described in the attached Exhibit "A." B. On or about Owner and Agency entered into that certain Affordable Housing Agreement ("Affordable Housing Agreement") recorded concurrently herewith in the Official Records of the Riverside County Recorder's Office. C. In consideration for Agency's provision of financial assistance to Owner which enabled Owner to purchase the Property and in order to assist Agency in achieving its goal of increasing, improving and preserving the supply of moderate income housing available within the territorial jurisdiction of Agency, in accordance with the Community Redevelopment Law (California Health and Safety Code Sections 33000 et M.), Owner has provided to Agency an option to purchase the Property at the price and time, and subject to the terms and conditions, set forth in Section 6 of the Affordable Housing Agreement. Reference to the Affordable Housing Agreement is hereby made for a complete statement of Agency's option to purchase the Property. D. Agency's option to purchase, as set forth in Section 6 of the Affordable Housing Agreement, shall terminate and be of no further force or effect on the date that is forty-five (45) years after the date of recordation of the Affordable Housing Agreement. E. Owner's obligations with respect to the option to purchase shall be covenants running with the land and shall, without regard to technical classification or designation, legal or otherwise, be, to the fullest extent permitted by law and equity, binding for the benefit and in favor of and enforceable by Agency, its successors and assigns, against Owner, its successors and assigns, to or of the Property or any interest therein, and any party in possession or occupancy of the Property or portion thereof. Agency shall have the right, in the event of any breach by Owner of any covenant relating to Agency's option to purchase, to exercise all the rights and remedies, and to maintain any actions at law or suits in equity or other proper proceedings, to enforce Agency's rights with respect thereto. 47a 882/015610-0043 349572.01 AM02 IN WITNESS WHEREOF, the parties have executed this Memorandum as of the date and year written below. Date: Date: Date: ATTEST: Agency Secretary APPROVED AS TO FORM: RUTAN & TUCKER, LLP Agency Legal Counsel "OWNER" By: Printed Name: By: Printed Name: "AGENCY" LA QUINTA REDEVELOPMENT AGENCY Lo Executive Director 4 :7r 882/015610-0043 349572.01 AM02 STATE OF CALIFORNIA COUNTY OF On Public, ss. before me, personally Notary appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. [SEAL] STATE OF CALIFORNIA COUNTY OF On Public, ss. Notary Public before me, personally Notary appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] 477 882/015610-0043 349572.01 AM02 STATE OF CALIFORNIA COUNTY OF On Public, ss. before me, personally Notary appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] i�3 882/015610-0043 349572.01 AM02 EXHIBIT "A" LEGAL DESCRIPTION OF THE PROPERTY ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF RIVERSIDE, CITY OF LA QUINTA, DESCRIBED BELOW: [to be inserted] 882/015610-0043 349572.01 AM02