Loading...
2017 SR Dev Co - Phase 1A Option AgrRecording Requested by: FNTG Builder Services FREE RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of La Quinta 78-495 Calle Tampico La Quinta, CA 92253 Attn: City Manager DOC # 2017-0463951 11/06/2017 02:08 PM Fees: $0.00 Page 1 of 16 Recorded in Official Records County of Riverside Peter Aldana Assessor -County Clerk -Recorder **This document was electronically submitted to the County of Riverside for recording** Receipted by: MARY #420 Space Above This Line for Recorder's Use (Exempt from Recording Fee per Gov't Code § 6103 and 27383) PHASE 1A OPTION AGREEMENT THIS P ASE 1A OPTION AGREEMENT ("Phase 1A Option Agreement") is made this 3"day of MAy , 2017 (the "Phase 1A Option Agreement Effective Date"), by and between SILVERROCK DEVELOPMENT COMPANY, LLC, a Delaware limited liability company ("Developer"), and the CITY OF LA QUINTA, a California municipal corporation and charter city ("City"). City and Developer are hereinafter sometimes referred to individually as a "Party" and collectively as the "Parties." RECITALS A. Developer has entered into a Purchase, Sale, and Development Agreement dated November 19, 2014 ("Original PSDA"), as amended by Amendment No. 1 to Purchase, Sale, and Development Agreement dated October 29, 2015 ("Amendment No. 1") and by Amendment No. 2 to Purchase, Sale, and Development Agreement dated on or about April 18, 2017 ("Amendment No. 2") (collectively, the "PSDA"), pursuant to which City agreed to convey to Developer approximately one hundred forty-five (145) acres of real property located at the southwest intersection of Avenue 52 and Jefferson Street in the City of La Quinta, County of Riverside, State of California, in two (2) phases described in the Original PSDA as "Phase 1" or the "Phase 1 Property" and "Phase 2" or the "Phase 2 Property, and as modified and described in Amendment No. 2 as "Phase 1A" and "Phase 1A Property" and "Phase 1B" and "Phase 1B Property." The "PSDA Property" for purposes of this Phase 1A Option Agreement consists collectively of the "Phase 1A Property" and "Phase 1B Property" as defined in Amendment No. 2. The Phase 1A Property is legally described in Exhibit "A", which is attached hereto and incorporated herein by this reference. Unless otherwise expressly defined in this Phase 1A Option Agreement, capitalized terms used in this Phase 1A Option Agreement shall have the meanings ascribed thereto in the PSDA. B. Pursuant to the PSDA, Developer has agreed to construct on the PSDA Property a commercial development that consists of a luxury resort hotel and spa and associated branded luxury residential units, a lifestyle hotel and associated lifestyle branded residential units, a permanent clubhouse for the SilverRock Resort's Arnold Palmer Classic Course, a mixed use village, a resort residential village, and associated amenities (collectively, the "Project"). 882/015610-0065 9490862.5 a04/25117 DOC #2017-0463951 Page 2 of 16 C. The PSDA as modified by Amendment No. 2 requires that in connection with City's conveyance of the Phase 1A Property and Phase 1 B Property to Developer, Developer is required to grant to City (i) an option to repurchase the Phase 1A Property or Phase 1 B Property (as applicable), or certain portions thereof, from Developer on the occurrence of certain events. D. Phase 1A of the Project includes the Golf Course Realignment. The PSDA requires the Golf Course Realignment to be completed during Summer or late Spring, when play at the Golf Course is at a minimum. Pursuant to Amendment No. 2, the City agreed (i) to permit Developer to perform the Golf Course Realignment work prior to the Phase 1 B Closing, and (ii) to convey to Developer as security for Developer's financing for the Golf Course Realignment the portions of Phase 1A commonly referred to as "PA 2" (Luxury Hotel site), "PA 3" (Luxury Branded Residential Development site), and "PA 4" (Conference and Shared Service Facility site) (the "Phase 1A Property" as defined in Amendment No. 2), all prior to the time Developer satisfies all of City's Conditions Precedent to the Closing for Phase 1 B (and other Phases as described in Amendment No. 2). E. Amendment No. 2 requires that in connection with City's conveyance of the Phase 1A Property to Developer, Developer is required to enter into this Phase 1A Option Agreement for purposes of granting to City (i) an option to repurchase the Phase 1A Property from Developer if Developer (a) fails to satisfy all of City's Conditions Precedent to the Closing for Phase 1 B (as defined in Amendment No. 2) and acquire the balance of the Phase 1 B Property (as defined in Amendment No. 2) by the Outside Date for Phase 1 B Closing (as set forth in Amendment No.2), or (b) transfers the Phase 1A Property, or any portion thereof, in violation of the terms of the PSDA; and (ii) a right of first offer to purchase the Phase 1A Property, or any portion thereof, if (I) City's option under (i)(a) or (i)(b) above has been triggered, (II) City did not timely exercise the applicable option, (III) the default which gave rise to City's option has not been cured, and (IV) Developer has determined to sell or otherwise transfer the Phase 1A Property. 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 Amendment No. 2 and PSDA generally, Developer hereby grants to City the following repurchase options: 1. Option I — Developer's Failure to Satisfy City's Conditions Precedent to the Closing for Phase 1 B and Failure to Acquire Phase 1 B Property Developer hereby grants to City an exclusive option to repurchase all, but not less than all, of the Phase 1A Property ("Option 1"), if Developer fails to satisfy all of City's Conditions Precedent to the Closing for Phase 1 B and acquire the Phase 1 B Property by the Outside Date for Phase 1 B Closing. In the event of Developer's failure to satisfy all of City's Conditions Precedent to the Closing for Phase 1 B and acquire the Phase 1 B Property by the Outside Date for Phase 1 B Closing, and such failure is not cured within the cure period provided for under Sections 4(b) and 4(c) below, then City shall be entitled to exercise, but is not obligated 882/015610-0065 9490862.5 a04/25117 -2- DOC #2017-0463951 Page 3 of 16 to exercise, the foregoing option for a period of sixty (60) days following the expiration of such cure period (the "Option I Period"). (a) Exercise of Option City shall exercise Option I by giving written notice to Developer ("City's Notice of Option 1 Exercise"), in accordance with Section 5 of this Phase 1A Option Agreement, prior to the expiration of the Option I Period. Failure of City to exercise Option I shall constitute a waiver of City's right to exercise Option I, but shall not constitute a waiver by City of Developer's breach of its obligation to satisfy all of City's Conditions Precedent to the Closing for Phase 1B and acquire the Phase 1B Property by the Outside Date for Phase 1B Closing or of any remedies City may have under the terms of the PSDA or under any other agreement for Developer's failure to satisfy all of City's Conditions Precedent to the Closing for Phase 1B and acquire the Phase 1B Property by the Outside Date for Phase 1B Closing. (b) Repurchase Price - Option I City's repurchase price for the Phase 1A Property ("Option I Repurchase Price"), shall be the sum of (i) one hundred percent (100%) of "Developer's Golf Course Realignment Construction Costs," and (ii) the cost of any Plans City elects to purchase pursuant to Section 4(i) below with respect to (a) the Master Site Infrastructure Improvements, and/or (b) any Project Components comprising the Project. For purposes of this Phase 1A Option Agreement, the term "Developer's Golf Course Realignment Construction Costs" shall mean the construction costs actually incurred by Developer for construction of the Golf Course Realignment and related on- site and off-site work, as determined by an independent audit (the "Golf Course Realignment Cost Audit"), performed by an independent auditor who shall be selected by City and be a partner at a nationally recognized firm of accountants with experience in auditing large-scale, mixed use construction projects (the "Auditor"), which costs shall consist only of: (I) the amount(s) paid by Developer to the contractor or contractors performing the construction, (II) reasonable inspection, supervision, and testing costs paid by Developer to independent third party engineers, architects, or consultants in conjunction with said construction, (III) any amounts paid by Developer to material suppliers and equipment suppliers in connection with the construction (but, subject to the immediately preceding paragraph, not including any costs, fees, charges, or profits allocated to Developer's own internal administrative, payroll, or overhead expenses or to any person or entity affiliated with Developer), and (IV) if the Golf Course Realignment work is completed and accepted by City, then amounts that include design plans (such as architectural renderings and drawings) used by Developer to complete the construction of the Golf Course' Realignment. In explanation of clause (IV) in the preceding sentence, "Developer's Golf Course Realignment Construction Costs" shall not include any design plans Developer may have contracted for or obtained if the Golf Course Realignment is not completed as evidenced by the City accepting all work for the Golf Course Realignment being completed. Developer shall promptly provide City and the Auditor with all records and documentation necessary for the Auditor to perform the Golf Course Realignment Cost Audit. 882/015610-0065 9490862.5 a04/25117 -3- DOC #2017-0463951 Page 4 of 16 2. Option II — Developer's Transfer of the Phase 1A Property, or Portion Thereof, Prior to City's Transfer of Phase 1 B Property to Developer Developer hereby grants to City an exclusive option ("Option II") to repurchase all, but not less than all, of the Phase 1A Property if, prior to the time (i) Developer satisfies all of City's Conditions Precedent to the Closing for Phase 1 B, (ii) City transfers the Phase 1 B Property to Developer, and (iii) this Phase 1A Option Agreement is terminated, Developer transfers or suffers an involuntary transfer of the Phase 1A Property or any portion thereof in violation of the terms of the PSDA. In the event of Developer's transfer of the Phase 1A Property or any portion thereof in violation of the PSDA (an "Unauthorized Transfer"), City shall be entitled to exercise, but is not obligated to exercise, the foregoing option for sixty (60) days following the later of (a) the date of the Unauthorized Transfer that gives rise to City's option under this Section 2, or (b) City's discovery of the Unauthorized Transfer that gives rise to Option 11 ("Option II Period"). (a) Exercise of Option City shall exercise Option II by giving written notice to Developer ("City's Notice of Option II Exercise"), in accordance with Section 5 of this Phase 1A Option Agreement, prior to the expiration of the Option II Period. Failure of City to exercise Option II shall constitute a waiver by City of City's right to exercise Option II only with respect to the specific Unauthorized Transfer that gave rise to Option II, but shall not constitute a waiver by City of Developer's breach of the transfer provisions in the PSDA or pursuant to this Phase 1A Option Agreement, or of any remedies City may have under the terms of the PSDA or under any other agreement for Developer's transfer or sufferance of an involuntary transfer of the Phase 1A Property or any portion thereof. (b) Repurchase Price - Option 11 City's repurchase price for the Phase 1A Property ("Option II Repurchase Price") shall be the sum of (i) one hundred percent (100%) of Developer's Golf Course Realignment Construction Costs (as defined in Section 1(b) above), and (ii) the cost of any Plans City elects to purchase pursuant to Section 4(i) below with respect to (a) the Master Site Infrastructure Improvements, and/or (b) any Project Components comprising the Project. 3. City's Right of First Offer Developer hereby grants to City a right of first offer ("City's Right of First Offer") to purchase all, but not less than all, of the Phase 1A Property, in accordance with the terms and conditions in this Section 3, in the event that (i) City has had the right to exercise Option I or Option II and has failed to exercise or has elected not to exercise Option I or Option II (as applicable) in accordance with the terms of this Phase 1A Option Agreement and Developer's default that gave rise to Option I or Option II (as applicable) has not been cured, and (ii) Developer has determined to sell or otherwise transfer the Phase 1A Property or portion thereof. 882/015610-0065 9490862.5 a04125117 -4- DOC #2017-0463951 Page 5 of 16 (a) Developer's Notice to City; City's Election In the event that the circumstances described in clauses (i) and (ii) of the immediately preceding paragraph exist, then prior to entering into any transaction with a third party concerning the sale of any of the Phase 1A Property, Developer shall provide City with written notice of Developer's intent to sell such Phase 1A Property, and Developer's proposed sale price for the same ("Developer's Sale Notice"). City shall have sixty (60) days after receiving Developer's Sale Notice to notify Developer, in writing, of City's election to exercise City's Right of First Offer to acquire the Phase 1A Property, at the lesser of (1) the price noted in Developer's Sale Notice, or (2) the sum of one hundred percent (100%) of Developer's Golf Course Realignment Construction Costs ("City's Election to Exercise"), regardless of whether Developer's proposed sale or transfer included all of the Phase 1A Property. (b) City's Failure to Exercise City's failure to deliver to Developer City's Election to Exercise within such sixty (60) day period shall be deemed City's election not to exercise City's Right of First Offer and, except as provided below, City's Right of First Offer with respect to the Phase 1A Property shall then terminate and City shall have no further right of first offer with respect to the Phase 1A Property. If City elects not to exercise (or is deemed to have elected not to exercise) City's Right of First Offer then Developer may sell the Phase 1A Property or portion thereof to a third party purchaser; provided, however, that in the event Developer determines to sell the Phase 1A Property or portion thereof at a price that is less than the price set forth in Developer's Sale Notice (determined on a proportional basis if the portion of the Phase 1A Property differs from the prior Developer's Sale Notice), Developer shall provide City with a written notice of Developer's intent to sell the Phase 1A Property or portion thereof, with Developer's new proposed sale price for the same ("Developer's Second Sale Notice"), and City's Right of First Offer shall again apply with respect to the Phase 1A Property, in accordance with the process outlined in subparagraph (a) above and this subparagraph (b). (c) Transfer Restrictions of PSDA Notwithstanding the foregoing, nothing herein is intended to or shall have the effect of waiving the transfer restrictions set forth in the PSDA, and any proposed sale or transfer by Developer shall be effected in accordance with the same. 4. Additional Terms Applicable to the Repurchase Options The following additional terms shall apply to Option 1, Option 11, and City's Right of First Offer: (a) Successors and Assigns. Option I, Option II, and City's Right of First Offer created hereby shall be irrevocable by Developer and shall be binding upon the successors and assigns of Developer and on the Phase 1A Property. (b) Developer's Right to Cure Certain Defaults. Notwithstanding anything in this Phase 1A Option Agreement to the contrary, City shall not be entitled to 882/015610-0065 9490862.5 a04/25117 -5- DOC #2017-0463951 Page 6 of 16 exercise Option I until City has provided a written notice to Developer regarding Developer's failure to satisfy all of City's Conditions Precedent to the Closing for Phase 1B and acquire the Phase 1B Property (the "Option Triggering Event"), and Developer has not, within sixty (60) days after receipt of such notice, cured, corrected, or remedied such Option Triggering Event or, if Developer cannot reasonably cure, correct or remedy such Option Triggering . Event within sixty (60) days, commenced to cure, correct or remedy such Option Triggering Event within said sixty (60) day period, and diligently prosecute the same to completion. (c) 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 City may deliver any notice or demand to Developer with respect to an Option Triggering Event, City 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 City 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 Phase 1A Property (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. (d) No City Obligation. Notwithstanding any covenant, term, or provision in this Section 4 to the contrary, City shall not be obligated to exercise Option I, Option II, or City's Right of First Offer. (e) Termination of Phase 1A Option Agreement. City agrees to execute a termination of this Phase 1A Option Agreement at such time as (i) Developer has satisfied all of City's Conditions Precedent to Phase 1B Closing, (ii) Developer has acquired fee title to the Phase 1B Property, and (iii) City and Developer have executed and recorded against the Phase 1B Property and Phase 1A Property an option agreement substantially in the form of the option agreement attached to the PSDA as Attachment No. 7, but modified to reflect the earlier transfer of the Phase 1A Property pursuant to Amendment No. 2. (f) City's and City's Assignee's Investigation of Phase 1A Property. i) City shall have a period of forty-five (45) days, commencing on the date of an event that triggers City's ability to exercise any of Option I, Option II, or City's Right of First Offer, to enter upon the Phase 1A Property to conduct any tests, inspections, investigations, or studies of the condition of the Phase 1A Property (the "Phase 1A Option Agreement Tests and Investigations"). Developer shall permit City access to the Phase 1A Property for such purposes. City's obligation to close "Escrow" (as that term is defined in Section 7(g) below) shall be subject to City's approval of any environmental and other site testing conducted by City in City's discretion. City shall indemnify, defend, and hold harmless Developer and its officers, directors, shareholders, 882/015610-0065 9490862.5 a04/25/17 -6- DOC #2017-0463951 Page 7 of 16 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 Phase 1A Property. ii) In the event City assigns its rights under this Phase 1A Option Agreement, City's assignee shall have the right to enter upon the Phase 1A Property during the period commencing on the later of (i) the date of City's assignment provided City was entitled to and has exercised Option I, Option II, or the Right of First Offer, or (ii) the date the assignee is entitled to and does in fact exercise Option I, Option II, or the Right of First Offer and ending on the "Closing Date" (as that term is defined in Section 4(g) below) to conduct any Phase 1A Option Agreement Tests and Investigations elected by the assignee. Developer shall permit City's assignee access to the Phase 1A Property for such purposes, provided that, prior to any entry upon the Phase 1A Property by such assignee or its employees, agents, representatives or consultants, City shall cause such assignee to provide Developer with evidence that it has a liability insurance policy that names Developer as an additional insured, which policy shall have limits of coverage and be on terms reasonably acceptable to Developer. City's obligation to close "Escrow" (as defined in Section 4(g) below) shall be subject to City's assignee's approval of any environmental and other site testing conducted by said assignee in said assignee's discretion. City shall cause said assignee to 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 Phase 1A Property. (g) Escrow Provisions. i) Within five (5) business days after City has exercised Option I, Option II, or City's Right of First Offer (as applicable), or as soon thereafter as reasonably practicable, an escrow shall be opened ("Escrow") with an escrow company selected by City ("Escrow Holder") for the reconveyance to City of the Phase 1A Property. Escrow shall be deemed opened on the date that a fully executed copy of this Phase 1A Option Agreement and a notice of exercise of option prepared by City are delivered to Escrow Holder ("Opening of Escrow"). Escrow Holder shall notify Developer and City in writing of the date of the Opening of Escrow promptly following the opening of the Escrow. ii) Escrow shall close on or before the date that is six (6) months after occurrence of the event giving rise to City's exercise of Option I, Option II, or City's Right of First Offer ("Close of Escrow" or "Closing Date"). The terms "Close of Escrow" and "Closing Date" shall mean the date the grant deed conveying fee title to City ("City Grant Deed") is recorded in the Official Records. Possession of the Phase 1A Property shall be delivered to City at the Close of Escrow. iii) This Phase 1A Option Agreement, together with any standard instructions of Escrow Holder, shall constitute the joint escrow instructions of Developer and City to Escrow Holder as well as an agreement between Developer and City. In the 882/015610-0065 9490862.5 a04/25/17 -7- DOC #2017-0463951 Page 8 of 16 event of any conflict between the provisions of this Phase 1A Option Agreement and Escrow Holder's standard instructions, this Phase 1A Option Agreement shall prevail. iv) The Escrow shall be subject to City's approval of a then - current preliminary title report. 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 Phase 1A Property from City to Developer shall be removed by Developer at its sole expense prior to or at the Close of Escrow pursuant to this Section 7(g) unless such exception(s) is (are) accepted by City in its sole discretion; provided, however, that City 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 Phase 1A Property to Developer (substantially in the form of Attachment No. 4 to the PSDA), and (iii) matters shown as printed exceptions in the standard form ALTA policy of title insurance. v) On or before 1:00 p.m. on the last business day preceding the scheduled Closing Date, City shall deposit in Escrow (i) the applicable of the Option 1 Repurchase Price, the Option II Repurchase Price, the price noted in Developer's Sale Notice or Developer's Second Sale Notice (as applicable) (the "Right of First Offer Repurchase Price"); (ii) one-half (1/2) of the escrow fees; (iii) the portion of the title insurance premium attributable to any extra or extended coverages, or any additional charge resulting from City's request that the amount of insurance be higher than the applicable of the Option 1 Repurchase Price, the Option 11 Repurchase Price, or the Right of First Offer Repurchase Price; and (iv) any and all additional instruments or other documents required from City (executed and acknowledged if appropriate) as may be necessary in order to effect the transfer of the Phase 1A Property to City. On or before 1:00 p.m. on the last business day preceding the scheduled Closing Date, Developer shall deposit in Escrow (i) the City Grant Deed, executed and acknowledged; (ii) one-half (1/2) of the escrow fees; and (iii) any and all additional instruments or other documents required from Developer (executed and acknowledged if appropriate) as may be necessary in order to effect the transfer of the Phase 1A Property to City. Developer shall also be required to pay for documentary tax stamps and recording fees, if any, and for an ALTA standard form owner's policy of title insurance in the amount of the Option I Repurchase Price, the Option II Repurchase Price, or the Right of First Offer Repurchase Price (as applicable), showing title vested in City free and clear of all liens and encumbrances except those permitted by subparagraph iv) above (the "Title Policy"). City's receipt of the Title Policy shall be a condition to the Close of Escrow. Any other costs and expenses shall be allocated between the Parties in the manner customary for a commercial property conveyance in Riverside County. vi) If, on or before the Closing Date, Escrow Holder has received all of the documents and funds listed in subparagraph (v) above, and Escrow Holder is in a position to cause the Title Policy to be issued to City, and provided City has approved of the condition of the Phase 1A Property, Escrow Holder shall close the Escrow by taking the following actions: (a) recording the City Grant Deed in the Official Records, and delivering the recorded City Grant Deed to City; (b) causing the Title Policy to be issued to City; and (c) delivering the applicable of the Option 1 Repurchase Price, the Option 11 Repurchase Price, or the Right of First Offer Repurchase Price to Developer. 882/015610-0065 9490862.5 a04125117 -8- DOC #2017-0463951 Page 9 of 16 (h) City's Right to Acquire the Phase 1A Property. Notwithstanding anything herein to the contrary, upon City's exercise of Option I, Option 11, or City's Right of First Offer pursuant to the terms of this Agreement, Developer's commencement to cure the default that led to City's exercise shall not affect City's right to close the Escrow and acquire the Phase 1A Property. (i) City's Right to Purchase Plans. At the time City exercises any of Option I, Option II, or City's Right of First Offer, City shall also have the right, which City may exercise in its sole and absolute discretion, to purchase from Developer for the actual cost Developer incurred in preparing the same, any of the 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 (collectively, the "Plans") relating to (i) all of the Master Site Infrastructure Improvements designated pursuant to the PSDA to be constructed on the Property, and/or (b) all or any of the Project Components designated pursuant to the PSDA to be constructed on the Property, together with copies of all of the Plans, as have been prepared for the development of the Property to date of City's exercise of Option I, Option II, or City's Right of First Offer (as applicable). Notwithstanding the foregoing, however, Developer does not covenant to convey to City the copyright or other ownership rights of third parties. City'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 City shall assume all risks in the use of the Plans. (j) City's Repurchase Price Reflects Reasonable Approximation of Damages. City and Developer agree that City has the right to either proceed with its remedies under the PSDA or to exercise Option I or Option 11. Notwithstanding anything to the contrary herein or in the PSDA, in the event City exercises either of Option I or Option II (as applicable) to acquire the Phase 1A Property, City shall be deemed to have elected to waive the remedies to which it would otherwise be entitled under the PSDA. City and Developer agree that City will incur damages by reason of the default that gave rise to City's ability to exercise Option I or Option 11 (as applicable), which damages shall be impractical and extremely difficult, if not impossible, to ascertain. City and Developer, in a reasonable effort to ascertain what City's damages would be in the event of such default by Developer, have agreed that considering all of the circumstances existing on the date of this Phase 1A Option Agreement, including the relationship of the sum to the range of harm to City that reasonably could be anticipated, including without limitation the potential loss of tax revenue to the City of La Quinta, and the anticipation that proof of actual damages would be costly or inconvenient, the exercise by City of Option I or Option II (as applicable), and the payment by City of the Option I Repurchase Price or the Option 11 Repurchase Price (as applicable) and the conveyance of the Phase 1A Property by Developer to City, is fair and reasonable. City and Developer agree that the Option I Repurchase Price or Option 11 Repurchase Price (as applicable) reflect a reasonable estimate of City's damages under the provisions of Section 1671 of the California Code of Civil Procedure and shall operate as liquidated damages to City if City exercises Option I or Option 11 (as applicable). If City does not exercise Option I or Option II, then City shall retain and may exercise all of its rights and remedies as set forth in any other agreement, including, but not limited to, the PSDA. 882/015610-0065 9490862.5 a04125117 -9- DOC #2017-0463951 Page 10 of 16 5. Notices, Demands and Communications Between the Parties Formal notices, demands, and communications between City 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) mailing in the United States mail, certified mail, postage prepaid, return receipt requested, addressed to: To City: With a copy to: To Developer: With a copy to: City of La Quinta 78-495 Calle Tampico La Quinta, California 92253 Attn: City Manager Rutan & Tucker, LLP 611 Anton Boulevard., Suite 1400 Costa Mesa, California 92626 Attn: William H. lhrke, Esq. SilverRock Development Company, LLC c/o The Robert Greene Company 3551 Fortuna Ranch Road Encinitas, California 92024 Attn: Robert Green Clinton L. Bain, Attorney at Law 3990 Old Town Avenue, Suite B-101 San Diego, California 92110 Attn: Clinton Blain, Esq. 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. 6. Applicable Law and Forum; Attorney's Fees The Superior Court 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 Phase 1A Option Agreement. This Phase 1A Option Agreement shall be governed by, and construed under, the internal laws of the State of California, without regard to conflict of law principles. In addition to any other rights or remedies and subject to the restrictions otherwise set forth in this Phase 1A Option Agreement, including without limitation in this Section 6, 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 Phase 1A Option Agreement, to obtain declaratory or injunctive relief, or to obtain any other remedy consistent with the purposes of this Phase 1A Option Agreement. Subject to Section 4(j) above, City shall also have the right to pursue damages for Developer's defaults but in no event shall Developer be entitled to recover damages of any kind from 882/015610-0065 9490862.5 a04/25/17 -10- DOC #2017-0463951 Page 11 of 16 City, including damages for economic loss, lost profits, or any other economic or consequential damages of any kind. 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 City 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 Phase 1A Option Agreement is required to initiate or defend, or is made a party to, any action or proceeding in any way connected with this Phase 1A 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. 7. City Right to Assign In the event City has the right to exercise any of Option I, Option II, or City's Right of First Offer, City shall have the right to assign its rights hereunder upon providing prior written notice to Developer pursuant to Section 5 of this Phase 1A Option Agreement, and thereafter entering into an assignment and assumption agreement with such assignee. 8. City Approvals and Actions City shall maintain authority of this Phase 1A Option Agreement and the authority to implement this Phase 1A Option Agreement through the City Manager. The City Manager shall have the authority to make approvals, issue interpretations, waive provisions, negotiate and enter into amendments to this Phase 1A Option Agreement and/or negotiate and enter into implementing agreements or documents on behalf of City so long as such actions do not materially or substantially change the business terms of this Phase 1A Option Agreement, or materially or substantially add to the costs incurred or to be incurred by City as specified herein. Such approvals, interpretations, waivers, amendments, and/or implementing agreements or documents may include extensions of time to perform. All other material and/or substantial interpretations, waivers, or amendments shall require the consideration, action and written consent of the City Council. 9. Nonliability of City Officials and Employees No officer, official, employee, agent, or representative of City shall be personally liable to Developer or any successor in interest, in the event of any default or breach by City, or for any amount which may become due to Developer or its successor, or for breach of any obligation of the terms of this Phase 1A Option Agreement. 10. 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 882/015610-0065 9490862.5 a04/25117 -11- DOC #2017-0463951 Page 12 of 16 on account of race, color, creed, religion, sex, marital status, national origin, or ancestry with respect to this Phase 1A Option Agreement or use of the Phase 1A Property. 11. Interpretation The terms of this Phase 1A 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 Phase 1A 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 Phase 1A Option Agreement. 12. Entire Agreement This Phase 1A Option Agreement integrates all of the terms and conditions mentioned herein, or incidental hereto, and, with the exception of the PSDA and Implementation Agreement, 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 Phase 1A 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 City and Developer. 13. Counterparts This Phase 1A Option Agreement may be executed in counterparts, each of which, after all the Parties hereto have signed this Phase 1A Option Agreement, shall be deemed to be an original, and such counterparts shall constitute one and the same instrument. 14. Severability In the event any section or portion of this Phase 1A 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 Phase 1A Option Agreement. 882/015610-0065 9490862.5 a04/25117 -12- DOC #2017-0463951 Page 13 of 16 IN WITNESS WHEREOF, the Parties have executed this Phase 1A Option Agreement as of the date first above written. "DEVELOPER" SILVERROCK DEVELOPMENT COMPANY, LLC, a Delaware limited liability company By: RGC La Quinta II LLC, a Delaware limited liability company Its: Co -Manager By: The Robert Green Company, a California corporation Its: Mana Date: , 201/467By: Name: Robert S. Green, Jr. Its: President and Chief Executive Officer By: RGC La Quinta, LLC, a Delaware limited liability company Its: Co -Manager By: The Robert Green Company, a California corporation Its: Mana Date: -"Vb , 20 By: Name: Robert S. 's'reen, Jr. Its: President and Chief Executive Officer Date: , 201, ATTEST: - Susan Maysels, City Cler APPROVED AS TO FORM: RUTAN & TUCKER, LP "CITY" CITY OF LA QUINTA a Cal .rnia municipal cor•,1ir tbn a y, ch Vit` 1 .. /. WilliamrH Ihrke, City Attorney 882/015610-0065 9490862.5 a04125/17 -13- City ra evacek DOC #2017-0463951 Page 14 of 16 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document, to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document State of California County of Riverside On May 3 .2017 before me, TERESA THOMPSON, Notary Public, personally appeared FLANK J. SPEVACEK who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument, and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature z z DOCUMENT: PHASE 1A OPTION AGREEMENT between City of La Quinta and SilverRock Development Company, LLC re property within Parcel Map 37207 TERESA THOMPSON Commission # 2030796 Notary Public - California Riverside County My Comm. Expires Jun 24, 2017 (seal) DOC #2017-0463951 Page 15 of 16 A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California ) County ofRid W'/ atifEGo ) On 11-7.-g�17 , before me, ©/✓ 7, 5eMz— (insert name and title of the officer) Notary Public, personally appeared "ger-7 5. t i t- , 7g, who proved to me on the basis of satisfactory evidence to be the person(' whose name(% 0am-subscribed to the within instrument and acknowledged to me that at,tzeitttcy executed the same inliialagtheif authorized capacity(jesl, and that by it erthe r-signaturekeron the instrument the person, or the entity upon behalf of which the person,(4 acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature /OP RON J. SEGAL Commission # 2098015 Notary Public - California z San Diego County My Comm. Expires Feb 21, 2019 ry- ,.��. (Seal) A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of Riverside On , before me, (insert name and title of the officer) Notary Public, personally appeared who 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. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) 882/015610-0065 9490862.5 a04/25117 DOC #2017-0463951 Page 16 of 16 EXHIBIT "A" TO PHASE 1A OPTION A AGREEMENT LEGAL DESCRIPTIONS OF PARCELS Page 1 of 1 PHASE 1A PROPERTY: Those portions of Sections 5, 6 and 8 Township 6 South, Range 7 East, San Bernardino Meridian, in the City of La Quinta, County of Riverside, State of California, described as follows: Parcels 1, 3, 4, 5, and 6 of Parcel Map No. 37207 per map filed in Book 242, Pages 72 through 87 inclusive, of Parcel Maps, in the office of the County Recorder of Riverside County, State of California. This legal description was prepared by me or under my directions in conformance with the requirements of the Professional Land Surveyors Act. Christopher L. Alberts, P.L.S. 8508 Date: "Or / Zv/7