CC Resolution 2014-060 SilverRock PSDARESOLUTION NO. 2014 - 060
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
LA QUINTA, CALIFORNIA, APPROVING THE PURCHASE,
SALE, AND DEVELOPMENT AGREEMENT BY AND
BETWEEN THE CITY OF LA QUINTA AND SILVERROCK
DEVELOPMENT COMPANY, LLC, RELATING TO THE
DISPOSITION AND USE OF CERTAIN REAL PROPERTY
FOR THE SILVERROCK RESORT, AND AUTHORIZING
IMPLEMENTATION ACTIONS RELATED THERETO
WHEREAS, the City of La Quinta ("City") -and SilverRock Development
Company, LLC, a Delaware limited, liability company ("Developer"), have negotiated
that certain Purchase, .Sale, and Development Agreement with attachments thereto
(the "Agreement" or "PSDA"); and,
WHEREAS, the City owns fee title to that certain real property located at the
southwest intersection of Jefferson Street and Avenue 52 in the City of La Quinta,
California 92253, as more particularly depicted in the PSDA (the "Property"); and,
WHEREAS, among other terms and conditions, the PSDA sets forth the
terms and conditions, rights and obligations, for the purchase and sale of the
Property, and subsequent development and use thereof; and,
WHEREAS, City and Developer desire, through the PSDA, for Developer to
purchase the Property from City and to thereafter construct, complete, and operate
thereon a commercial project containing a luxury resort hotel and spa and
associated branded luxury residential units, a lifestyle hotel and associated lifestyle
branded residential units, a conference and shared service facility, a permanent
clubhouse for the SilverRock Resort's Arnold Palmer Classic Course, a mixed use
village, a resort residential village, and associated amenities, all as further described
in the PSDA; and,
WHEREAS, the proposed disposition and use of the Property has been
approved by the California Department of Finance to the extent that the
redevelopment dissolution law (Part 1.85 (commencing with Section 34170) of
Division 24 of the Health and Safety Code) applies, in that: (i) The proposed
property disposition is consistent with the City of La Quinta Successor Agency's
Long Range Property Management Plan ("LRPMP"), which was approved by the
California Department of Finance, (ii) The proposed property disposition is
consistent with the 2011 transfer of 86 acres of land designated for private
development, also as approved by the California Department of Finance, and (iii) All
Resolution No.2014-060
Purchase, Sale, and Development Agreement
City of La Quinta — SilverRock Development Company, LLC.
Adopted: November 4, 2014
Page 2 of 4
of the Property is vested in the name of the City to further the proposed future
development; and,
WHEREAS, pursuant to the requirements of Part 4 (commencing with
Section 52200) of Division 1 of Title 5, and Section 53083 of the Government
Code, the City prepared and made available to the public the Summary Report
representing the economic opportunity and development subsidy report associated
with the PSDA, which Summary Report is a public document and available for
review on the City's Internet Web site and at City Hall during business hours
("Summary Report"); and,
WHEREAS,- as more fully documented in the Summary Report and LRPMP,
the Property evaluated two valuations for the Property: Estimated Current Value
and Encumbered Value. -The Estimated Current Value of the approximately 59 acres
is $295,000, as determined by appraisal which assumes that there are no
covenants or conditions limiting development of the 59 acres. In contrast, the
Encumbered Value of the property is $0, due in part to the restrictions on property
development as aresult of the funding source, tax exempt bond proceeds,
originally utilized to purchase the 59 acres in 2002, as more fully described in the
Summary Report, which is incorporated herein by this reference to this Resolution;
and,
WHEREAS, the City Council of the City of La Quinta, California ("City
Council"), did hold on the 41h day of November, 2014, a duly noticed public hearing
-to consider the PSDA; and,
WHEREAS, at said City Council Public Hearing, upon hearing and considering
all testimony and arguments, if any, of all interested persons wanting to be heard,
said City Council did make the following findings to justify approving the PSDA:
1. The PSDA is consistent with the La Quinta General Plan, Municipal Code and
the SilverRock Resort Specific Plan. The development proposal as
represented in the PSDA will not be developed in any manner inconsistent
with the General Plan land use designations of Tourist Commercial and
Recreational Open Space.
2. The PSDA is compatible with the uses and regulations as stipulated for the
Tourist Commercial and Golf Course zoning districts.
3. The PSDA furthers the intent of the Legislature in fulfilling economic,
opportunity, as set forth in Part 4 (commencing with Section 52200) of
Division 1 of Title 5 of the Government Code because the development
proposal will promote economic development on a local level to increase
Resolution No.2014-060
Purchase, Sale, and Development Agreement
City of La Quinta — SilverRock Development Company, LLC.
Adopted: November 4, 2014
Page 3 of 4
jobs, create economic opportunity, and generate tax revenue for all levels of
government.
4. The consideration that the City will receive for the Property is not less than
the fair reuse value at the use and with the covenants and conditions and
development costs authorized by the disposition pursuant to the PSDA. As
more fully explained in the Summary Report, the Encumbered Value of the
Property is $0, due in part to the restrictions on property development as a
result of the funding source, tax exempt bond proceeds, originally utilized to
purchase the 59 acres in 2002; and,
WHEREAS, City's disposition of the Property to Developer, and Developer's
subsequent construction, completion and operation thereon, pursuant to the terms
of the PSDA, are in the vital and best interest of the City 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, BE IT RESOLVED, by the City Council of the City of La
Quinta, as follows:
SECTION 1. RECITALS. The above recitals are true and correct and incorporated
here by this reference, and shall constitute findings of the City Council.
SECTION 2. APPROVAL. The City Council hereby approves and adopts the PSDA
attached as Exhibit "A" substantially in the form presented to the City Council
concurrent with the approval and adoption of this Resolution, authorizes and
directs the City Manager to sign the PSDA on behalf of the City, authorizes and
directs the City Manager to make any modifications to the PSDA, before or -after its
execution, that do not substantively amend the PSDA and still effectuate the intent
of the City and Developer as presented to and approved by the City Council
concurrent with the approval and adoption of this Resolution, and directs the City
Clerk to retain the executed PSDA as a public record available for public inspection
pursuant to law.
SECTION 3. ENVIRONMENTAL. An Addendum to a previously adopted Mitigated
Negative Declaration (EA 2002-453), and subsequent Addendum (EA 2006-568)
was prepared pursuant to the California Environmental Quality Act, was confirmed
and adopted by the City Council, on November 4, 2014. Said determination,
extends to include PSDA, based on its incorporation as part of the overall project,
as defined under CEQA.
SECTION 4. REPORTS. The City Manager is authorized and directed to prepare
Resolution No.2014-060
Purchase, Sale, and Development Agreement
City of La Quinta — SilverRock Development Company, LLC.
Adopted: November 4, 2014
Page 4 of 4
and submit for City Council and public review any reports required by law for the
implementation of the PSDA.
PASSED, APPROVED AND ADOPTED at a regular meeting of the City
Council of the City of La Quinta held this 4t' day of November, 2014, by the
following vote:
AYES: Council Members Evans, Franklin, Osborne, Mayor Adolph
NOES: Council Member Henderson
ABSENT: None
ABSTAIN: None
DON ADOI H, Ma r
City of La Quinta, C lifornia
ATTEST:
SUSAN MAYSELS, City Jerk
City of La Quinta, California
(CITY SEAL)
APPROVED AS TO FORM:
WILLIAM H. IHRKE, City Attorney
City of La Quinta, California
EXHIBIT "A"
PURCHASE, SALE, AND DEVELOPMENT AGREEMENT
By and Between the
CITY OF LA QUINTA,
a California municipal corporation and charter city,
and
SILVERROCK DEVELOPMENT COMPANY, LLC,
a Delaware limited liability company
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6895841.10 a10/30/14
PURCHASE, SALE, AND DEVELOPMENT AGREEMENT
This PURCHASE, SALE, AND DEVELOPMENT AGREEMENT (this
"Agreement") is entered into as of 2014 ("Effective Date"), by and
between the CITY OF LA QUINTA, a California municipal corporation and charter city
(the "City"), and SILVERROCK DEVELOPMENT COMPANY, LLC, a Delaware limited
liability company (the "Developer"). City and Developer are hereinafter sometimes
referred to individually as a "Party" and collectively as the "Parties."
RECITALS
The following recitals are a substantive part of this Agreement:
A. City is a California municipal corporation and charter city organized and
existing under the Constitution of the State of California.
B. Developer is a Delaware limited liability company, the members of which
specialize in the development and management of luxury hotel and luxury residential
developments.
C. City owns fee title to that certain real property located at the southwest
intersection of Jefferson Street and Avenue 52 in the City of La Quinta, California 92253
(the "Property").
D. City and Developer desire by this Agreement for Developer to purchase
the Property from City and to thereafter construct, complete, and operate thereon a
commercial project containing a luxury resort hotel and spa and associated branded
luxury residential units, a lifestyle hotel and associated lifestyle branded residential
units, a conference and shared service facility, a permanent clubhouse for the
SilverRock Resort's Arnold Palmer Classic Course, a mixed use village, a resort
residential village, and associated amenities, all as further described herein.
E. City's disposition of the Property to Developer, and Developer's
subsequent construction, completion and operation of the "Project" (as that term is
defined in Section 100 below) 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, for good and valuable consideration, the sufficiency of
which is hereby acknowledged, City and Developer hereby agree as follows:
100. DEFINITIONS
In addition to the terms that may be defined elsewhere in this Agreement, the
following terms when used in this Agreement shall be defined as follows:
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"Adverse Economic Event' means either of the following: (i) as of any date
following the Phase 1 Closing, that the average RevPAR for the Competitive Coachella
Valley Hotels over the course of the immediately preceding twelve (12) month period
has declined by ten percent (10%) or more from the levels reported by Smith Travel
Research for the 2014 calendar year, or (ii) Developer's inability, despite its use of
commercially reasonable efforts for one (1) year following the Phase 1 Closing, to
obtain a commitment for a construction loan for the development of the Luxury Hotel
from an institutional lender on the following terms: (a) an annual interest rate of no more
than seven percent (7%) (subject to such maximum rate being increased to the extent
of any increase in the Prime Rate published by the Wall Street Journal between the
Effective Date and the Phase 1 Closing Date, (b) a loan to "cost" ratio of no less than
sixty-five percent (65%), and (c) such loan being non -recourse to Developer and its
principals save and except for a limited guarantee to pay for up to ten percent (10%) of
the cost of construction in addition to Developer providing the lender with a completion
bond for one hundred percent (100%) of the budgeted costs of construction. As used in
subdivision (b) above, the term "cost" shall have the same meaning as the term
"Aggregate Preopening Expenses", as defined in the TOT Covenant Agreement.
"Agreement' means this Purchase, Sale, and Development Agreement between
City and Developer.
"Ahmanson Ranch House Component' means the Project Component that
consists of Developer's rehabilitation of the existing Ahmanson Ranch House, as further
described in Section 319 hereof, and in the Scope of Development and Specific Plan.
"Assignment and Assumption Agreement' is defined in Section 603.3 hereof.
"Available Rooms" means, with respect to any consecutive twelve (12) month
period, the total number of hotel guest rooms in such period, less those hotel guest
rooms removed from saleable inventory for any period of time during such period.
"Average Room Rate" means, with respect to any consecutive twelve (12)
month period, the total revenue generated from hotel guest room rentals, divided by the
number of paid hotel rooms occupied during such period.
"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 Property.
"Bulk Sale" is defined in Section 305.3(d) hereof.
"Business DaY' means any day on which the City of La Quinta is open for
business. Unless otherwise specified as "Business Days," all days hereunder are
calendar days.
"City' means the City of La Quinta, a California municipal corporation and charter
city.
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"City Manage" means the individual duly appointed to the position of City
Manager of City, or his or her authorized designee.
"City's Conditions Precedent to the Closing" means the conditions precedent
to the Closing to the benefit of City, as set forth in Section 205.1 hereof.
"Competitive Coachella Valley Hotels" means, collectively, those certain hotels
located in the Coachella Valley and currently known as Hyatt Regency Indian Wells,
Marriott Desert Springs, Miramonte, Waldorf Astoria La Quinta, Viceroy Palm Springs,
and Ritz Carlton Rancho Mirage.
"Completion of Construction Date" is defined in Section 306 hereof.
"Condition of Property Title" is defined in Section 203 hereof.
"Conference and Shared Service Facility' means the Project Component that
consists of Developer's development and subsequent operation of a conference and
shared service facility containing space designed and designated for conferences and
banquets, back -of -house support services, and management function space shared by
the Lifestyle Hotel and Luxury Hotel, and a surface parking lot, all as further described
in the Scope of Development and Specific Plan; provided, however, that if Developer
elects to construct the Lifestyle Hotel subsequent to constructing the Luxury Hotel, then
Developer shall have the option to submit to City, for City's review and approval, which
approval shall not be unreasonably withheld, a phasing plan for the construction of the
Conference and Shared Service Facility to complement the construction of the Luxury
Hotel and Lifestyle Hotel (including any approved phasing plan for the construction of
the Lifestyle Hotel).
"Contractor Bonds" means payment and performance bonds ensuring the
completion of a contractor or subcontractor's work on the Phase 1 Master Site
Infrastructure Improvements, the Phase 2 Master Site Infrastructure Improvements, or
one or more Project Components.
"CVWD" means Coachella Valley Water District, a public agency of the State of
California.
"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 501 hereof.
"Developer" means SilverRock Development Company, LLC, a Delaware limited
liability company, and any permitted successors and assigns.
"Developer CC&Rs" is defined in Section 312 hereof.
"Developer Representatives" means, collectively, Developer's managers,
directors, officers, engineers, analysts, officials, employees, agents, contractors,
representatives, attorneys, advisers, and consultants, including an Environmental
Consultant.
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"Developer's Conditions Precedent to the Closing" means the conditions
precedent to the Closing to the benefit of Developer, as set forth in Section 205.2.
"Development Agreement' means a Development Agreement entered into or to
be entered into between City and Developer pursuant to Government Code section
65864 et seg.
"Dust Control Program" means a program compliant with the City's dust control
ordinance and with applicable South Coast Air Quality Management District
requirements.
"Effective Date" means the date inserted into the Preamble hereof, which is the
date this Agreement becomes effective.
"Environmental Consultant' means a consultant engaged by Developer, at
Developer's sole cost and expense, which conducts the environmental investigations of
the Property pursuant to Section 207.2 hereof.
"Environmental Review Period' is defined in Section 206.1.
"Escrow Agent' is defined in Section 202 hereof.
"Evidence of Financial Capability' means evidence reasonably satisfactory to
the City Manager that Developer has the financial resources necessary for the
development of each respective Development Component, as further described in
, r. inn 311
"Expert' means an independent, neutral and impartial individual from the firms of
PKF Consulting or HVS Consulting, having not less than ten (10) years hospitality
industry experience in the area of expertise on which the dispute is based (e.g. with
respect to operational matters, experience in the management and operation of luxury,
boutique, lifestyle or similar First -Class Hotels or, with respect to financial matters,
experience in the financial or economic evaluation or appraisal of such luxury boutique,
lifestyle or similar First -Class Hotels).
"Fee Transfer Release Date" is defined in Section 603.1 hereof.
"Final Project Budget' means the final Project development budget, which shall
consist of the Preliminary Project Budget with any modifications necessary to reflect
Developer's final development cost estimates.
"FIRPTA" means the Foreign Investment in Real Property Transfer Act.
"Force Majeure" is defined in Section 602 hereof.
"GC Permit' is defined in Section 318 hereof.
"Golf Course" means SilverRock Resort's Arnold Palmer Classic Course.
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"Golf Course Realignment' means the Project Component that consists of
Developer's realignment of certain portions of the Golf Course, as further described in
Section 316 hereof and in the Scope of Development.
"Good Funds" means 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.
"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 Property, or
any portion thereof, is located, and of any other political subdivision, agency or
instrumentality exercising jurisdiction over Developer, and/or the Property, or any
portion thereof.
"Grant Deed' means a grant deed, substantially in the form attached hereto and
incorporated herein by this reference as Attachment No. 4, pursuant to which City shall
convey title to the Phase 1 Property and the Phase 2 Property to Developer.
"Hazardous Materials" means any substance, material, or waste which is, or
becomes, regulated by any local or regional 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 biphenyls, (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.
"Hotel Management Agreement' is defined in Section 304.10 hereof.
"Hotel Management Agreement Letter of Intent' means a letter of intent or
term sheet prepared by a Hotel Operator with respect to the Luxury Hotel or Lifestyle
Hotel (as applicable), as set forth in Section 205.1(m) hereof.
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"Hotel Operator' is defined in Section 205.1(m) hereof.
"Indemnitee" and "Indemnitees" are defined in Section 206.2 hereof
"Independent Contract Consideration" is defined in Section 202.2 hereof.
"Lifestyle Branded Residential Development' means the Project Component
that consists of Developer's construction of approximately sixty (60) one and/or two-
story luxury, condominium -style Resort Residential Dwelling Units, as further described
in the Scope of Development and Specific Plan.
"Lifestyle Hotel" means the Project Component that consists of Developer's
construction and subsequent operation of a modern, two- and three-story hotel (a)
containing not less than a sufficient number of hotel guest rooms that, when added to
the number of hotel guest rooms at the Luxury Hotel, will result in the Project having an
aggregate of at least three hundred (340) total hotel guest rooms, which rooms may be
constructed pursuant to a phasing plan that has been submitted to and approved by
City in City's reasonable discretion, and (ii) providing food and beverage services, a
pool, a surface parking lot, and other related amenities, all as further described in the
Scope of Development and Specific Plan. Notwithstanding anything to the contrary in
this Agreement, if Developer elects to construct the Lifestyle Hotel in phases, then
Developer shall have the option to submit to City, for City's review and approval, which
approval shall not be unreasonably withheld, a phasing plan for the construction of the
Lifestyle Hotel.
"Lifestyle Hotel Operator" is defined in Section 401 hereof.
"Luxury Branded Residential Development' means the Project Component
that consists of Developer's construction of approximately thirty-five (35) luxury single-
family detached Resort Residential Dwelling Units, as further described in the Scope of
Development and Specific Plan.
"Luxury Hotel" means the Project Component that consists of Developer's
construction and subsequent operation of an upscale, luxury, full -service single -story
hotel containing not less than one hundred twenty (120) luxury hotel rooms, that offers
luxury amenities, full service accommodations, a full -service sit-down restaurant, a first-
class spa and fitness facility, and pools, all as further described in the Scope of
Development and Specific Plan.
"Luxury Hotel Fence" means a fence (or the functional equivalent, as
determined by City) that meets the applicable specifications and standards of the
Coachella Valley Conservation Commission acting as authorized agent for the
requirements and obligations of the Multiple Species Habitat Conservation Plan.
"Luxury Hotel Operator is defined in Section 401 hereof.
"Management Transfer"is defined in Section 603.2 hereof.
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"Master Site Infrastructure Improvements" means the Project Component
consisting of Developer's construction and installation of all of the backbone
infrastructure improvements required to serve the Property, consistent with the Specific
Plan and Scope of Development.
"Master Site Infrastructure Improvements Design/Construction
Development Drawings" means those applications, plans and drawings to be
submitted to City with respect to the development of each of the Phase 1 Master Site
Infrastructure Improvements and the Phase 2 Master Site Infrastructure Improvements,
as set forth in Section 210 hereof.
"Master Site Infrastructure Improvements Land Use Approvals" is defined in
Section 209 hereof.
"Master Site Infrastructure Improvements Phasing Plan" means a plan that
provides for Developer's completion of the Master Site Infrastructure Improvements in
separate phases, with specified times for commencement and completion of each
phase.
"Memorandum of PSDX means the Memorandum of Purchase, Sale, and
Development Agreement substantially in the form attached hereto and incorporated
herein as Attachment No. 10.
"Meriwethet" means Meriwether Companies LLC, a Delaware limited liability
company.
"Municipal Code" means the La Quinta Municipal Code.
"Notice" means a notice in the form prescribed by Section 601 hereof.
"Occupancy Percentage" means, with respect to any consecutive twelve (12)
month period, the number of paid hotel rooms occupied in such period divided by the
Available Rooms in such period.
"Official Records" means the Official Records of the County of Riverside.
"Option Agreement' means the Option Agreement substantially in the form
attached hereto and incorporated herein as Attachment No. 7. The Option Agreement
shall be recorded against the Phase 1 Property at the Phase 1 Closing, and against the
Phase 2 Property at the Phase 2 Closing.
"Outside Date for Phase 1 Closing" means the date that is five hundred forty
(540) days following the Effective Date.
"Outside Date for Phase 2 Closing" means the date that is the earlier of (a)
three (3) years following the Phase 1 Closing Date, or (b) four (4) years following the
Effective Date.
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"PA" or "Planning Area" means a proposed planning area within the SilverRock
Resort Area, each of which proposed planning areas is depicted on the Site Map.
"Parcel Map" means a parcel map subdividing the Property into multiple parcels,
or a lot line adjustment of the existing Property, as necessary to accomplish the
development of the Project. The existing parcel map for the Property shall be amended
or a new parcel map recorded against the Property prior to or concurrently with the
Phase 1 Closing.
"Permanent Golf Clubhouse" shall mean the Project Component that consists
of Developer's development of a permanent public clubhouse to serve the Golf Course,
all as further described in the Scope of Development and Specific Plan.
"Phase" is defined in Section 201 hereof.
"Phase 1 Closing" means the close of the Phase 1 Escrow for the conveyance
from City to Developer of the Phase 1 Property as set forth in Section 202.5 hereof.
"Phase 1 Closing Date" means the date the Phase 1 Escrow closes for the
conveyance of the Phase 1 Property from City to Developer as set forth in Section
202.5 hereof.
"Phase 1 EscroW is defined in Section 202 hereof.
"Phase 1 Master Site Infrastructure Improvements" means the portion of the
Master Site Infrastructure Improvements to be installed and/or constructed to serve the
Phase 1 Property.
"Phase 1 Property' means the portion of the Property consisting of
approximately one hundred twenty-five (125) acres, which is comprised of the proposed
Planning Areas identified on the Site Map as "PA 2," "PA 3," "PA 4," "PA7," "PA 8," "PA
9," and a portion of "PA 10A."
"Phase 2 EscroW' is defined in Section 202 hereof.
"Phase 2 Property' means the portion of the Property consisting of
approximately twenty (20) acres, which is comprised of the proposed Planning Areas
identified on the Site Map as "PA 5" and "PA 6."
"Phase 2 Closing" means the close of the Phase 2 Escrow for the conveyance
from City to Developer of the Phase 2 Property as set forth in Section 202.5 hereof.
"Phase 2 Closing Date" means the date the Phase 2 Escrow closes for the
conveyance of the Phase 2 Property from City to Developer as set forth in Section
202.5 hereof.
"Phase 2 Master Site Infrastructure Improvements" means the portion of the
Master Site Infrastructure Improvements to be installed and/or constructed to serve the
Phase 2 Property.
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"Preliminary Budget' means that certain preliminary Project development
budget prepared by Developer, which is attached hereto and incorporated herein as
Attachment No. 6.
"Preliminary Title Report' means the preliminary title report issued by the Title
Company that covers the Property, as described in Section 203 hereof.
"Project' means the commercial development to be constructed on the Property
that consists of the Ahmanson Ranch House Component, Conference and Shared
Service Facility, Lifestyle Branded Residential Development, Lifestyle Hotel, Luxury
Branded Residential Development, Luxury Hotel, Permanent Golf Clubhouse,
Promenade Mixed -Use Village, and Resort Residential Village, as further described in
the Scope of Development and Specific Plan.
"Project Component' means any of the following components of the Project:
Ahmanson Ranch House Component, Conference and Shared Service Facility, Golf
Course Realignment, Lifestyle Branded Residential Development, Lifestyle Hotel,
Luxury Branded Residential Development, Luxury Hotel, Permanent Golf Clubhouse,
Promenade Mixed -Use Village, and Resort Residential Village.
"Project Component Design/Construction Development Drawings" means
those applications, plans and drawings to be submitted to City with respect to the
development of each Project Component, as set forth in Section 302 hereof.
"Project Component Land Use Approvals" is defined in Section 304.5 hereof.
"Promenade Mixed -Use Village" means the Project Component consisting of
Developer's development of up to two hundred twenty-five thousand (225,000) salable
square feet of residential space containing between one hundred ten (110) and two
hundred twenty-five (225) Resort Residential Dwelling Units, together with commercial
space comprising between twelve thousand nine hundred (12,900) and forty thousand
(40,000) square feet of mixed -use space comprised of permanent retail and seasonable
stand-alone "pop-up" space, all as further described in the Scope of Development and
Specific Plan.
"Property' means that approximately one hundred forty-five (145) acres of real
property located at the southwest intersection of Jefferson Street and Avenue 52 in the
City of La Quinta, California 92253. The Property is legally described in the Property
Legal Description and depicted in the Site Map.
"Property Environmental Reports" means the collective environmental
investigations of the Property conducted pursuant to Section 207.2 hereof.
"Property Exceptions" is defined in Section 203.
"Property Legal Description" means the legal description of the Property. At
such time as the Parcel Map is recorded, the Parties shall insert the legal description of
the Property into Attachment No. 1, which is attached hereto and incorporated herein by
this reference.
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"Purchase Price" means the price to be paid by Developer to City in
consideration of City's conveyance to Developer of fee title to the Property. The
Purchase Price is referenced in Section 202.2 hereof.
"Redevelopment Plan" is defined in Section 203 hereof.
"SWRCB" means the State Water Resources Control Board.
"Release of Construction Covenants" means the document which evidences
Developer's satisfactory completion of a Project Component, as set forth in Section 310
hereof, substantially in the form of Attachment No. 8 hereto which is incorporated herein
by this reference.
"Resort Residential Dwelling Unit' means a for -sale, residential dwelling unit
located within the Luxury Branded Residential Development, Lifestyle Branded
Residential Development, Promenade Mixed -Use Village, or Resort Residential Village.
"Resort Residential Village" means the Project Component that consists of
Developer's development and subsequent operation of approximately one hundred sixty
(160) Resort Residential Dwelling Units, an on -site amenity center consisting of a
clubhouse, and a reception and concierge desk, all as further described in the Scope of
Development and Specific Plan.
"RevPAR" means, with respect to any consecutive twelve (12) month period, the
Average Room Rate multiplied by the Occupancy Percentage for such period.
"RGC" means The Robert Green Company, a California corporation.
"Schedule of Performance" means the Schedule of Performance attached
hereto and incorporated herein as Attachment No. 3, setting out the dates and/or time
periods by which certain obligations set forth in this Agreement must be accomplished,
as same may be amended from time to time upon written approval of City, which
approval shall not be unreasonably withheld.
"Scope of Development' means the Scope of Development attached hereto and
incorporated herein as Attachment No. 5, which describes the scope, amount and
quality of development of the Project to be constructed by Developer pursuant to the
terms and conditions of this Agreement.
"SilverRock Resort Area" means the real property included in and covered by
the Specific Plan.
"Site Map" means the map of the Property and adjacent real property owned by
City, which is attached hereto as Attachment No. 2 and incorporated herein by this
reference. The Site Map depicts twelve (12) proposed Planning Areas within the
SilverRock Resort Area, numbered 1, 2, 3, 4, 5, 6, 7, 8, 9, 10A,10B, 11, and 12.
"Specific Plan" means the SilverRock Resort Specific Plan, which was approved
by the City Council of City on July 18, 2006. Developer's development and operation of
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the Project shall be in substantial conformance with the Specific Plan, as it may be
amended from time to time in accordance with its provisions. In the event this
Agreement is inconsistent with the Specific Plan, the terms of the Specific Plan shall
prevail.
"Title Company' is defined in Section 203 hereof.
"Title Policy' is defined in Section 204 hereof.
"TOT Covenant Agreement' means an Agreement Containing Covenants,
Conditions, and Restrictions Affecting Real Property substantially in the form attached
to the TOT Sharing Agreement as Exhibit "B". Concurrently with the execution of this
Agreement, Developer and City will be required to execute a TOT Covenant Agreement
for each of the Luxury Hotel and Lifestyle Hotel. At the Phase 1 Closing, Developer and
City shall record against the real property to be developed with the Luxury Hotel the
TOT Covenant Agreement for the Luxury Hotel, and at the Phase 2 Closing, Developer
and City shall record against the real property to be developed with the Lifestyle Hotel
the TOT Covenant Agreement for the Lifestyle Hotel. The TOT Covenant Agreements
(i) require Developer to operate and maintain the Luxury Hotel and Lifestyle Hotel as
first class hotels in accordance with the terms thereof, and (ii) provide for City to make
certain payments to Developer based on the Transient Occupancy Tax generated by
Developer's operation of the Luxury Hotel or Lifestyle Hotel (as applicable) if
Developer's annual net revenue from operating the Luxury Hotel or Lifestyle Hotel (as
applicable) is less than the target amount, as specified therein.
"TOT Sharing Agreement' means an Agreement to Share Transient Occupancy
Tax Revenue substantially in the form attached hereto and incorporated herein as
Attachment No. 11. Concurrently with the execution of this Agreement, Developer and
City will be required to execute a TOT Sharing Agreement for each of the Lifestyle Hotel
and Luxury Hotel.
"Transfer" is defined in Section 603.1 hereof.
"Transient Occupancy Tax" means the tax imposed on the occupancy of a hotel
or group hotel pursuant to Chapter 3.24 of the Municipal Code.
"Water Agreement' is defined in Section 205.1(n) hereof.
200. CONVEYANCE OF THE PROPERTY
201. Disposition of the Property. Developer agrees to purchase the Property
from City, and City agrees to sell the Property to Developer, in accordance with and
subject to all of the terms, covenants, and conditions of this Agreement. The Purchase
Price for each Planning Area to be conveyed to Developer is One Dollar ($1.00). The
Property will be conveyed in two phases (each, a "Phase").
202. Escrow. Within the times set forth in the Schedule of Performance,
Developer and City shall open (i) an escrow for Phase 1 (the "Phase 1 Escrow") with
Brenna Ryan, at First American Escrow, at 18500 Von Karman Avenue, Suite 600,
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Irvine, California 92612, or another escrow company mutually satisfactory to both
Parties (the "Escrow Agent"), for City's conveyance of the Phase 1 Property to
Developer, and (ii) an escrow for Phase 2 (the "Phase 2 Escrow") with Escrow Agent for
City's conveyance of the Phase 2 Property to Developer.
202.1 Costs of Escrow. Developer shall pay all of the costs of each of the
Phase 1 Escrow and the Phase 2 Escrow, including, without limitation, (i) all costs and
charges attributable to the ALTA (or CLTA, as elected by Developer in its sole
discretion) policy of title insurance for the Phase 1 Property and all costs and charges
attributable to the ALTA (or CLTA, as elected by Developer in its sole discretion) policy
of title insurance for the Phase 2 Property, as set forth in Section 204 hereof, (ii) the
documentary transfer taxes, if any, due with respect to the conveyance of the Phase 1
Property and the conveyance of the Phase 2 Property, and (iii) all other fees, charges,
and costs which arise from the Phase 1 Escrow and Phase 2 Escrow. Due to City's
status as a public entity, the Parties do not anticipate that any recording fees will be
charged in connection with either of the Phase 1 Escrow or Phase 2 Escrow.
Notwithstanding the foregoing, however, to the extent recording fees are charged or
imposed, Developer shall pay all of such fees.
202.2 Payment of Independent Contract Consideration and Purchase
Price.
(a) Concurrent with the execution of this Agreement, Developer
has paid to City the sum of One Dollar ($1) (the "Independent Contract Consideration"),
which sum is non-refundable to Developer under any circumstances and City hereby
acknowledges having received as consideration for City's execution and delivery of this
Agreement and Developer's right to approve or disapprove any of Developer's
Conditions Precedent to the Closing. In the event the Phase 1 Escrow closes, the
Independent Consideration shall be applied towards payment of the Purchase Price for
the Planning Areas to be conveyed to Developer at the Phase 1 Closing.
(b) On or before 5:00 p.m. on the Business Day preceding each
of the Phase 1 Closing Date and Phase 2 Closing Date (or such earlier time as required
by Escrow Agent), Developer shall deposit with Escrow Agent such funds as may be
required to meet the closing costs as hereinafter provided.
202.3 Escrow Instructions. This Agreement constitutes the joint escrow
instructions of Developer and City for each of the Phase 1 Escrow and Phase 2 Escrow,
and the Escrow Agent to whom instructions are delivered is hereby empowered to act
under this Agreement. All funds received in the Phase 1 Escrow and Phase 2 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 or Escrow Agent it is necessary or
convenient in order to accomplish the Phase 1 Closing or Phase 2 Closing, such Party
may require that the Parties sign supplemental escrow instructions; provided that if
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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. Escrow Agent is instructed
to release City's and Developer's escrow closing statements to the respective Parties.
202.4 Authority of Escrow Agent. At each of the Phase 1 Closing and
Phase 2 Closing, Escrow Agent is authorized to, and shall:
(a) Pay and charge Developer for the costs for the applicable
Title Policy, as set forth in Section 204 including all endorsements required by
Developer.
(b) Pay and charge Developer for all escrow fees, charges, and
costs payable under Section 202.1 of this Agreement.
(c) At each of the Phase 1 Closing and Phase 2 Closing,
disburse funds and record the applicable Grant Deed, Option Agreement, TOT
Covenant Agreement, and Water Agreement, and at the Phase 1 Closing only, record
the Memorandum of PSDA, when both Developer's Conditions Precedent to the Closing
and City's Conditions Precedent to the Closing have been fulfilled, or waived by
Developer and City (as applicable).
(d) Do such other actions as necessary, including obtaining the
applicable Title Policy, to fulfill its obligations under this Agreement.
(e) Within the discretion of Escrow Agent, direct City 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. City 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.
(g) Deliver the applicable recorded Option Agreement, TOT
Covenant Agreement, and Water Agreement, and at the Phase 1 Closing only, the
Memorandum of PSDA to City, and deliver copies of the aforementioned recorded
documents together with the applicable recorded Grant Deed to Developer.
202.5 Closing. Each of the Phase 1 Escrow and Phase 2 Escrow shall
close (the "Phase 1 Closing" or "Phase 2 Closing," as applicable) within thirty (30) days
after the Parties' satisfaction of all of City's Conditions Precedent to the Closing and all
of Developer's Conditions Precedent to the Closing as set forth in Section 205 hereof,
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but in no event shall the Phase 1 Closing occur later than the Outside Date for Phase 1
Closing, and in no event shall the Phase 2 Closing occur later than the Outside Date for
Phase 2 Closing. Subject to the provisions in this Section 202.5, each of the Phase 1
Closing and Phase 2 Closing shall occur at a time reasonably agreed on by the Parties.
The "Phase 1 Closing" shall mean the time and day the Grant Deed for the Phase 1
Property is recorded in the Official Records. The "Phase 1 Closing Date" shall mean
the day on which the Phase 1 Closing occurs. The "Phase 2 Closing" shall mean the
time and day the Grant Deed for the Phase 2 Property is recorded in the Official
Records. The "Phase 2 Closing Date" shall mean the day on which the Phase 2
Closing occurs. Notwithstanding anything herein to the contrary, the Outside Date for
Phase 1 Closing and the Outside Date for Phase 2 Closing shall not be subject to Force
Majeure.
202.6 Termination. If the Phase 1 Escrow is not in condition to close by
the Outside Date for Phase 1 Closing, or the Phase 2 Escrow is not in condition to close
by the Outside Date for Phase 2 Closing, then either Party which is not then in default of
any of its obligations under this Agreement may, in writing, demand the return of money,
documents, or property and terminate the Phase 1 Escrow or Phase 2 Escrow (as
applicable). If either Party makes a written demand for return of money, documents or
property, the Phase 1 Escrow or Phase 2 Escrow (as applicable) shall not terminate
until ten (10) Business Days after Escrow Agent shall have delivered copies of such
demand to the other Party at the respective addresses shown in this Agreement. If any
objections are raised within said ten (10) Business Day period, Escrow Agent is
authorized to hold all monies, papers and documents until instructed by a court of
competent jurisdiction or by mutual written instructions of the Parties. Termination of
the Phase 1 Escrow or Phase 2 Escrow (as applicable) 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, Escrow Agent shall proceed with the Phase 1
Closing or Phase 2 Closing (as applicable) as soon as possible.
202.7 Closing Procedure. Escrow Agent shall close each of the Phase 1
Escrow and Phase 2 Escrow as follows:
(a) (i) Record, in the following order, the applicable Grant Deed,
Option Agreement, TOT Covenant Agreement, Water Agreement, and Memorandum of
PSDA (at the Phase 1 Escrow only), and deeds of trust and other security instruments
securing Developer's financing for completion of the Phase 1 Master Site Infrastructure
Improvements or Phase 2 Master Site Infrastructure Improvements (as applicable), and
(ii) deliver conformed copies of each of the documents listed in clauses (i) above,
showing recording information to City and Developer;
(b) Provide for the delivery of (i) the applicable original recorded
Option Agreement, Water Agreement, TOT Covenant Agreement, and Memorandum of
PSDA (at the Phase 1 Escrow only), to City, together with a copy of the applicable
Grant Deed, and (ii) the applicable original recorded Grant Deed to Developer, together
with copies of the Option Agreement, Water Agreement, TOT Covenant Agreement,
and Memorandum of PSDA (at the Phase 1 Escrow only) to Developer;
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(c) Deliver the applicable Title Policy and 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 applicable FIRPTA Certificate, if any, to
Developer; and
(f) Forward to both Developer and City a separate accounting
of all funds received and disbursed for each Party and copies of all executed and
recorded or filed documents deposited into the Phase 1 Escrow or Phase 2 Escrow (as
applicable), with such recording and filing date and information endorsed thereon.
203. Review of Title of Property. City shall cause First American Title, attention
Wendy Hagen, at 250 East Palm Canyon Drive, Palm Springs, California 92262 (the
"Title Company"), or another title company mutually satisfactory to both Parties, to
deliver to Developer a standard preliminary title report dated no earlier than the
Effective Date (the "Preliminary Title Report") with respect to the title to the Property,
together with legible copies of the documents underlying the exceptions ("Property
Exceptions") set forth in the Preliminary Title Report, within thirty (30) days after the
Effective Date. Developer shall have the right to approve or disapprove the Property
Exceptions and any proposed encumbrances to the Property in the exercise of its sole
discretion; provided, however, that Developer hereby approves the following Property
Exceptions:
(a) The Redevelopment Plan for the La Quinta Project Area No.
1, adopted on November 29, 1983, by Ordinance No. 43 of the City Council of the City
of La Quinta (the "Redevelopment Plan").
(b) The lien of any non -delinquent property taxes and
assessments (to be prorated at close of the Escrow).
(c) All documents to be recorded pursuant to this Agreement at
the Phase 1 Closing or the Phase 2 Closing (as applicable).
Developer shall have thirty (30) days after the later of (i) the date of its receipt of the
Preliminary Title Report, or (ii) the date Developer receives the documents underlying
the Property Exceptions to give written notice to City and Escrow Holder of Developer's
approval or disapproval of any of such Property Exceptions. Developer's failure to give
written approval or disapproval of the Preliminary Title Report within such time limit shall
be deemed Developer's approval of the Preliminary Title Report; provided, however,
under no circumstances shall any monetary liens or encumbrances existing as of the
Effective Date or any "City Caused Exceptions" (as that term is defined below) be
deemed approved by Developer without Developer's express written approval thereof.
If Developer notifies City of its disapproval of any Property Exceptions in the Preliminary
Title Report, City shall have the right, but not the obligation, to remove any disapproved
Property Exceptions within thirty (30) days after receiving written notice of Developer's
disapproval or provide assurances satisfactory to Developer that such Property
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Exception(s) will be removed on or before the Phase 1 Closing. If City cannot or does
not agree to remove any of the disapproved Property Exceptions before the Phase 1
Closing, Developer shall have fifteen (15) days after the expiration of such thirty (30)
day period to either give City written notice that Developer elects to proceed with the
purchase of the Property subject to the disapproved Property Exceptions or to give City
written notice that 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 Property. Anything herein to the
contrary notwithstanding, City shall, at or prior to the Phase 1 Closing, remove from title
to the Property (i) all monetary encumbrances other than the lien referred to in (b)
above in this Section 203, and (ii) any and all matters recorded on title to the Property
after the Effective Date without the prior approval of Developer (collectively, "City
Caused Exceptions"). The condition of title, including all of the Property Exceptions to
title approved by Developer as provided herein shall hereinafter be referred to as the
"Condition of Property Title". From and after the Effective Date hereof, and continuing
until the earlier of (i) the Phase 2 Closing, or (ii) termination of this Agreement, City shall
not further encumber the Property with additional Property Exceptions without
Developer's prior written consent. Developer shall have the right to approve or
disapprove any further Property Exceptions (which are not created by Developer)
reported by the Title Company after Developer has approved the Condition of Property
Title. Developer and the City Manager, on behalf of City, shall have the authority to
extend the foregoing fifteen (15) day period by written agreement for an additional
fifteen (15) days.
204. Title Insurance. Concurrently with recordation of each Grant Deed, there
shall be issued to Developer an ALTA (or CLTA, as elected by Developer in its sole
discretion) standard owner's policy of title insurance (the "Title Policy"), together with
such endorsements as are requested by Developer, issued by the Title Company
insuring that the title to the Phase 1 Property or Phase 2 Property (as applicable) is
vested in Developer in the Condition of Property Title approved by Developer pursuant
to Section 203 of this Agreement. Developer shall pay all costs and charges for the title
insurance, and the costs for preparation of a current survey of the Property, if requested
by Developer. The Title Company shall provide City with a copy of the applicable Title
Policy.
205. Conditions of Closing. Each of the Phase 1 Closing and Phase 2 Closing
is conditioned upon the satisfaction of the following terms and conditions within the
times designated below:
205.1 City's Conditions of Closing. City's obligation to proceed with the
Phase 1 Closing or Phase 2 Closing (as applicable) is subject to the fulfillment, or
waiver by City, of each and all of the conditions precedent (a) through (w), inclusive,
described below ("City's Conditions Precedent to the Closing"), which are solely for the
benefit of City, and which shall be fulfilled or waived by the time periods provided for
herein:
(a) No Default. As of the close of each of the Phase 1 Escrow
and the Phase 2 Escrow, neither Developer nor any entity that has assumed
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Developer's obligations hereunder with respect to the development and/or operation of
one or more Project Components shall be in default of 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. Developer shall have executed
and delivered into the Phase 1 Escrow or Phase 2 Escrow (as applicable) the applicable
Grant Deed, Option Agreement, TOT Covenant Agreement, and Water Agreement, and
any other documents required hereunder, and, at the Phase 1 Escrow only, the TOT
Covenant Agreement and Memorandum of PSDA. The Development Agreement shall
have been fully executed and recorded in the Official Records.
(c) Payment of Funds. Prior to each of the Phase 1 Closing and
Phase 2 Closing, Developer shall have paid all of its required costs thereof into the
Phase 1 Escrow or Phase 2 Escrow (as applicable) in accordance with Section 202
hereof.
(d) Design Approvals. Developer shall have obtained approval
by City, acting in its governmental capacity, of the Master Site Infrastructure
Improvements Design/Construction Development Drawings for the Phase 1 Master Site
Infrastructure Improvements or Phase 2 Master Site Infrastructure Improvements (as
applicable), as set forth in Section 210 hereof.
(e) TOT Sharing Agreement. Developer shall have entered into
with City, concurrently with the execution of this Agreement, the applicable TOT Sharing
Agreement.
(f) Master Site Infrastructure Improvements Land Use
Approvals. Developer shall have received all Master Site Infrastructure Improvements
Land Use Approvals required for the Phase 1 Master Site Infrastructure Improvements
or Phase 2 Master Site Infrastructure Improvements (as applicable), pursuant to Section
209 hereof.
(g) Insurance. Developer shall have provided proof of insurance
as required by Section 304 hereof and City shall have approved of the same, provided
such approval shall not be unreasonably withheld, conditioned or delayed.
(h) Financing. (i) City shall have approved Developer's
financing for the Phase 1 Master Site Infrastructure Improvements or Phase 2 Master
Site Infrastructure Improvements (as applicable), pursuant to Section 211 hereof, and
such financing shall close concurrently with the Phase 1 Closing or Phase 2 Closing (as
applicable) and be available to Developer upon the Phase 1 Closing or Phase 2 Closing
(as applicable), and (ii) Developer shall have (or Developer's affiliates shall collectively
have) the "Required Equity" (as that term is defined below), or Developer shall have
entered into a joint venture agreement with a capital partner who has the Required
Equity and significant experience developing projects of the type, size and scope
contemplated by this Agreement. As used in this paragraph (h), the term "Required
Equity" means sufficient equity capital to pay for one hundred percent (100%) of the
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difference between (a) the expected cost to complete construction of all of the Project
Components in the applicable Phase (as set forth in the Final Project Budget), and (b)
the amount of construction financing available to Developer for the construction of all of
such Project Components. Notwithstanding anything in this paragraph to the contrary,
any proposed capital partner shall be subject to approval by the City Manager, which
approval shall be based upon a review by a representative of City of the financial
records and qualifications of said proposed capital partner; provided, however, that such
representative of City shall not be permitted to make and/or retain copies of any such
financial records without the prior approval of such proposed capital partner.
(i) Environmental. Developer shall have approved the
environmental condition of the Property and shall not have elected to terminate this
Agreement with respect to the Property pursuant to Section 207.2 hereof.
0) Grading Plans and Permits. Developer shall have obtained
approval by City, acting in its governmental capacity, of Developer's mass grading plans
for the Phase 1 Property or Phase 2 Property (as applicable), and grading permits shall
be ready to be issued (on payment of necessary fees, posting of required security, and
similar items).
(k) Construction Costs and Contract(§). Developer shall have
provided City with a copy of the proposed contract(s), certified by Developer to be a true
and correct copy thereof, between Developer and one or more duly licensed general
contractors reasonably acceptable to City for the construction and/or installation of the
Phase 1 Master Site Infrastructure Improvements or Phase 2 Master Site Infrastructure
Improvements (as applicable). No material changes shall thereafter be made to such
proposed contract(s) without the prior approval of the City Manager (such approval not
to be unreasonably withheld, conditioned or delayed) that (i) increase the time for
completion of the work (unless caused by Force Majeure), or (ii) are inconsistent with
City's prior approvals or permits for the Master Site Infrastructure Improvements.
(1) Contractor Bonds. Developer shall have obtained from the
general contractor who will install and construct the Phase 1 Master Site Infrastructure
Improvements or Phase 2 Master Site Infrastructure Improvements (as applicable), and
delivered to City evidence, in a form and amount as required pursuant to City's
subdivision ordinance and in accordance with all performance standards as
implemented through its standard subdivision improvement agreement, that said
contractor has obtained Contractor Bonds for the completion of the Phase 1 Master Site
Infrastructure Improvements or Phase 2 Master Site Infrastructure Improvements (as
applicable). Said Contractor Bonds shall be issued to, and shall be enforceable by,
City.
(m) Hotel Management Agreement Letter of Intent. Developer
shall have submitted to City and City shall have approved, an executed letter of intent
from a hotel operator (a "Hotel Operator") that sets forth all of the terms and conditions
pursuant to which the Hotel Operator will operate and manage the Luxury Hotel and/or
Lifestyle Hotel in the event Developer closes on financing acceptable to said Hotel
Operator (each, a "Hotel Management Agreement Letter of Intent"), provided that City's
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approval of the Hotel Management Agreement Letter of Intent shall not be unreasonably
withheld, conditioned or delayed. With respect to the Luxury Hotel, City hereby
approves each of Four Seasons Hotels and Resorts, Ritz Carlton Hotels, Rosewood
Hotels and Resorts, Montage Hotels, and St. Regis Hotels by Starwood, to act as Hotel
Operator. With respect to the Lifestyle Hotel, City hereby approves each of W Hotels by
Starwood, Andaz Hotel by Hyatt, a lifestyle hotel brand owned by the Montage Hotels,
Thompson Hotels, and Kimpton, to act as Hotel Operator. Any Hotel Operator not listed
above shall be subject to prior written approval by City, which may be granted or
withheld in City's sole and absolute discretion.
(n) Water Agreement. Developer shall have entered into a
standard Domestic Water and/or Sanitation Installation Agreement with the Coachella
Valley Water District ("CVWD"), substantially in the form attached as Exhibit C to that
certain Domestic Water and Sanitation System Installation and Irrigation Service
Agreement entered into by and between City and CVWD on or about June 11, 2005,
and recorded in the Official Records, as Instrument No. 2005-0852063, on June 14,
2005, as same may be amended from time to time by Developer, City and CVWD.
(o) Completion Guaranty. In the event Developer's lender is
requiring a completion guaranty for the lien -free completion of construction of the Phase
1 Master Site Infrastructure Improvements or Phase 2 Master Site Infrastructure
Improvements (as applicable), Developer shall cause the guarantor under such
guaranty to execute a completion guaranty in substantially the same form and
substance of the completion guaranty provided to Developer's lender, in favor of City,
for the lien -free completion of construction of the Phase 1 Master Site Infrastructure
Improvements or Phase 2 Master Site Infrastructure Improvements (as applicable),
provided that such guaranty in favor of City shall be at no additional cost to Developer;
provided further that if there is a cost for such guaranty, City shall have the election of
paying such costs in order to obtain such guaranty.
(p) Signage Agreement. Developer shall have entered into with
City a signage agreement. Notwithstanding other signage locations to be determined
during the site development permit process, the signage agreement shall provide for
perimeter signage along Avenue 52, at SilverRock Way; on Jefferson Street, at
SilverRock Way; at the corner of Avenue 52 and Jefferson Street; and at the corner of
Avenue 54 and Jefferson Street.
(q) Security for Luxury Hotel Fence. Developer shall have
delivered to City evidence, in a form satisfactory to City, in City's reasonable discretion,
that Developer has obtained Contractor Bonds or other security acceptable to City, for
the completion of the Luxury Hotel Fence. Said Contractor Bonds shall be issued to,
and shall be enforceable by, City.
(r) Dust Control Program. Developer shall have submitted to
City and City shall have approved a Dust Control Program for the Phase 1 Property or
Phase 2 Property (as applicable), which approval shall not be unreasonably withheld,
conditioned or delayed.
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(s) Parcel Map. Developer shall have processed for recordation
concurrently with the Phase 1 Closing the Parcel Map in the Official Records.
(t) Master Site Infrastructure Improvements Phasing Plan.
Developer shall have submitted to City and City shall have approved, in its reasonable
discretion, a Master Site Infrastructure Improvements Phasing Plan.
(u) Final Project Budget. Developer shall have submitted to City
and City shall have approved, in its reasonable discretion, the Final Project Budget.
(v) Notice of Intent. Developer shall have filed a Notice of Intent
and/or any other documentation required by SWRCB that notifies the SWRCB that
Developer is the legally responsible party for complying with the GC Permit with respect
to the Phase 1 Property or Phase 2 Property (as applicable).
(w) Temporary Clubhouse Design. City and Developer shall
have agreed upon the design and specifications for the temporary clubhouse to be
constructed by Developer pursuant to Section 315 hereof.
205.2 Developer's Conditions of Closing. Developer's obligation to
proceed with the purchase of the Phase 1 Property or Phase 2 Property (as applicable)
is subject to the fulfillment, or waiver by Developer, of each and all of the conditions
precedent (a) through (o), inclusive, described below ("Developer's Conditions
Precedent to the 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. As of the Phase 1 Closing Date and the Phase
2 Closing Date (as applicable), City shall not be in default of any of its obligations under
the terms of this Agreement and all representations and warranties of City contained
herein shall be true and correct in all material respects.
(b) Execution of Documents. City shall have executed and
delivered into the Phase 1 Escrow or Phase 2 Escrow (as applicable), the applicable
Grant Deed, Option Agreement, TOT Covenant Agreement, and Water Agreement, and
any other documents required hereunder, and, at the Phase 1 Escrow only, the
Memorandum of PSDA. The Development Agreement and the applicable TOT Sharing
Agreement shall have been fully executed and, if applicable, and recorded in the Official
Records.
(c) Review and Approval of Title. Developer shall have
reviewed and approved the condition of the title to the Property, as provided in Section
203 hereof.
(d) Title Policy. The Title Company shall be irrevocably
committed to issue to Developer, upon receipt of payment of Title Company's regularly
scheduled premium, a Title Policy for the Phase 1 Property at the Phase 1 Closing and
for the Phase 2 Property at the Phase 2 Closing, in accordance with Section 204 hereof.
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(e) Environmental. Developer shall have approved the
environmental condition of the Property and shall not have elected to terminate this
Agreement with respect to the Property pursuant to Section 207.2 hereof.
(f) Design Approvals. Developer shall have obtained approval
by City, acting in its governmental capacity, of the Master Site Infrastructure
Improvements Design/Construction Development Drawings for the Phase 1 Master Site
Infrastructure Improvements or Phase 2 Master Site Infrastructure Improvements (as
applicable), as set forth in Section 210 hereof.
(g) Master Site Infrastructure Improvements Land Use
Approvals. Developer shall have received all Master Site Infrastructure Improvements
Land Use Approvals required for the Phase 1 Master Site Infrastructure Improvements
or Phase 2 Master Site Infrastructure Improvements (as applicable), pursuant to Section
209 hereof.
(h) Grading and Building Permits. All grading and building
permits required for the installation and construction of the Phase 1 Master Site
Infrastructure Improvements or Phase 2 Master Site Infrastructure Improvements (as
applicable), and building permits shall be available for issuance upon the payment of
applicable permit fees, posting of required security, and similar items.
(i) Financing. As provided in Section 211 hereof, Developer
shall have obtained and City shall have approved, in City's reasonable discretion,
Developer's financing for the Phase 1 Master Site Infrastructure Improvements or
Phase 2 Master Site Infrastructure Improvements (as applicable), and such financing
shall close and be available to Developer upon the Phase 1 Closing or Phase 2 Closing
(as applicable).
(j) Parcel Map. City shall have approved the Parcel Map, and
the Parcel Map shall be recorded at or prior to the Phase 1 Closing in the Official
Records.
(k) Golf Course Realignment. City shall have approved
Developer's plans and schedule for the realignment of the Golf Course pursuant to
Section 316 below.
(1) Final Project Budget. City shall have approved the Final
Project Budget.
(m) Hotel Management Agreement Letter of Intent. City shall
have approved a Hotel Management Agreement Letter of Intent executed by a Hotel
Operator that sets forth all of the terms and conditions pursuant to which the Hotel
Operator will operate and manage the Luxury Hotel (for the Phase 1 Closing) and
Lifestyle Hotel (for the Phase 2 Closing) in the event Developer closes on financing
acceptable to said Hotel Operator.
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(n) Master Site Infrastructure Improvements Phasing Plan. City
shall have approved, in its reasonable discretion, the Master Site Infrastructure
Improvements Phasing Plan.
(o) Temporary Clubhouse Design. City and Developer shall
have agreed upon the design and specifications for the temporary clubhouse to be
constructed by Developer pursuant to Section 315 hereof.
206. Studies and Reports.
206.1 Access to Property. For a period of ninety (90) days commencing
on the Effective Date (the "Environmental Review Period"), City shall provide
representatives of Developer the right of access to all portions of the Property for the
purpose of obtaining data and making surveys and tests necessary to carry out this
Agreement, including without limitation the investigation of the geotechnical and
environmental condition of the Property pursuant to Section 207 hereof. Any work
undertaken on the Property by Developer prior to the Phase 1 Closing shall be done at
the sole expense of Developer. In no event shall Developer conduct any intrusive
testing procedures on the Property without the prior written consent of City, which
consent shall not be unreasonably withheld. 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 Property.
City shall cooperate to assist Developer in completing such inspections and special
investigations at no cost or expense to City other than the time of City's personnel and
incidental photocopying and like costs. Such inspections and investigations shall be
conducted only (a) upon no less than two (2) Business Days' notice to City, and (b)
between the hours of 8:00 a.m. and 5:00 p.m., Monday through Friday. City 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 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
City prior to initial entry a certificate of insurance evidencing that Developer and/or the
persons entering the Property have procured and have in effect the insurance required
by Section 306; (vi) conduct all work or studies at such times and in a manner that
minimizes interference with the operation of the Golf Course; (vii) coordinate all work or
studies that will interfere with the operation of the Golf Course with the City's Public
Works Director; and (viii) repair any damage it causes to the Property during the course
of such investigations and/or inspections promptly upon completion of the investigations
and/or inspections that caused such damage, and restore the Property to the condition
existing prior to the investigations and/or inspections, including, without limitation,
restabilizing any portions of the Property on which Developer's work removed or caused
the removal of the soil stabilizer present on the Property, to the satisfaction of City's
Public Works Director. Any work undertaken pursuant to this Section 206 shall be
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undertaken only after securing any necessary permits from the appropriate
governmental agencies. Developer's approval of the environmental and soils condition
of the Property shall be a Developer's Condition Precedent to the Closing, as set forth in
Section 205.2 hereof. If Developer, based upon the above tests, reports, and review,
disapproves the environmental or soils condition of the Property, in its sole and absolute
discretion, then Developer may (x) at its sole cost and with prior written approval of City
of any remediation proposal, remediate the Property, or any specific contaminated
portion thereof, to an acceptable condition, or (y) terminate this Agreement by written
Notice to City pursuant to Section 503 hereof. From and after the Effective Date hereof,
and continuing until the earlier of (1) the Phase 2 Closing, or (2) termination of this
Agreement, City shall not take any affirmative action to affect the condition of the
Property without Developer's prior written consent. City may revoke the foregoing right
of access upon five (5) days written notice to Developer delivered in accordance with
Section 601 below in the event: (1) in the reasonable judgment of City, such revocation
is necessary to protect the public health, safety, or welfare pursuant to the exercise of
City's police powers; or (11) Developer is in violation of the terms of this Agreement or
any applicable law, statute, ordinance, rule, or regulation pertaining to the preliminary
work permitted hereunder or Developer's or Developer Representative's entry upon the
Property pursuant to this Agreement, and Developer has failed to cure such violation
within five (5) days following Developer's receipt of written notice of such violation from
City; provided, however, that for the first two (2) such violations, Developer's right of
access shall be reinstated once the alleged violation is cured to City's reasonable
satisfaction, and that for any subsequent violation, Developer may request that such
right of access be reinstated once the alleged violation is cured to City's reasonable
satisfaction. From the Effective Date through the Phase 1 Closing and Phase 2
Closing, as applicable, City shall continue to maintain the Phase 1 Property and Phase
2 Property, respectively, in substantially the same condition as same are in as of the
Effective Date.
206.2 Indemnification. Developer shall protect, defend, indemnify and
hold harmless City and City's officers, officials, members, employees, volunteers,
agents, representatives, analysts, advisers, attorneys, and consultants (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 reasonable attorneys' fees and expert
witness fees, except to the extent caused or resulting from the gross negligence or
willful misconduct of any Indemnitee, and excluding those resulting from environmental
contamination of the Property or other defects on the Property 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 Property by Developer or any of the Developer Representatives
pursuant to this Section or Section 207, below, including without limitation:
(a) any damage to the Property and any liability to any third
party incurred by reason of any acts or omission of, including, but not limited to, any
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commission of any negligent or tortious acts, by Developer or the Developer
Representatives, or any of them;
(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 Developer or any of the Developer
Representatives, or any of them, on or relating to the Property (including, without
limitation, any claims by any of such Developer Representatives); and
(c) any costs of removing Developer or the Developer
Representatives from the Property after the expiration of the term hereof unless
Developer is otherwise entitled to possession of the Property at such time.
207. Condition of the Property
(a) Disclosure. Within ten (10) days after the Effective Date,
City shall provide to Developer, at no cost to Developer, copies of all environmental
studies and reports with respect to the Property of which it has actual knowledge,
without any duty of investigation or inquiry. Developer acknowledges and agrees that
City has provided to Developer a copy of (i) that certain Phase I Environmental Site
Assessment covering some or all of the Property, prepared on or about November 7,
1995, by SSCI Environmental and Consulting Services, and (ii) that certain Phase I
Environmental Site Assessment covering some or all of the Property, prepared on or
about February 28, 2001, by Ninyo & Moore Geotechnical and Environmental Sciences
Consultants.
207.2 Investigation of Property. Pursuant to Section 206 hereof,
Developer may engage an Environmental Consultant to make such investigations as
Developer deems necessary, including any "Phase I" and/or "Phase 2" investigations of
the Property, and City shall promptly be provided a copy of all final reports and test
results provided by the Environmental Consultant (the "Property Environmental
Reports"). Developer shall be permitted to make such inspections of the Property
pursuant to the requirements of Section 206. Developer shall approve or disapprove of
the environmental condition of the Property in Developer's sole discretion, not later than
the expiration of the Environmental Review Period. If Developer, based upon the
Property Environmental Reports, timely disapproves the environmental condition of the
Property for any reason, in Developer's sole discretion, then Developer may (i) at its
sole cost and with prior written approval of City of any remediation proposal, remediate
the Property, or any specific contaminated portion thereof, to an acceptable condition,
or (ii) terminate this Agreement by written Notice to City pursuant to Section 503 hereof.
207.3 No Further Warranties As To Property; Release of City; Waiver.
The physical condition, possession, and title of the Property is and shall be delivered
from City to Developer in an "AS -IS" "WHERE IS" "WITH ALL FAULTS" condition and,
with the exception of the limited warranties set forth in Section 207.6 below, with no
warranty expressed or implied by City, including without limitation, the presence of
Hazardous Materials or the condition of the soil, its geology, the presence of known or
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unknown seismic faults, or the suitability of the Property for the development purposes
intended hereunder.
Upon City's conveyance of fee title to the Phase 1 Property to Developer,
Developer shall be deemed to have waived, released and discharged forever the
Indemnitees 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 Phase 1 Property, any Hazardous Materials on the Phase 1 Property, or the
existence of Hazardous Materials contamination due to the generation of Hazardous
Materials from the Phase 1 Property or any other real property, however they came to
be placed there, except that arising out of (i) the active negligence or intentional
misconduct of any of the Indemnitees, or (ii) the material inaccuracy of any
representation set forth in Section 207.6 below.
Upon City's conveyance of fee title to the Phase 2 Property to Developer,
Developer shall be deemed to have waived, released and discharged forever the
Indemnitees 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 Phase 2 Property, any Hazardous Materials on the Phase 2 Property, or the
existence of Hazardous Materials contamination due to the generation of Hazardous
Materials from the Phase 2 Property or any other real property, however they came to
be placed there, except to the extent arising out of (i) the active negligence or
intentional misconduct of any of the Indemnitees, or (ii) the material inaccuracy of any
representation set forth in Section 207.6 below.
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 or her
favor at the time of executing the release, which if
known by him or her must have materially affected his
or her settlement with the debtor."
With respect to the condition of the Property as set forth in this Section
207.3, Developer hereby waives and relinquishes all rights and benefits which it may
have under Section 1542 of the California Civil Code.
Developer's Initials
Notwithstanding anything herein to the contrary, the release set forth in
this Section 207.3 shall become effective as to the Phase 1 Property on the Phase 1
Closing Date and as to the Phase 2 Property on the Phase 2 Closing Date.
Developer acknowledges that "natural hazards" described in the following
California Code sections (the "Natural Hazard Laws") may affect the Property:
Government Code sections 8589.4; 8589.3; Government Code sections 51183.4,
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51183.5 (fire hazard severity zone); Public Resource Code section 2621.9 (earthquake
fault zone); Public Resource Code section 2694 (seismic hazard zone); and Public
Resource Code section 4136 (wildland area). Developer acknowledges and agrees that
as of the Phase 1 Closing Developer will have had the opportunity to independently
evaluate and investigate whether any or all of such natural hazards affect the Phase 1
Property and as of the Phase 2 Closing Developer will have had the opportunity to
independently evaluate and investigate whether any or all of such natural hazards affect
the Phase 2 Property, and City shall have no liabilities or obligations with respect
thereto. Without limiting the foregoing, Developer acknowledges and agrees that
Developer knowingly and intentionally waives any disclosures, obligations or
requirements of City with respect to natural hazards, including, without limitation, any
disclosure obligations or requirements under the aforementioned code sections or under
California Civil Code section 1102(c). Developer represents that Developer has
experience acquiring and conducting due diligence, and that this waiver has been
negotiated and is an essential aspect of the bargain between the Parties.
207.4 Developer Precautions After the Closi
(a) Upon the Phase 1 Closing, 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 Phase 1 Property, or placed in, on, or
under the Phase 1 Property after the Phase 1 Closing. Such precautions shall include
compliance with all Governmental Requirements with respect to Hazardous Materials.
In addition, 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.
(b) Upon the Phase 2 Closing, 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 Phase 2 Property, or placed in, on, or
under the Phase 2 Property after the Phase 2 Closing. Such precautions shall include
compliance with all Governmental Requirements with respect to Hazardous Materials.
In addition, 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 Indemn
(a) Upon the Phase 1 Closing, Developer agrees to indemnify,
defend and hold City harmless from and against any claim, action, suit, proceeding,
loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense
(including, without limitation, reasonable 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 Phase 1 Property which first occurs after the Phase
1 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
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about, or to or from, the Phase 1 Property by Developer or by Developer's contractors,
subcontractors, agents, consultants, or representatives which occurs after the Phase 1
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 Developer, City
shall cooperate with and assist Developer in its defense of any such claim, action, suit,
proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or
expense; provided that City shall not be obligated to incur any expense in connection
with such cooperation or assistance.
(b) Upon the Phase 2 Closing, Developer agrees to indemnify,
defend and hold City harmless from and against any claim, action, suit, proceeding,
loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense
(including, without limitation, reasonable 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 Phase 2 Property which first occurs after the Phase
2 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, or to or from, the Phase 2 Property by Developer or by Developer's contractors,
subcontractors, agents, consultants, or representatives which occurs after the Phase 2
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 Developer, City
shall cooperate with and assist Developer in its defense of any such claim, action, suit,
proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or
expense; provided that City shall not be obligated to incur any expense in connection
with such cooperation or assistance.
207.6 City Representations. City hereby makes the following limited
representations and warranties and covenants to Developer with respect to the
Property, each of which is true in all respects as of the date hereof and shall be true in
all respects as of the Phase 1 Closing Date, with respect to the Phase 1 Property, and
as of the Phase 2 Closing Date, with respect to the Phase 2 Property:
(a) There are no pending or, to City's knowledge, threatened
lawsuits or claims which would affect the Property, or City's right to transfer the Property
to Developer pursuant to this Agreement.
(b) To City's knowledge, (i) the Property is not in violation of any
federal, state or local law, ordinance or regulation, and (ii) there are no underground
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storage tanks on the property, no Hazardous Materials being stored on or underneath
the Property, and no environmental, health or safety hazards on or under the Property,
including but not limited to soil and groundwater conditions.
(c) City has received no written notice from any third parties,
prior owners of the Property, or any federal, state or local governmental agency
indicating that any hazardous waste remedial or clean-up work will be required on the
Property.
(d) There are not presently pending any eminent domain or
condemnation actions against the Property or any part thereof; and City has not
received any notice of any eminent domain or condemnation actions being threatened
or contemplated that would affect the Property or any part thereof.
(e) To City's knowledge, there are no contracts, leases, claims
or rights affecting the development or use of Property and no agreements entered into
by or under City that shall survive the Phase 1 Closing, with respect to the Phase 1
Property or the Phase 2 Closing, with respect to the Phase 2 Property, that would
adversely affect Developer's rights with respect to the Property.
Until the Phase 1 Closing, if City learns of any fact or condition which
would cause any of the warranties and representations in this Section not to be true with
respect to the Phase 1 Property as of the Phase 1 Closing, City shall immediately give
written notice of such fact or condition to Developer.
Until the Phase 2 Closing, if City learns of any fact or condition which
would cause any of the warranties and representations in this Section not to be true with
respect to the Phase 2 Property as of the Phase 2 Closing, City shall immediately give
written notice of such fact or condition to Developer.
From the Effective Date through and until the Phase 1 Closing or the
Phase 2 Closing, as applicable, City shall maintain the Phase 1 Property and the Phase
2 Property in substantially the same condition that they are in as of the Effective Date.
Throughout this Agreement, terms such as "to City's knowledge," "City has
no knowledge," or like phrases mean the actual present and conscious awareness or
knowledge, without a duty to inquire or investigate, of the City Manager of the City of La
Quinta.
208. Installation of Luxury Hotel Fence; Implementation of Dust Control
Program.
(a) Within the time set forth in the Schedule of Performance,
and prior to the time Developer commences any grading activities on the Phase 1
Property, Developer shall install the Luxury Hotel Fence. Developer shall defend, with
counsel approved by City in City's sole and absolute discretion, indemnify, assume all
responsibility for, and hold the Indemnitees harmless from all claims, demands,
damages, defense costs or liability of any kind arising from Developer's failure to strictly
comply with the Mitigation Measures related to the protection of Bighorn Sheep set forth
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in that certain Mitigated Negative Declaration of Environmental Impact for
Environmental Assessment 2002-435 (State Clearinghouse No. 1999081020).
(b) Upon the Phase 1 Closing, Developer shall implement the
Dust Control Program with respect to the Phase 1 Property. Such implementation shall
continue until such time as all Project Components within the Phase 1 Property have
been completed, as evidenced by City's issuance of a Release of Construction
Covenants for the final Project Component for the Phase 1 Property.
(c) Upon the Phase 2 Closing, Developer shall implement the
Dust Control Program with respect to the Phase 2 Property. Such implementation shall
continue until such time as all Project Components within the Phase 2 Property have
been completed, as evidenced by City's issuance of a Release of Construction
Covenants for the final Project Component for the Phase 2 Property.
209. Master Site Infrastructure Improvements Land Use Approvals. As one of
City's Conditions Precedent to the Closing as set forth in Section 205.1(f) hereof,
Developer shall, at its own expense, secure or cause to be secured any and all land use
and other entitlements, permits and approvals which are required for the Master Site
Infrastructure Improvements to be installed or constructed within the Phase 1 Property
or Phase 2 Property (as applicable) by 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 (collectively,
the "Master Site Infrastructure Improvements Land Use Approvals"); provided, however,
that the condition precedent in this Section 209 shall not apply to permits or approvals
required to be obtained from CVWD or the Imperial Irrigation District if such permits and
approvals are not otherwise required by applicable law for the commencement or
completion of construction of the Master Site Infrastructure Improvements.
210. Master Site Infrastructure Improvements Design Approvals. As one of
City's Conditions Precedent to the Closing pursuant to Section 205.1(d), at or prior to
the time set forth in the Schedule of Performance, Developer shall submit to City any
plans and drawings (collectively, the "Master Site Infrastructure Improvements
Design/Construction Development Drawings") which may be required by City acting in
its governmental capacity with respect to any permits and entitlements which are
required to be obtained to install or construct the Phase 1 Master Site Infrastructure
Improvements or Phase 2 Master Site Infrastructure Improvements (as applicable), and
such plans for the Phase 1 Master Site Infrastructure Improvements or Phase 2 Master
Site Infrastructure Improvements (as applicable) as required by City acting in its
governmental capacity in order for Developer to obtain building and grading permits for
the Phase 1 Master Site Infrastructure Improvements or Phase 2 Master Site
Infrastructure Improvements (as applicable). Within thirty (30) days after City's
disapproval or conditional approval of such plans, Developer shall revise the portions of
such plans identified by City as requiring revisions and resubmit the revised plans to
City.
210.1 City Review and Approval. City, acting in its governmental
capacity, shall have all rights to review and approve or disapprove all Master Site
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Infrastructure Improvements Design/Construction Development Drawings and other
required submittals in accordance with the Municipal Code, and nothing set forth in this
Agreement shall be construed as City's approval of any or all of the Master Site
Infrastructure Improvements Design/Construction Development Drawings or other
required submittals. City retains all rights to exercise its discretion with respect to the
review and approval of any of said submittals.
210.2 Revisions. Any and all change orders or revisions required by City
and its inspectors which are required under the 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 Developer in its Master Site
Infrastructure Improvements Design/Construction Development Drawings and other
required submittals and shall be completed during the installation or construction of the
Phase 1 Master Site Infrastructure Improvements or Phase 2 Master Site Infrastructure
Improvements (as applicable).
210.3 Defects in Plans. City shall not be responsible either to Developer
or to third parties in any way for any defects in any of the Master Site Infrastructure
Improvements Design/Construction Development Drawings, nor for any structural or
other defects in any work done according to the approved Master Site Infrastructure
Improvements Design/Construction Development Drawings, nor for any delays
reasonably caused by the review and approval processes established by this Section
210
211. Approval of Financing (Master Site Infrastructure Improvements). Within
the time set forth in the Schedule of Performance, and as one of City's Conditions
Precedent to the Closing as set forth in Section 205.1(h) hereof, Developer shall submit
to City evidence that Developer (i) has obtained or will have obtained as of the Phase 1
Closing or Phase 2 Closing (as applicable), financing from a commercial lender
necessary to undertake the installation and construction of the Phase 1 Master Site
Infrastructure Improvements or Phase 2 Master Site Infrastructure Improvements (as
applicable), in accordance with this Agreement which may be in the form of a
commitment, a term letter, or such other form, with all such forms to be approved by
City, provided that such approval may not be unreasonably withheld, conditioned or
delayed (an "Infrastructure Loan"); (ii) if desired by Developer, has obtained
"mezzanine" financing in a form acceptable to City; and (iii) has obtained sufficient
equity capital to cover the difference between (a) the sum of the Infrastructure Loan and
the mezzanine financing and (b) the total cost of developing the Phase 1 Master Site
Infrastructure Improvements or Phase 2 Master Site Infrastructure Improvements (as
applicable) ("Developer's Master Site Infrastructure Improvements Equity Contribution").
City shall approve or disapprove such evidence of financing within thirty (30) days after
receipt of a complete submission for the Phase 1 Master Site Infrastructure
Improvements or Phase 2 Master Site Infrastructure Improvements (as applicable). If
City shall disapprove any such evidence of financing, City shall do so by Notice to
Developer stating with reasonable specificity the reasons for such disapproval and
Developer shall promptly obtain and submit to City new evidence of financing. City shall
approve or disapprove such new evidence of financing in the same manner and within
the same times established in this Section 211 for the approval or disapproval of the
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evidence of financing as initially submitted to City, provided, that such approval shall not
be unreasonably withheld, conditioned or delayed. Developer shall close each
approved Infrastructure Loan prior to or concurrently with the Phase 1 Closing or Phase
2 Closing (as applicable). Such evidence of financing shall include the following: (a) a
copy of a loan commitment(s) or term letter(s), obtained by Developer from one or more
financial institutions for the Infrastructure Loan, subject to such lenders' reasonable,
customary and normal conditions and terms, and (b) documentation satisfactory to City
as evidence of the "mezzanine" financing and Developer's Equity Contribution.
212. Access to Property for Planning, Entitlement, Design, and Financing
Purposes.
212.1 Access to Property. Commencing on the Effective Date and
continuing until the Phase 2 Closing Date, City shall provide representatives of
Developer the right of access to all portions of the Property for the purpose of facilitating
the planning, entitlement, design, and finance of the Project. Such access shall be
conducted only (a) upon no less than two (2) Business Days' notice to City, and (b)
between the hours of 8:00 a.m. and 5:00 p.m., Monday through Friday. City shall have
the right, but not the obligation, to accompany Developer during such entries. As a
condition to any such entry, Developer shall (i) conduct all activities during such access
in a diligent, expeditious and safe manner and not allow any dangerous or hazardous
conditions to occur on the Property during or after such entries; (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 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 City prior to initial entry a certificate of
insurance evidencing that Developer and/or the persons entering the Property have
procured and have in effect the insurance required by Section 306; (vi) conduct all
entries at such times and in a manner that minimizes interference with the operation of
the Golf Course; and (vii) repair any damage it causes to the Property during the course
of such entries promptly upon completion of the entries that caused such damage, and
restore the Property to the condition existing prior to the entries. City may revoke the
foregoing right of access upon two (2) days written notice to Developer delivered in
accordance with Section 601 below in the event: (1) in the reasonable judgment of City,
such revocation is necessary to protect the public health, safety, or welfare pursuant to
the exercise of City's police powers; or (11) Developer is in violation of the terms of this
Agreement or any applicable law, statute, ordinance, rule, or regulation pertaining to the
entries permitted hereunder or Developer's or Developer Representative's entry upon
the Property pursuant to this Agreement, and Developer has failed to cure such
violation within five (5) days following Developer's receipt of written notice of such
violation from City; provided, however, that for the first two (2) such violations,
Developer's right of access shall be reinstated once the alleged violation is cured to
City's reasonable satisfaction, and that for any subsequent violation Developer may
request that such right of access be reinstated once the alleged violation is cured to
City's reasonable satisfaction.
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212.2 Indemnification. Developer shall protect, defend, indemnify and
hold harmless the 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 reasonable
attorneys' fees and expert witness fees, except to the extent caused or resulting from
the gross negligence or willful misconduct of any Indemnitee, and excluding those
resulting from environmental contamination of the Property or other defects on the
Property existing prior to Developer's entry thereon or not otherwise caused by
Developer or any of Developer's 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, arising out of or in any manner directly or indirectly
connected with the entry upon the Property by Developer or any of the Developer's
representatives pursuant to Section 212.1 above, including without limitation:
(a) any damage to the Property and any liability to any third
party incurred by reason of any acts or omission of, including, but not limited to, any
commission of any negligent or tortious acts, by Developer or Developer's
representatives, or any of them;
(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 Developer or any of Developer's
representatives, or any of them, on or relating to the Property (including, without
limitation, any claims by any of such representatives); and
(c) any costs of removing Developer or Developer's
representatives from the Property unless Developer is otherwise entitled to possession
of the Property at such time
300. DEVELOPMENT OF THE PROJECT
301. Scope of Development. Developer shall develop or cause the
development of the Project in accordance with the Scope of Development, the Specific
Plan, the Municipal Code, Governmental Requirements, Project Component Land Use
Approvals, and the plans, drawings and documents submitted by Developer and
approved by City as set forth herein. Prior to commencement of construction of any
Project Component, Developer shall obtain and deliver to City evidence of Contractor
Bonds covering the applicable Project Component, and which provide that City is
authorized to enforce such Contractor Bonds as a third party beneficiary; provided,
however, that Developer shall only be required to obtain Contractor Bonds for any of the
Ahmanson Ranch House Component, Golf Course Realignment, Lifestyle Branded
Residential Development, Luxury Branded Residential Development, Promenade
Mixed -Use Village, or Resort Residential Village, for which Developer's lender requires
Developer to obtain Contractor Bonds.
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302. Desian Review.
302.1 Developer Submissions. At or prior to the time set forth in the
Schedule of Performance, Developer shall submit to City any plans and drawings
(collectively, the "Project Component Design/Construction Development Drawings")
which may be required by City with respect to any permits and entitlements which are
required to be obtained to develop each of the Project Components, and such plans for
the Project Components as required by City in order for Developer to obtain building
and grading permits for the Project Components. City shall review such plans and
drawings pursuant to the requirements of the Municipal Code. Within thirty (30) days
after the disapproval or conditional approval of any of such plans by City, acting in its
governmental capacity, Developer shall revise the portions of such plans identified by
City as requiring revisions and resubmit the revised plans to City.
302.2 City Review and Approval. City shall have all rights to review and
approve or disapprove all Project Component Design/Construction Development
Drawings and other required submittals in accordance with the Municipal Code, and
nothing set forth in this Agreement shall be construed as City's approval of any or all of
the Project Component Design/Construction Development Drawings or other required
submittals. City retains all rights to exercise its discretion with respect to the review and
approval of any of said submittals when acting in its governmental capacity.
302.3 Revisions. Any and all change orders or revisions required by City
and its inspectors which are required under the 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 Developer in its Project Component
Design/Construction Development Drawings and other required submittals and shall be
completed during the installation or construction of the Project Components.
302.4 Defects in Plans. City shall not be responsible either to Developer
or to third parties in any way for any defects in any of the Project Component
Design/Construction Development Drawings, nor for any structural or other defects in
any work done according to the approved Project Component Design/Construction
Development Drawings, nor for any delays reasonably caused by the review and
approval processes established by this Section 302.
303. Schedule of Performance. Developer shall submit all Project Component
Design/Construction Development Drawings, commence and complete all construction
of the Project, and satisfy all other obligations and conditions of this Agreement, within
the times established therefor in the Schedule of Performance.
304. Conditions to Develop. Developer may not obtain building permits for any
Project Component until such time as Developer has satisfied all of the following
conditions with respect to such Project Component:
304.1 City's Conditions Precedent to the Closing. Developer shall have
satisfied all of City's Conditions Precedent to the Closing, as set forth in Section 205.1,
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for the Phase in which the property to be developed with the Project Component is
located, and Developer shall have acquired fee title to said property from City.
304.2 Completion of Master Site Infrastructure Improvements. Developer
shall have completed each phase of the installation and construction of the Master Site
Infrastructure Improvements in accordance with the Master Site Infrastructure
Improvements Phasing Plan.
304.3 No Default. Neither Developer nor any entity that has assumed
Developer's obligations hereunder with respect to the development and/or operation of
one or more Project Components shall be in default of 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.
304.4 Financing. City shall have approved Developer's financing for the
Project Component, pursuant to Section 311.1 hereof, and such financing shall have
closed and shall be available to Developer.
304.5 Project Component Land Use Approvals. Developer shall, at its
own expense, secure or cause to be secured any and all land use and other
entitlements, permits and approvals which are required for the Project Component by
City or any other governmental agency affected by such construction or work, including
but not limited to, site development permits, conditional use permits, temporary use
permits, minor use permits, and any environmental studies and documents required
pursuant to the California Environmental Quality Act (collectively, the "Project
Component Land Use Approvals"); provided, however, that the condition precedent in
this Section 304.5 shall not apply to permits or approvals required to be obtained from
CVWD or the Imperial Irrigation District if such permits and approvals are not otherwise
required by applicable law for the commencement or completion of construction of the
Luxury Hotel, Lifestyle Hotel, or Conference and Shared Service Facility.
304.6 Building Plans and Permits. Developer shall have obtained
approval by City, acting in its governmental capacity, of Developer's building plans for
the Project Component, and building permits shall be ready to be issued (on payment of
necessary fees, posting of required security, and similar items).
304.7 Construction Costs and Contract(s). Developer shall have provided
City with a copy of the proposed contract(s), certified by Developer to be a true and
correct copy thereof, between Developer and one or more duly licensed general
contractors reasonably acceptable to City for the construction of the Project
Component. No material changes that (i) increase the time for completion of the work
(unless caused by Force Majeure), (ii) are inconsistent with the City approvals or
permits shall thereafter be made to such proposed contract(s) without the prior approval
of the City Manager.
304.8 Performance Bond. With respect to the construction of the Luxury
Hotel, Lifestyle Hotel, and Conference and Shared Service Facility, Developer shall
have obtained from Developer's general contractor and delivered to City evidence, in a
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form reasonably satisfactory to City, that said general contractor has obtained lien and
completion Contractor Bonds for the completion of said Project Component. Said
Contractor Bonds shall provide that City is authorized to enforce the same as a third
party beneficiary; provided, however, that with respect to the aforementioned Project
Components (e.g., the Luxury Hotel, Lifestyle Hotel, and Conference and Shared
Facility), if Developer's construction lender requires Contractor Bonds that satisfy the
foregoing requirements of this Section 304.8, as reasonably determined by the City
Manager, then Developer may satisfy the foregoing requirements of this Section 304.8
by listing City as an additional obligee on said Contractor Bonds obtained by
Developer's lender. Notwithstanding the foregoing, (i) Developer shall have the right to
elect to obtain, in lieu of the performance bond component of any of the foregoing
Contractor Bonds, a subguard insurance policy that insures Developer's obligation to
complete construction of the applicable Project Component, and (ii) if Developer's
construction lender requires Contractor Bonds for any other Project Component (e.g.,
any Project Component other than the Luxury Hotel, Lifestyle Hotel, or Conference and
Shared Service Facility), whether or not said Contractor Bonds satisfy the requirements
of this Section 304.8, Developer shall list City as an additional obligee on the Contractor
Bonds for said other Project Component(s) obtained by Developer's lender.
304.9 Completion Guaranty. Developer shall cause the guarantor under
any completion guaranty given to Developer's lender guaranteeing the lien -free
completion of construction of the applicable Project Component to execute a completion
guaranty in favor of City and in substantially the same form and substance as the
completion guaranty provided to Developer's lender.
304.10 Hotel Management Agreement. Developer shall have
submitted to City and City shall have approved, a fully executed hotel management
agreement from a Hotel Operator to operate and manage the Luxury Hotel or Lifestyle
Hotel (as applicable) in accordance with all applicable requirements set forth herein,
including all ancillary agreements including, without limitation, a technical services
agreement, hotel brand licensing agreement, and use and access development
agreement (each such agreement collectively with all ancillary agreements, a "Hotel
Management Agreement"), provided that City's approval of the Hotel Management
Agreement shall not be unreasonably withheld, conditioned or delayed.
305. Phasing of Development. Notwithstanding Developer's fee ownership of
the Phase 1 Property, the Phase 2 Property, or the entirety of the Property, or anything
herein to the contrary, Developer shall not be entitled to develop all portions of the
Project simultaneously. Developer's development of the Project shall, subject to
Section 305.3 below, be subject to the following phasing limitations:
305.1 Luxury Hotel.
(a) Developer may not obtain building permits for any Project
Component until such time as Developer has obtained a building permit for the Luxury
Hotel.
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(b) At such time as Developer has obtained a building permit for
the Luxury Hotel, Developer may obtain building permits for the Luxury Branded
Residential Development, Conference and Shared Service Facility, Promenade Mixed -
Use Village, and Resort Residential Village.
(c) Developer may not close escrow on the sale of any Resort
Residential Dwelling Unit within the Luxury Branded Residential Development until such
time as Developer has expended fifty percent (50%) of the construction costs set forth
in the construction contract for the Luxury Hotel that was approved by City pursuant to
Section 304.7 hereof on construction of the Luxury Hotel, as reasonably determined by
the City Manager.
305.2 Lifestyle Hotel.
(a) Developer may not obtain building permits for the Lifestyle
Branded Residential Development until such time as Developer has obtained a building
permit for the Lifestyle Hotel.
(b) Developer may not close escrow on the sale of any Resort
Residential Dwelling Unit within the Lifestyle Branded Residential Development until
such time as Developer has expended fifty percent (50%) of the construction costs set
forth in the construction contract for the Lifestyle Hotel that was approved by City
pursuant to Section 304.7 hereof on construction of the Lifestyle Hotel, as reasonably
determined by the City Manager.
305.3 Alternate Develooment Phasin
(a) If an Adverse Economic Event occurs, then Developer
may, at its election, provide written notice thereof to City, along with documentary
evidence establishing the Adverse Economic Event. Upon City's concurrence that an
Adverse Economic Event has occurred, which determination shall be made in City's
reasonable discretion, Developer and City shall meet and confer for up to a maximum
of fifteen (15) days to determine if they can mutually agree on a course of action to
address the Adverse Economic Event, including, without limitation, an alternate
schedule for developing the Project. If the Parties are able to agree on a course of
action to address the Adverse Economic Event, then the Parties shall prepare an
amendment hereto or other documentation mutually satisfactory to the Parties that
documents said agreement. If the Parties are unable to agree on a course of action to
address the Adverse Economic Event, then City shall have a period of sixty (60) days,
commencing on the final date of the meet and confer, to notify Developer, in writing, of
City's election to exercise, or assign, its right to purchase the Property or portions
thereof pursuant to the terms of the Option Agreement recorded at the Phase 1
Closing (the "Phase 1 Option Agreement") and, if the Phase 2 Closing shall have
occurred, the Option Agreement recorded at the Phase 2 Closing (the "Phase 2
Option Agreement"). If City notifies Developer of its election to exercise, or assign, its
right to purchase the Property or portions thereof pursuant to the terms of the Phase 1
Option Agreement and/or, if the Phase 2 Closing shall have occurred, the Phase 2
Option Agreement, City or its assignee shall have a period of one hundred eighty
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(180) days, commencing on the final date of the meet and confer, to conclude the
purchase and acquire fee title to the Property or portions thereof pursuant to the terms
of the Phase 1 Option Agreement and/or, if the Phase 2 Closing shall have occurred,
the Phase 2 Option Agreement. Notwithstanding the foregoing, and subject to the
terms of a subordination or other agreement entered into with Developer's
construction lender pursuant to Section 7(g) of the Phase 1 Option Agreement and/or,
if the Phase 2 Closing shall have occurred, the Phase 2 Option Agreement, if
applicable, City may extend such one hundred eighty (180) day period for one or more
additional periods of thirty (30) days each (each, an "Option Extension Period") by
depositing into the escrow opened by the Parties pursuant to the terms of the Phase 1
Option Agreement and/or, if the Phase 2 Closing shall have occurred, the Phase 2
Option Agreement (the "Option Agreement Escrow") funds in the amount of five
percent (5%) of the applicable purchase price to be paid by City or its assignee
pursuant to the Phase 1 Option Agreement and/or, if the Phase 2 Closing shall have
occurred, the Phase 2 Option Agreement (the "Option Agreement Deposit"). In the
event the Option Agreement Escrow closes prior to the expiration of the applicable
Extension Period, the Option Agreement Deposit shall be applied to the purchase
price to be paid by City or its assignee pursuant to the Phase 1 Option Agreement
and/or, if the Phase 2 Closing shall have occurred, the Phase 2 Option Agreement. In
the event the Option Agreement Escrow fails to close prior to the expiration of the
applicable Extension Period, Developer shall retain the Option Agreement Deposit and
the dates applicable to Developer's performance under the Phase 1 Option
Agreement and, if the Phase 2 Closing shall have occurred, the Phase 2 Option
Agreement, shall each be extended by the length of time between the final date of the
meet and confer and the date that the Option Agreement Escrow is cancelled. If City
notifies Developer of its election not to exercise, or assign, its right to purchase the
Property or portions thereof pursuant to the Phase 1 Option Agreement and/or, if the
Phase 2 Closing shall have occurred, the Phase 2 Option Agreement, or notifies
Developer of its election to exercise, or assign, its right to purchase the Property or
portions thereof pursuant to the Phase 1 Option Agreement and, if the Phase 2
Closing shall have occurred, the Phase 2 Option Agreement, but City or its assignee
(as applicable) fails to conclude such purchase prior to the expiration of (1) the one
hundred eighty (180) day period described above, or (II) any applicable Extension
Period (either of the foregoing, an "Alternate Development Phasing Trigger"), then the
phasing requirements set forth in Section 305.1 and Section 305.2 above shall be
amended such that Developer may commence and complete construction of the
Project in the following phases:
(i) Phase 1: the portion of the Property identified on the Site
Map as "PA 7" and "PA 8", which shall collectively be referred to herein as
the "Alternate Development Phase 1 Property" following the occurrence of
an Alternative Development Phasing Trigger, together with those certain
Master Site Infrastructure Improvements to be installed and/or constructed
to serve such Alternate Development Phase 1 Property, which shall
collectively be referred to herein as the "Alternate Development Phase 1
Master Site Infrastructure Improvements" following the occurrence of an
Alternative Development Phasing Trigger; and
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(ii) Phase 2: the portion of the Property identified on the Site
Map as "PA 2", "PA 3", "PA 4", "PA 5" and "PA 6", which shall collectively
be referred to herein as the "Alternate Development Phase 2 Property"
following the occurrence of an Alternative Development Phasing Trigger,
together with those certain Master Site Infrastructure Improvements to be
installed and/or constructed to serve such Alternate Development Phase 2
Property, which shall collectively be referred to herein as the "Alternate
Development Phase 2 Master Site Infrastructure Improvements" following
the occurrence of an Alternative Development Phasing Trigger.
(b) As soon as reasonably possible following the occurrence of
an Alternative Development Phasing Trigger, (1) the Parties shall discuss in good faith
and agree upon appropriate changes to the Schedule of Performance to
accommodate the amended development phasing described above, (II) the Parties
shall amend the Option Agreement to reflect the changes in the description of the
Phase 1 Master Site Infrastructure Improvements and the Phase 2 Master Site
Infrastructure Improvements and other changes necessary to reflect the amended
development phasing described above, (III) Developer shall prepare and submit to
City for City's reasonable approval a new budget (the "Alternate Development Phasing
Budget") that reflects the alternate development phasing described above, and (IV) all
revenue generated by Developer from the sale of Resort Residential Dwelling Units
located within the Promenade Mixed -Use Village and the Resort Residential Village
shall be distributed as follows by Developer:
(i) first, to the Developer, an amount equal to the lesser of (x)
the development costs set forth in the Alternate Development Phasing
Budget, and (y) all third party hard and soft costs actually incurred in
connection with the design and construction of Master Site Infrastructure
Improvements, provided that Developer has provided invoices to City
documenting the expenditure of all of said costs; and
(ii) all remaining funds to be deposited into an escrow account
opened in Developer's name (the "Alternative Development Phase 2
Holding Escrow") with a nationally recognized escrow agent reasonably
acceptable to both Parties (the "Alternate Development Phase 2 Escrow
Agent").
(c) Developer shall irrevocably instruct the Alternate
Development Phase 2 Escrow Agent to release the funds in the Alternative
Development Phase 2 Holding Escrow to the ultimate developer of the Alternate
Development Phase 2 Property upon receipt of invoices for hard and soft costs
actually incurred in connection with the design and construction of improvements on
the Alternate Development Phase 2 Property that are consistent with the Alternate
Development Phasing Budget, as it may be amended with the approval of City, which
approval shall not be unreasonably withheld, conditioned or delayed, with any funds
remaining in the Alternate Development Phase 2 Holding Escrow following completion
of construction of the Alternate Development Phase 2 improvements to be released to
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such ultimate developer of the Alternate Development Phase 2 Property as its sole
property.
(d) On the occurrence of an Alternate Development Phasing
Trigger, Developer shall have the right, exercisable upon written notice to the City, to
sell the property designated to be developed with the Resort Residential Village in a
bulk sale to an unrelated third party developer (the "Bulk Sale"). If Developer elects to
proceed with the Bulk Sale, then, notwithstanding anything to the contrary in Section
305.3 b above, (i) Developer shall retain the proceeds from the Bulk Sale, and (ii)
Developer shall distribute all revenue generated from the sale of Resort Residential
Dwelling Units located within the Resort Residential Village in accordance with
Sections 305.3(b) and 305.3 c above.
(e) During the meet and confer described in Section 305.3(a)
above, City shall direct Developer regarding the completion of the following: (i) the
completion of the Golf Course Realignment, if any of such work has been commenced
by Developer pursuant to the terms of Section 316 below; (ii) the completion of the
Ahmanson Ranch House Component, if any work on such component has been
commenced by Developer; (iii) the completion of the Permanent Golf Clubhouse, if
any work on such component has been commenced by Developer; (iv) the completion
of the Phase 1 Master Site Infrastructure Improvements; and (v) the completion of the
Phase 2 Master Site Infrastructure Improvements, if any work on said improvements
has been commenced by Developer. City's direction pursuant to the terms of this
Section 305.3(e) shall be made in City's sole and absolute discretion, and shall
become obligations of Developer regardless of whether the Parties are able to agree
on a course of action pursuant to the meet and confer process.
306. Insurance Requirements.
306.1 Commencing with the Effective Date hereof and ending on the
latest of (a) the date the Development Agreement expires or is earlier terminated by the
Parties pursuant to the terms thereof; (b) the date the TOT Covenant Agreement for the
Luxury Hotel expires or is earlier terminated by the Parties pursuant to the terms
thereof, or (c) the date the TOT Covenant Agreement for the Lifestyle Hotel expires or is
earlier terminated by the Parties pursuant to the terms thereof, Developer shall procure
and maintain, at its sole cost and expense, in a form and content reasonably
satisfactory to the City Manager, the following policies of insurance:
(a) A policy of commercial general liability insurance written on a
per occurrence basis in an amount not less than Five Million Dollars ($5,000,000.00)
per occurrence and Five Million Dollars ($5,000,000.00) in the aggregate.
(b) A policy of workers' compensation insurance in such amount
as will fully comply with the laws of the State of California against any loss, claim or
damage arising from any injuries or occupational diseases occurring to any worker
employed by Developer in the course of carrying out the work or services contemplated
in this Agreement.
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(c) A policy of commercial automobile liability insurance written
on a per occurrence basis in an amount not less than Three Million Dollars
($3,000,000.00). Said policy shall include coverage for owned, non -owned, leased, and
hired cars.
(d) "All Risks" Builder's Risk (course of construction) insurance
coverage on a replacement cost basis in an amount equal to the full cost of the hard
construction costs of the Project. Such insurance shall contain no coinsurance
provision, and cover, at a minimum: all work, materials, and equipment to be
incorporated into the Project; the Project during construction; the completed Project until
such time as City issues the final certificate of occupancy for the Project, and storage,
transportation, and equipment breakdown risks. Such insurance shall include coverage
for earthquake (for the Luxury Hotel, Lifestyle Hotel, and Conference and Shared
Service Facility only), flood, ordinance or law, temporary offsite storage, debris removal,
pollutant cleanup and removal, preservation of property, landscaping, shrubs and plants
and full collapse during construction. Such insurance shall protect/insure the interests
of Developer/owner and all of Developer's contractor(s), and subcontractors, as each of
their interests may appear. If such insurance includes an exclusion for "design error,"
such exclusion shall only be for the object or portion which failed. Notwithstanding the
foregoing, such insurance shall only be required for a particular Project Component at
such time as construction commences on such Project Component.
306.2 Commencing on the date City issues a Release of Construction
Covenants for a Project Component and ending on the latest of (a) the date the
Development Agreement expires or is earlier terminated by the Parties pursuant to the
terms thereof; (b) the date the TOT Covenant Agreement for the Luxury Hotel expires or
is earlier terminated by the Parties pursuant to the terms thereof, or (c) the date the
TOT Covenant Agreement for the Lifestyle Hotel expires or is earlier terminated by the
Parties pursuant to the terms thereof, Developer shall procure and maintain, at its sole
cost and expense, in a form and content reasonably satisfactory to City Manager, "All
Risks" property insurance on a replacement cost basis in an amount equal to full
replacement cost of the Project Component, as the same may change from time to
time. The above insurance policy or policies shall contain no coinsurance provision.
306.3 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 and All Risks insurance, shall name City and City's officers,
officials, members, employees, agents, and representatives as additional insureds,
using a pre-2004 additional insured endorsement (or equivalent). To the extent
allowable by applicable law, the insurer shall waive all rights of subrogation and
contribution it may have against City and City's 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 materially amended or cancelled
without providing thirty (30) days' prior written notice to City. In the event any of said
policies of insurance are cancelled, Developer shall, prior to the cancellation date,
submit new evidence of insurance in conformance with this Section to the City Manager.
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Not later than the Effective Date of this Agreement, Developer shall provide the City
Manager 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 City Manager. Upon the request of the City
Manager, Developer shall provide City with complete copies of each policy of insurance
required by this Agreement.
The policies of insurance required by this Agreement shall be satisfactory
only if issued by companies (i) licensed and admitted 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, or
(ii) authorized 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 Registry and only if they
are of a financial category Class XV. Notwithstanding the foregoing, in the event that
the policies required hereunder are not available from such insurers at commercially
reasonable rates, the City Manager shall have the authority, in his or her sole and
absolute discretion, to waive one or more of such requirements provided the proposed
policies will adequately protect City's interests hereunder.
City may reasonably require coverage increases, provided that the
percentage increase in coverage shall not be required to exceed the percentage
increase in the Consumer Price Index published by the United States Department of
Labor, Bureau of Labor Statistics, for Urban Wage Earners and Clerical Workers, Los
Angeles -Riverside -Orange County Average, All Items (1984 = 100) (the "Index"), from
and after the date of this Agreement, or, if said Index is discontinued, such official index
as may then be in existence and which is most nearly equivalent to said Index (the "CPI
Adjustment"). Unless otherwise approved in advance by the City Manager, the
insurance to be provided by Developer may provide for a deductible or self -insured
retention of not more than Fifty Thousand Dollars ($50,000); provided, however, that the
deductible or self -insured retention for the earthquake coverage may be up to, but not
exceed, ten percent (10%) of the replacement cost of the damaged Luxury Hotel,
Lifestyle Hotel, and/or Conference and Shared Service Facility (as applicable).
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 Developer's activities or
the activities of any person or persons for which Developer is otherwise responsible.
307. Indemnity. Commencing on the Effective Date, Developer shall defend,
with counsel approved by City in City's sole and absolute discretion, indemnify, assume
all responsibility for, and hold the Indemnitees 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 reasonable attorneys' fees and costs),
which may be caused by any acts or omissions of Developer under this Agreement,
whether such activities or performance thereof be by Developer or by anyone directly or
indirectly employed or contracted with by 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, if required, prevailing wages on the construction
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and development of any Project Component. Developer shall not be liable for any
damages to the extent occasioned by the gross negligence or willful misconduct of City
or City's agents, employees or consultants.
308. Rights of Access During Construction. Prior to the Completion of
Construction Date, for purposes of assuring compliance with this Agreement,
representatives of City shall have the right of access to the Property, 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 Project so long as City representatives comply with all safety rules
and do not interfere with construction. City (or its representatives) shall, except in
emergency situations, notify Developer prior to exercising its rights pursuant to this
Section 308. City shall indemnify, defend, and hold Developer harmless from and
against all costs, claims, demands, damages, defense costs, or liability arising from
City's exercise of its right of access hereunder, including without limitation reasonable
attorneys' fees and costs.
309. Compliance With Laws; Payment of Taxes.
309.1 Compliance with Laws. Developer shall carry out the design,
construction and operation of the Project and each Project Component in conformity
with all applicable laws, regulations, and rules of the governmental agencies having
jurisdiction, including without limitation City zoning and development standards,
building, plumbing, mechanical and electrical codes, and all other provisions of the
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, et seq., the Unruh Civil Rights Act, Civil Code Section 51, et seq., and the
California Building Standards Code, Health and Safety Code Section 18900, et seq.,
and all federal, state, and local labor laws and regulations, including, without limitation, if
applicable, the requirements to pay prevailing wages under federal law (the Davis
Bacon Act, 40 U.S.C. Section 3141, et seq., and the regulations promulgated
thereunder set forth at 29 CFR Part 1 (collectively, "Davis Bacon")) and California law
(Labor Code Section 1720, et seq.). The Parties acknowledge that a financing structure
utilizing certain federal and/or state funding sources and financing scenarios may trigger
compliance with applicable state and federal prevailing wage laws and regulations.
Developer shall be solely responsible, expressly or impliedly, and legally
and financially, for determining and effectuating compliance with all applicable federal,
state and local public works requirements, prevailing wage laws, and labor laws and
standards, and City makes no representation, either legally and/or financially, as to the
applicability or non -applicability of any federal, state and local laws to the Project or any
Project Component, either onsite or offsite. Developer expressly, knowingly and
voluntarily acknowledges and agrees that City has not previously represented to
Developer or to any representative, agent or affiliate of Developer, or its contractor or
any subcontractor(s) for the construction or development of the Project or any Project
Component, in writing or otherwise, in a call for bids or otherwise, that the work and
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construction undertaken pursuant to this Agreement is (or is not) a "public work," as
defined in Section 1720 of the Labor Code or under Davis Bacon.
Developer knowingly and voluntarily agrees that Developer shall have the
obligation to provide any and all disclosures or identifications as required by Labor Code
Section 1781 and/or by Davis Bacon, as the same may be amended from time to time,
or any other similar law or regulation. In addition to any other Developer
indemnifications of City set forth in this Agreement, Developer shall indemnify, protect,
pay for, defend (with legal counsel reasonably acceptable to City) and hold harmless
City from and against any and all loss, liability, damage, claim, cost, expense and/or
"increased costs" (including reasonable attorneys' fees, court and litigation costs, and
fees of expert witnesses) which, in connection with the development, construction (as
defined by applicable law) and/or operation of the Project, or any Project Component,
including, without limitation, any and all public works (as defined by applicable law),
results or arises in any way from any of the following: (i) the noncompliance by
Developer with any applicable local, state and/or federal law or regulation, including,
without limitation, any applicable federal and/or state labor laws or regulations
(including, without limitation, if applicable, the requirement to pay state and/or federal
prevailing wages); (ii) the implementation of Section 1781 of the Labor Code and/or of
Davis Bacon, as the same may be amended from time to time, or any other similar law
or regulation; and/or (iii) failure by Developer to provide any required disclosure or
identification as required by Labor Code Section 1781 and/or by Davis Bacon, as the
same may be amended from time to time, or any other similar law or regulation. It is
agreed by the Parties that, in connection with the development and construction (as
defined by applicable law or regulation) of the Project, including, without limitation, any
and all public works (as defined by applicable law or regulation), Developer shall bear
all risks of payment or non-payment of prevailing wages under applicable federal, state
and local law or regulation and/or the implementation of Labor Code Section 1781
and/or by Davis Bacon, as the same may be amended from time to time, and/or any
other similar law or regulation. "Increased costs," as used in this Section 309.1, shall
have the meaning ascribed to it in Labor Code Section 1781, as the same may be
amended from time to time. The foregoing indemnity shall survive termination of this
Agreement and shall continue after completion of the construction and development of
the Project by Developer.
309.2 Taxes and Assessments. Developer shall pay prior to delinquency
all ad valorem real estate taxes and assessments on the Property (after such time that
Developer acquires fee title to the Property), subject to Developer's right to contest in
good faith any such taxes. Developer agrees on behalf of itself, and on behalf of all
persons or entities that may own an interest in the portions of the Property developed
with the Luxury Hotel, Lifestyle Hotel, or Conference and Shared Service Facility in the
future, that during the term of any applicable TOT Covenant Agreement, neither
Developer nor any such person or entity shall (i) apply for or receive any exemption
from the payment of property taxes or assessments on any interest in or to the Project
or any portion thereof, or (ii) take action, including any assessment appeal, to decrease
the assessed value of any of the Luxury Hotel, the Lifestyle Hotel, or the Conference
and Shared Service Facility below the aggregate third -party costs incurred by Developer
to construct each of said Project Components.
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310. Release of Construction Covenants. Upon City's issuance of the last and
final certificate of occupancy for a Project Component, Developer shall be entitled to a
Release of Construction Covenants for the applicable Project Component. City shall
not unreasonably withhold any such Release of Construction Covenants, and if
Developer is entitled thereto pursuant to the foregoing sentence, City shall furnish to
Developer a recordable Release of Construction Covenants for the applicable Project
Component within fifteen (15) days after Developer's request thereof. The Release of
Construction Covenants shall be a conclusive determination of satisfactory completion
of the applicable Project Component and the Release of Construction Covenants shall
so state. Any party then owning or thereafter purchasing, leasing or otherwise acquiring
any interest in the real property for which a Release of Construction Covenants has
been issued 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 Article 500 of this Agreement.
If City refuses or fails to furnish a Release of Construction Covenants after
written request from Developer, City shall, within fifteen (15) days after written request
therefor, provide Developer with a written statement of the reasons City refused or failed
to furnish a Release of Construction Covenants. The statement shall also contain City's
opinion of the actions Developer must take to obtain a Release of Construction
Covenants for the applicable Project Component. A Release of Construction Covenants
shall not constitute evidence of compliance with or satisfaction of any obligation of
Developer to any holder of any mortgage, or any insurer of a mortgage securing money
loaned to finance the applicable Project Component, 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.
311. Financing of the Project.
311.1 Approval of Financing. As a condition to obtaining a building permit
for a Project Component, Developer shall submit to City evidence that Developer (i) has
obtained construction financing from a commercial lender necessary to undertake the
construction of the applicable Project Component, in accordance with this Agreement (a
"Construction Loan"); (ii) if desired by Developer, has obtained "mezzanine" financing in
a form reasonably acceptable to City; and (iii) has obtained 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 applicable Project Component
("Developer's Equity Contribution"). City shall, in its reasonable discretion, approve or
disapprove such evidence of financing within thirty (30) days after receipt of a complete
submission for the applicable Project Component. If City shall disapprove any such
evidence of financing, City shall do so by Notice to Developer stating with reasonable
specificity the reasons for such disapproval and Developer shall promptly obtain and
submit to City new evidence of financing. City shall approve or disapprove such new
evidence of financing in the same manner and within the same times established in this
Section 311.1 for the approval or disapproval of the evidence of financing as initially
submitted to City. Such evidence of financing shall include the following: (1) a copy of a
loan agreement entered into between Developer and one or more financial institutions
for the Construction Loan, and (II) documentation satisfactory to City as evidence of the
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"Mezzanine" financing and Developer's Equity Contribution. Notwithstanding anything
to the contrary in this Section 311.1, with respect to the Promenade Mixed Use Village,
the Resort Residential Village, the Luxury Branded Residential Development, and the
Lifestyle Branded Residential Development, Developer's sole obligation under this
Section shall be to provide City, as a condition to obtaining a building permit for the
construction of any Resort Residential Dwelling Unit located with such Project
Components, with evidence of sufficient financing and equity to pay for the budgeted
cost to complete construction of such Resort Residential Dwelling Unit.
311.2 Changes Requested by Lenders. In the event that a lender which
has been approved pursuant to Section 311.1 hereof requires one or more amendments
to this Agreement, or any of the attachments hereto, which amendments are acceptable
to the City Manager and do not materially affect City's interest hereunder, the City
Manager is hereby authorized to make such amendments without further authorization
from the City Council; provided, however, that the foregoing is not intended to restrict or
limit City's legislative discretion.
311.3 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 any breach or
default by Developer in completion of construction of the Project or any Project
Component, 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
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.
311.4 Failure of Holder to Complete Project. In any case where, sixty
(60) days after the holder of any mortgage or deed of trust creating a lien or
encumbrance upon the Property or any part thereof receives a notice from City of a
default by Developer in completion of construction of the Project, or any Project
Component under this Agreement, and such holder has not elected to commence a
cure of such default as set forth in this Section 311, or if it has elected to commence
such a cure but thereafter defaults hereunder and failed to timely cure such default, City
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, including without limitation, any
prepayment fees and costs. If the ownership of the Property or any part thereof has
vested in the holder, City, if it so desires, shall be entitled to a conveyance from the
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holder to City 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 Property
or part thereof;
(d) The costs of any improvements or expenditures made by
such holder;
(e) An amount equivalent to the interest that would have
accrued on the aggregate of the amounts set forth in (a) through (d) above 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 City; and
(f) Any customary prepayment charges imposed by the lender
pursuant to its loan documents and agreed to by Developer.
City shall exercise its rights hereunder to a conveyance of the Property from the
holder, if at all, within sixty (60) days after the sixty (60) day period referenced above
has lapsed.
311.5 Right of City to Cure Mortgage or Deed of Trust Default. In the
event of a mortgage or deed of trust default or breach by Developer under its loan
documents prior to the completion of the construction of the Project or any Project
Component, Developer shall immediately deliver to City a copy of any mortgage
holder's notice of default. If the holder of any mortgage or deed of trust has not elected
to cure any default by Developer under this Agreement, City shall have the right but no
obligation to cure the default, following at least thirty (30) days prior written notice to
Developer. In such event, City shall be entitled to reimbursement from Developer of all
reasonable costs and expenses incurred by City in curing such default. City shall also
be entitled to a lien upon the Property, or portion of the Property against which the
mortgage or deed of trust is recorded, to the extent of such costs and disbursements
actually made by City.
311.E Holder Not Obligated to Construct Project. The holder of any
mortgage or deed of trust encumbering the Property shall not be obligated by the
provisions of this Agreement to construct or complete the Project, or any portion thereof,
or to guarantee such construction or completion; nor shall any such covenant or any
other provision in this Agreement be construed so to obligate such holder.
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312. Developer CC&Rs. Prior to City's issuance of a final certificate of
occupancy for any of individual Resort Residential Dwelling Units in the Luxury Branded
Residential Development, Lifestyle Branded Residential Development, Resort
Residential Village, or Promenade Mixed -Use Village, Developer shall have submitted
to City, obtained City's approval of (such approval not to be unreasonably withheld,
conditioned or delayed), and recorded against the underlying real property a declaration
of covenants, conditions, and restrictions that (i) establishes a homeowners'
association, (ii) is necessary to create a condominium regime for the condominiums
described on the condominium plan to be recorded in accordance with all applicable
laws (for the Lifestyle Branded Residential Development and portions of the Resort
Residential Village developed with condominium -style units); (iii) clearly sets forth the
maintenance obligations of the owners of the Resort Residential Dwelling Units; and (iv)
includes a disclosure regarding the public ownership and control of the Golf Course and
a statement that Developer does not and cannot guarantee (a) that City will not make
changes to the Golf Course(s) or to the underlying real property, or (b) the timing of or
actual development or use of the remaining undeveloped real property located within
the SilverRock Resort Area (the "Developer CC&Rs"). The Developer CC&Rs shall
provide that the City is a third party beneficiary thereof with the right, but not the
obligation, to enforce the terms thereof which are required by this Section 312, and shall
require the written approval of the City prior to any amendments thereto to any of the
provisions which are required hereby.
313. Interference with Golf Course. Developer shall carry out the construction
of the Project so as to minimize interference with the Golf Course, including, without
limitation, taking all necessary actions to ensure that dust (i) does not blow off or leave
any portion of the Property under development and enter onto any portion of the Golf
Course; or (ii) is not tracked from any portion of the Property under development onto
any of the roadways within the SiverRock Resort Area. Developer shall screen any
portion of the Property under development to minimize the visual impacts of such
development on persons using the Golf Course. Developer acknowledges that City has
previously, and may in the future, enter into a Use Agreement with the Desert Classic
Charities or successor charitable entity, pursuant to which the Golf Course may be
utilized an annual golf tournament. In any year when said tournament is held at the Golf
Course, no construction activities shall take place during the televised portion of the
tournament unless authorized, in writing, by the City Manager, and Developer and
Developer's contractors and subcontractors shall ensure that during the tournament all
construction sites are left in a neat and orderly condition. Developer additionally agrees
to coordinate with the tournament officials to ensure that construction activities do not
interfere with the tournament.
314. Pipeline Across Luxury Branded Residential Development. City has
installed a pipeline across the portion of the Property to be developed with the Luxury
Branded Residential Development (the "City Pipeline"). Developer hereby
acknowledges that City's conveyance of the Phase 1 Property shall be subject to an
easement reserved by City for purposes of accessing, maintaining, and repairing the
City Pipeline (the "City Pipeline Easement"), which easement shall be in form and
substance reasonably acceptable to Developer. Developer shall use commercially
reasonable efforts to design the Luxury Branded Residential Development in a manner
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as to not interfere with the City Pipeline Easement; provided, however, that if Developer
is unable to do so, Developer may, at its sole cost and at no cost to City, relocate the
City Pipeline to a location and in a manner acceptable to the City Engineer and
Community Development Director, in each of their reasonable discretion, in accordance
with all City standards and requirements for such relocation. Any such relocation shall
be fully performed (i) during the summer or late spring, when play at the Golf Course is
at a minimum, or (ii) during other times of the year pursuant to the terms of a written
work plan and schedule approved by the Director of Public Works designed to minimize
interference to the operation of the Golf Course. Once Developer has completed the
relocation of the City Pipeline, as determined by the City Engineer and Community
Development Director, Developer shall convey to City an easement to access, maintain,
and repair the relocated City Pipeline, and City shall quitclaim any portions of the City
Pipeline Easement which are no longer necessary for the exercise of its rights under the
terms thereof.
315. Temporary Clubhouse. In the event that prior to the time Developer
completes development of the Permanent Golf Clubhouse Developer's construction
activities hereunder will (i) result in the removal of the existing temporary golf
clubhouse, or (ii) render the location of the existing temporary golf clubhouse
impractical, as determined by City, then Developer shall erect or install a new temporary
golf clubhouse to serve the Golf Course until such time as the Permanent Golf
Clubhouse has been completed and opened to the public. Said new temporary golf
clubhouse shall be constructed according to minimum standards reasonably required by
City and the current operator of the Golf Course, and may be a modular or similar
facility, but shall provide the same or equivalent services, and operate during the same
hours, as the existing temporary golf clubhouse. City shall have the right to review and
approve Developer's proposals for any such new temporary golf clubhouse.
316. Golf Course Realignment. Developer intends for the Luxury Hotel to be
constructed in a location which will require the displacement of one hole and the
realignment of several other holes at the Golf Course. Developer shall work with Arnold
Palmer Golf Design to develop a work plan and schedule for the Golf Course
Realignment, which shall consist of the relocation and redesign of the displaced hole
and realignment of the other affected holes, which work plan and schedule shall be
subject to the approval of the City, provided such approval shall not be unreasonably
withheld, conditioned or delayed. Notwithstanding the foregoing, however, the schedule
shall provide that all of such Golf Course Realignment work will occur during the
Summer or late Spring, when play at the Golf Course is at a minimum. Developer shall
bear all costs and expenses related to the Golf Course Realignment.
317. Permanent Clubhouse Lease. Upon completion of construction of the
Permanent Clubhouse, the Parties contemplate entering into a lease agreement
pursuant to which Developer will lease the Permanent Clubhouse to City. The Parties
agree to negotiate diligently to reach agreement on the terms of such lease agreement.
318. Compliance with State Construction General Permit. Developer
acknowledges and agrees that pursuant to Application No. 205291, City has obtained
Construction General Permit No. 7 33C325084 under the General Permit for Discharge
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of Storm Water Associated with Construction Activity (Construction General Permit
Order 2009-0009-DWQ) with respect to the Property (the "GC Permit"). In connection
with any entry by Developer of any Developer Representatives onto any portion of the
Property for any reason, including, but not limited to, for site inspections, testing,
evaluation, or construction of the Project or any portion thereof, Developer shall comply
with all applicable requirements of the GC Permit. Developer shall indemnify, assume
all responsibility for, and hold City and City's representatives, volunteers, officers,
officials, members, employees and agents, harmless from all claims, demands,
damages, defense costs or liability of any kind arising from Developer's failure to strictly
comply with all applicable requirements of the GC Permit. As one of City's Conditions
Precedent to the Closing, Developer shall file a Notice of Intent with the SWRCB that
notifies the SWRCB that Developer is the legally responsible party for complying with
the GC Permit with respect to the Phase 1 Property or Phase 2 Property (as applicable).
319. City Payment for Ahmanson Ranch House. The Ahmanson Ranch House
shall remain owned in fee by City. In addition to satisfying all of the conditions to
develop set forth in Section 304 hereof, prior to commencing construction of the
Ahmanson Ranch House Component, (i) Developer shall prepare and submit to City for
review and approval a detailed development budget for the same, (ii) Developer shall
obtain a right of entry and/or any other permits or approvals required by City to enter
upon the real property underlying the Ahmanson Ranch House and construct the
Ahmanson Ranch House component, and (iii) City and Developer shall diligently
negotiate the terms on which City will repay Developer for the costs Developer incurs in
developing the Ahmanson Ranch House, with such costs not to exceed the amount set
forth in said City -approved development budget; provided, however, that City shall
complete said repayment within a reasonable time, not to exceed thirty (30) years, and
shall be required to pay interest on the outstanding sum, on commercially reasonable
terms.
400. USE AND OPERATION OF THE PROPERTY
401. Operation of the Project. The Hotel Operator for the Luxury Hotel (the
"Luxury Hotel Operator") shall retain full management and operational control over all
components of the Luxury Hotel, including the rental of Resort Residential Dwelling
Units in the Luxury Branded Residential Development on behalf of owners of such
Resort Residential Dwelling Units wishing to rent their units through the front desk of the
Luxury Hotel. The Hotel Operator for the Lifestyle Hotel (the "Lifestyle Hotel Operator")
shall retain full management and operational control over all components of the Lifestyle
Hotel, including the rental of Resort Residential Dwelling Units in the Lifestyle Branded
Residential Development on behalf of owners of such Resort Residential Dwelling Units
wishing to rent their units through the front desk of the Lifestyle Hotel.
402. Use in Accordance with Redevelopment Plan.
402.1 Developer covenants and agrees for itself, its successors, assigns,
and every successor in interest to the Property or any part thereof, that upon
Developer's acquisition of the Property and during construction and operation of the
Project, Developer shall devote the Property to the uses specified in the Redevelopment
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Plan and this Agreement for the term of the land use controls of the Redevelopment
Plan.
402.2 All uses conducted on the Property, including, without limitation, all
activities undertaken by Developer pursuant to this Agreement, shall conform to the
Redevelopment Plan and all applicable provisions of the Municipal Code. The foregoing
covenants with respect to the Redevelopment Plan shall run with the land until the
expiration of the land use controls of the Redevelopment Plan.
403. Maintenance Covenants. Developer shall maintain the Phase 1 Property
and the Phase 2 Property from and after the Phase 1 Closing and the Phase 2 Closing,
respectively, and all improvements thereon, including all landscaping, in a first class
condition, and in compliance with the terms of the Redevelopment Plan, and all
applicable provisions of the Municipal Code.
404. Obligation to Refrain from Discrimination. Developer covenants and
agrees for itself, its successors, its assigns and all persons claiming under or through
them to the Property or any part thereof, 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, ancestry or national origin in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the Property, nor shall 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, or sublessees of the Property. The
foregoing covenants shall run with the land and shall remain in effect in perpetuity.
405. Covenants Regarding Nondiscrimination. 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 any basis listed in subdivision (a) or
(d) of Section 12955 of the Government Code, as those bases are defined in Sections
12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955,
and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer,
use, occupancy, tenure, or enjoyment of the Property, or any part thereof, nor shall
Developer, 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 Property, or any part thereof. The foregoing covenants
shall run with the land.
Developer agrees for itself and any successor in interest that Developer 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, 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:
405.1 In deeds: "The grantee herein covenants by and for himself or
herself, his or her heirs, executors, administrators, and assigns, and all persons
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claiming under or through them, that there shall be no discrimination against or
segregation of, any person or group of persons on account of any basis listed in
subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are
defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision
(p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease,
sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein
conveyed, nor shall the grantee or any person claiming under or through him or her,
establish or permit any 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 premises herein conveyed. The foregoing
covenants shall run with the land."
405.2 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: "That there shall be no discrimination against or
segregation of any person or group of persons, on account of any basis listed in
subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are
defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision
(p) of Section 12955, and Section 12955.2 of the Government Code, 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."
405.3 In contracts: "There shall be no discrimination against or
segregation of, any person or group of persons on account of any basis listed in
subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are
defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision
(p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease,
sublease, transfer, use, occupancy, tenure, or enjoyment of the premises which are the
subject of this agreement, nor shall the grantee or any person claiming under or through
him or her, establish or permit any 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 premises herein conveyed. The foregoing
covenants shall run with the land."
The foregoing covenants against discrimination shall remain in effect in
perpetuity.
406. Effect of Violation of the Terms and Provisions of this Agreement After
Completion of Construction. City 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 City has been, remains or is an owner of any land or interest
therein in the Property. City shall have the right, if this Agreement or the covenants
herein 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
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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. The covenants contained in
this Agreement shall not benefit or be enforceable by any owner of any other real
property, 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 covenants in Section 401 shall remain in effect until the
expiration or earlier termination of both of the TOT Covenant Agreements; provided,
however, that an earlier termination of either or both of the TOT Covenant Agreements
by City as the result of a Developer default thereunder shall not terminate the covenants
in this Section 401, which, in such event, shall not terminate until the date they would
have terminated pursuant to the later to expire of the TOT Covenant Agreements had
the TOT Covenant Agreement(s) not been terminated early by City.
(b) The environmental covenants set forth in Sections 207.3,
207.4, and 207.5 shall remain in effect in perpetuity.
(c) The covenants pertaining to use of the Property which are
set forth in Section 402 shall remain in effect (i) with respect to the Redevelopment
Plan, until the expiration of the land use controls of the Redevelopment Plan, and (ii)
with respect to the Municipal Code, in perpetuity; provided, however, Developer shall
not be held responsible for the lack of compliance by any individual Resort Residential
Dwelling Unit with the foregoing covenants.
(d) The covenants pertaining to maintenance of the Property,
and all improvements thereon, as set forth in Section 403, shall remain in effect (i) with
respect to the Redevelopment Plan, until the expiration of the land use controls of the
Redevelopment Plan, and (ii) with respect to the Municipal Code, in perpetuity;
provided, however, Developer shall not be held responsible for the lack of compliance
by any individual Resort Residential Dwelling Unit with the foregoing covenants.
(e) The covenants against discrimination, as set forth in Section
404, shall remain in effect in perpetuity.
(f) The indemnity obligations, as set forth in Section 207.5 and
in Section 307 hereof, shall remain in effect in perpetuity.
407. Representations and Warranties.
407.1 City Representations. City represents and warrants to Developer
as follows as of the Effective, the Phase 1 Closing Date, and the Phase 2 Closing Date:
(a) Authority. City is a California municipal corporation and
charter city, organized and existing under the Constitution of the State of California.
City has full right, power and lawful authority to acquire, grant, sell and convey the
Property as provided herein, and the execution, performance and delivery of this
Agreement by City has been fully authorized by all requisite actions on the part of City.
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(b) FIRPTA. City 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 City's actual knowledge, City'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 City is a party or by
which it is bound.
(d) Conformance with Redevelopment Plan. The development
and use of the Project as required hereunder is in conformance with the Redevelopment
Plan and City's Long Range Property Management Plan.
(e) No City Bankruptcy. City has not (a) made a general
assignment for the benefit of creditors; (b) filed any voluntary petition in bankruptcy or
suffered the filing of any involuntary petition by its creditors; (c) suffered the
appointment of a receiver to take possession of all, or substantially all, of its assets
which remains pending; (d) admitted in writing its inability to pay its debts as they come
due; or (e) made an offer of settlement, extension or composition to its creditors
generally.
Until the Phase 2 Closing, City shall, upon learning of any fact or condition which
would cause any of the warranties and representations in this Section 407.1 or in
Section 207.6 not to be true as of the Phase 1 Closing Date or the Phase 2 Closing
Date, immediately give written notice of such fact or condition to Developer. Upon
receipt of such notice, Developer shall have a right, exercisable within ten (10) Business
Days thereafter (and the Phase 1 Closing or Phase 2 Closing, as applicable, shall be
delayed accordingly, if necessary to accommodate such ten (10) Business Days) to
proceed with the transaction, or to terminate this Agreement. If Developer elects to
close the Phase 1 Escrow or Phase 2 Escrow (as applicable) following disclosure of
such information, City's representations and warranties contained herein shall be
deemed to have been made as of the Phase 1 Closing or Phase 2 Closing (as
applicable), subject to such exception(s). If, following the disclosure of such
information, Developer elects to not close the Phase 1 Escrow or Phase 2 Escrow (as
applicable), then this Agreement as to the Phase 1 Escrow or Phase 2 Escrow (as
applicable) shall automatically terminate, Developer shall be reimbursed the theretofore
undisbursed balance of any deposits made into said Phase 1 Escrow or Phase 2
Escrow (as applicable), and neither Party shall have any further rights, obligations or
liabilities hereunder; except for the indemnity obligations of Developer under this
Agreement and any other obligations that expressly survive the termination of this
Agreement; provided, however, that in the event the Phase 1 Escrow closes, a failure to
close the Phase 2 Escrow shall not terminate this Agreement. In the event the Phase 1
Escrow fails to close, this Agreement shall automatically terminate and neither Party
shall have any further rights or obligations hereunder, except for the indemnity
obligations of Developer under this Agreement and any other obligations that expressly
survive the termination of this Agreement and except that both Parties agree to take
whatever actions are reasonably necessary to terminate any other agreements that may
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have been executed in furtherance hereof. The representations and warranties set forth
in this Section 407.1 shall survive each of the Phase 1 Closing and Phase 2 Closing.
407.2 Developer's Representations. Developer represents and warrants
to City as follows, as of the Effective Date, the Phase 1 Closing Date and the Phase 2
Closing Date:
(a) Authority. Developer is a duly organized limited liability
company formed within and in good standing under the laws of the State of Delaware,
and is authorized to conduct business in the State of California. Developer has full
right, power and lawful authority to purchase and accept the conveyance of the
Property, and to 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 Developer.
(b) Experience. Developer is experienced in the development of
the type of commercial projects 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
Developer is a party or by which it is bound.
(d) No Developer Bankruptcy. Developer has not (a) made a
general assignment for the benefit of creditors; (b) filed any voluntary petition in
bankruptcy or suffered the filing of any involuntary petition by its creditors; (c) suffered
the appointment of a receiver to take possession of all, or substantially all, of its assets
which remains pending; (d) admitted in writing its inability to pay its debts as they come
due; or (e) made an offer of settlement, extension or composition to its creditors
generally.
Until the Phase 2 Closing, Developer shall, upon learning of any fact or condition
which would cause any of the warranties and representations in this Section 407.2 not
to be true as of the Phase 1 Closing Date or the Phase 2 Closing Date, immediately
give written notice of such fact or condition to City. Upon receipt of such notice, City
shall have a right, exercisable within ten (10) Business Days thereafter (and the Phase
1 Closing or Phase 2 Closing, as applicable, shall be delayed accordingly, if necessary
to accommodate such ten (10) Business Days) to proceed with the transaction, or to
terminate this Agreement. If City elects to close the Phase 1 Escrow or Phase 2
Escrow (as applicable) following disclosure of such information, Developer's
representations and warranties contained herein shall be deemed to have been made
as of the Phase 1 Closing or Phase 2 Closing (as applicable), subject to such
exception(s). If, following the disclosure of such information, City elects to not close the
Phase 1 Escrow or Phase 2 Escrow (as applicable), then this Agreement as to the
Phase 1 Escrow or Phase 2 Escrow (as applicable) shall automatically terminate, City
shall be reimbursed the theretofore undisbursed balance of any deposits made into said
Phase 1 Escrow or Phase 2 Escrow (as applicable), and neither Party shall have any
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further rights, obligations or liabilities hereunder except for the indemnity obligations of
Developer under this Agreement and any other obligations that expressly survive the
termination of this Agreement; provided, however, that in the event the Phase 1 Escrow
closes, a failure to close the Phase 2 Escrow shall not terminate this Agreement. In the
event the Phase 1 Escrow fails to close, this Agreement shall automatically terminate
and neither Party shall have any further rights or obligations hereunder, except for the
indemnity obligations of Developer under this Agreement and any other obligations that
expressly survive the termination of this Agreement, and except that both Parties agree
to take whatever actions are reasonably necessary to terminate any other agreements
that may have been executed in furtherance hereof. The representations and
warranties set forth in this Section 407.1 shall survive each of the Phase 1 Closing and
Phase 2 Closing.
408. Rights of Access During Operation. During the term of this Agreement, for
purposes of assuring compliance with this Agreement, representatives of City shall have
the right of access to the Property, without charges or fees, during business hours (e.g.,
Monday -Friday, 8:00 a.m. to 5:30 p.m.) for the purposes of this Agreement, so long as
City representatives comply with all safety rules and do not interfere with the operation
of the applicable Project Component(s). City (or its representatives) shall, except in
emergency situations, notify Developer prior to exercising its rights pursuant to this
Section 408. City shall indemnify, defend, and hold Developer harmless from and
against all costs (including, without limitation, reasonable attorneys' fees), claims,
damages, liability and judgments arising from City's exercise of its right of access
hereunder.
500. DEFAULTS AND REMEDIES
501. Default Remedies. Subject to the extensions of time set forth in Section
602 of this Agreement, failure by either Party to perform any action or covenant required
by this 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 the 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.
502. Institution of Legal 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, or to obtain any other remedy
consistent with the purpose of this Agreement. City 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 City, except for damages for actual out-of-pocket costs
incurred by Developer and paid or payable to attorneys, third party consultants,
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contractors, and similar parties resulting from a material misrepresentation of City's
express representations in Section 207.6 or in Section 407.1, or nonperformance by
City of its covenants under this Agreement, but excluding damages for economic loss,
lost profits, or any other economic or consequential damages of any kind. Any such
out-of-pocket costs shall be set forth in the Final Project Budget (or Alternate
Development Phasing Budget if an Alternate Development Phasing Trigger has
occurred pursuant to Section 305.3 hereof) and documented by invoices submitted to
City. Such legal actions must be instituted in the Superior Court of the County of
Riverside, State of California, or in the District of the United States District Court in
which such county is located.
503. Termination Prior to the Close of the Phase 1 Escrow.
503.1 Termination by Developer. In the event that prior to the close of the
Phase 1 Escrow (a) one or more of Developer's Conditions Precedent to the Closing for
the Phase 1 Escrow is not fulfilled on or before the time set forth herein or in the
Schedule of Performance and such failure is not caused by Developer, or (b) any
default of City under this Agreement prior to the close of the Phase 1 Escrow is not
cured within the time set forth in Section 501 hereof, after written demand by Developer,
then this Agreement may, at the option of Developer, be terminated by written Notice
thereof to City. From the date of the written Notice of termination of this Agreement by
Developer to City and thereafter this Agreement shall be deemed terminated and there
shall be no further rights or obligations between the Parties with respect to the Property,
or any portion thereof, by virtue of or with respect to this Agreement, except for
Developer's limited right to recover from City its out-of-pocket costs pursuant and
subject to Section 502 hereof.
503.2 Termination by City. In the event that prior to the close of the
Phase 1 Escrow (a) Developer (or any successor in interest) assigns this Agreement or
any rights herein or in any portion of the Property or Project Component in violation of
this Agreement, or assigns the Development Agreement or any rights therein; or (b) one
or more of City's Conditions Precedent to the Closing is not fulfilled on or before the
Outside Date for Phase 1 Closing (as it may be extended) and such failure is not
caused by City; or (c) Developer is otherwise in default of this Agreement and fails to
cure such default within the time set forth in Section 501 hereof, after written demand by
City; or (d) Developer is the subject of a bankruptcy proceeding, whether voluntarily or
involuntarily commenced, then this Agreement shall, at the option of City, be terminated
by City by written Notice thereof to Developer. From the date of the written Notice of
termination of this Agreement by City to Developer and thereafter this Agreement shall
be deemed terminated and there shall be no further rights or obligations between the
Parties, except for City's right to recover from Developer damages pursuant to Section
502 hereof, and except further that City shall have any and all rights available to City as
set forth in Section 505 and Section 506 hereof.
504. Termination Prior to Phase 2 Closi
504.1 Termination by Developer. In the event that, after the close of the
Phase 1 Escrow but prior to the Phase 2 Closing (a) one or more of Developer's
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Conditions Precedent to the Closing for the Phase 2 Escrow is not fulfilled on or before
the time set forth in the Schedule of Performance and such failure is not caused by
Developer, or (b) any default of City under this Agreement prior to the Phase 2 Closing
is not cured within the time set forth in Section 501 hereof, after written demand by
Developer, then this Agreement with respect to the Phase 2 Escrow may, at the option
of Developer, be terminated by written Notice thereof to City. From the date of the
written Notice of termination of this Agreement by Developer to City, this Agreement
shall be deemed terminated with respect to the Phase 2 Escrow and there shall be no
further rights or obligations between the Parties with respect to the Phase 2 Property by
virtue of or with respect to this Agreement, except for Developer's limited right to
recover from City its out-of-pocket costs pursuant and subject to Section 502 hereof.
504.2 Termination by City. In the event that, after the close of the Phase
1 Escrow but prior to the close of the Phase 2 Escrow (a) Developer (or any successor
in interest) assigns this Agreement or any rights herein or in any portion of the Property
or a Project Component in violation of this Agreement, or assigns the Development
Agreement or any rights therein; or (b) one or more of City's Conditions Precedent to
the Closing for the Phase 2 Escrow is not fulfilled on or before the Outside Date for
Phase 2 Closing (as it may be extended) and such failure is not caused by City; or (c)
Developer is otherwise in default of this Agreement and fails to cure such default within
the time set forth in Section 501 hereof, after written demand by City; or (d) Developer is
the subject of a bankruptcy proceeding, whether voluntarily or involuntarily commenced,
then this Agreement with respect to the Phase 2 Escrow shall, at the option of City, be
terminated by City by written Notice thereof to Developer. From the date of the written
Notice of termination of this Agreement by City to Developer, this Agreement with
respect to the Phase 2 Escrow shall be deemed terminated and there shall be no further
rights or obligations between the Parties with respect to the Phase 2 Property by virtue
of or with respect to this Agreement, except for City's right to recover from Developer
damages pursuant to Section 502 hereof, and except further that City shall have any
and all rights available to City as set forth in Section 505 and Section 506 hereof.
505. City Option to Acquire Plans. If this Agreement is terminated by City as a
result of a Default by Developer, at the option of City and without any additional
consideration, which option may be exercised in City's sole and absolute discretion,
Developer shall deliver to City an executed assignment in a form reasonably acceptable
to City of 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 Property (the "Plans"),
together with copies of all of the Plans, as have been prepared for the development of
the Project to date of the termination. Notwithstanding the foregoing, however,
Developer does not covenant to convey to City the copyright or other ownership rights
of third parties. City understands and agrees that the assignment to City under this
Section 505 is subject and subordinate to any assignment which Developer may make
to a lender providing financing for the Project, and City agrees to execute any
documents required by such lender acknowledging and effectuating such subordination
of City's rights in and to the assignment. City's acquisition or use of the Plans or any of
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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.
506. Option Agreement. In addition to any other rights and remedies available
to City hereunder, City shall be entitled, in its sole and absolute discretion, to
repurchase the Property, or applicable portion thereof, with all of the improvements
thereon, from Developer in the event that, (i) Developer fails to commence construction
of the Master Site Infrastructure Improvements or a Project Component within the time
periods set forth in the Schedule of Performance, (ii) after commencement of
construction, Developer fails to continuously proceed with, and complete, construction
of the Master Site Infrastructure Improvements or the Project Component within the time
periods set forth in the Schedule of Performance, or (iii) Developer transfers or suffers
an involuntary transfer of the Property, or a portion thereof, in violation of the terms
hereof. Said repurchase rights shall be as set forth in an option agreement to be
recorded against the Phase 1 Property at the Phase 1 Closing and against the Phase 2
Property at the Phase 2 Closing. The Option Agreement is substantially in the form
attached hereto and incorporated herein as Attachment No. 7 ("Option Agreement"). If
requested by Developer's construction lender, City agrees to enter into a subordination
or similar agreement in accordance with the terms and conditions set forth in Section
7(g) of the Option Agreement.
507. Acceptance of Service of Process. In the event that any legal action is
commenced by Developer against City, service of process on City shall be made by
personal service upon the City Manager or in such other manner as may be provided by
law. In the event that any legal action is commenced by City against Developer, service
of process on Developer shall be made by personal service upon any officer of
Developer, whether made within or outside the State of California, or in such other
manner as may be provided by law.
508. 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.
509. 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.
510. Applicable Law. The internal laws of the State of California shall govern
the interpretation and enforcement of this Agreement, without regard to conflict of law
principles.
511. Non -Liability of Officials and Employees of City. No member, official or
employee of City shall be personally liable to Developer, or any successor in interest, in
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the event of any Default or breach by City or for any amount which may become due to
Developer or its successors, or on any obligations under the terms of this Agreement.
512. 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.
600. GENERAL PROVISIONS
601. 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 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 City and Developer at the addresses specified
below, or at any other address as that Party may later designate by Notice.
To City: City of La Quinta
78-495 Calle Tampico
La Quinta, California 92253
Phone No.: 760-777-7031
Attention: City Manager
With a copy to: Rutan & Tucker, LLP
611 Anton Boulevard, Suite 1400
P.O. Box 1950
Costa Mesa, California 92628
Phone No.: 714-641-5100
Attention: William S. Ihrke, Esq.
To Developer: SilverRock Development Company, LLC
c/o Meriwether Companies
11999 San Vicente Boulevard, Suite 220
Los Angeles, California 90049
Phone: 424-272-0470
Attention: Graham Culp
With a copy to: Glaser Weil Fink Howard Avchen & Shapiro, LLP
10250 Constellation Boulevard, 19th Floor
Los Angeles, California 90067
Phone: 310-556-7844
Attention: Saul Breskal, Esq.
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and to: The Robert Green Company
3551 Fortuna Ranch Road
Encinitas, California 92024
Attention: Robert Green
Any written notice, demand or communication shall be deemed received
upon delivery if delivered by hand, including by reputable delivery service, and shall be
deemed received on the third day from the date it is postmarked if delivered by
registered or certified mail.
602. 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 (each, a "Force Majeure"): war; insurrection; acts of terrorism;
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
any public or governmental agency or entity (other than the acts or failures to act of City
which shall not excuse performance by City) or an Adverse Economic Event.
Notwithstanding anything to the contrary in this Agreement, an extension of time for any
such cause shall only 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 City and Developer. Notwithstanding any provision of this
Agreement to the contrary, with the exception of an Adverse Economic Event,
Developer is not entitled pursuant to this Section 602 to an extension of time to perform
because of past, present or future difficulty in obtaining suitable construction or
permanent financing to commence or complete the Project or any Project Component or
because of economic or market conditions. To the extent that City has an obligation to
act within a certain time period under this Agreement including, without limitation in
connection with City's review and approval of submittals received from Developer, and
City fails to respond appropriately to Developer within such time Period, then any
deadline for Developer's performance impacted by such delay by City shall be extended
by one day for each and every day that City's response is delayed.
603. Transfers of Interest in Property or Agreement. The qualifications and
identity of Developer as the developer and operator of high quality commercial resort
developments are of particular concern to City. Furthermore, the Parties acknowledge
that City has negotiated the terms of this Agreement in contemplation of the
development and operation of the Project on the Property and the property tax, resort
payments, and Transient Occupancy Tax revenues to be generated by the operation of
the Project on the Property.
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603.1 Transfers of Interest in Property or Agreement Prior to City's
Issuance of a Release of Construction Covenants. Except as provided in this Section
603.1, until the date City issues a Release of Construction Covenants for a particular
Project Component (the "Fee Transfer Release Date"), (1) no voluntary successor in
interest of Developer shall acquire any rights or powers under this Agreement with
respect to said Project Component; (2) Developer shall not make any total or partial
sale, transfer, conveyance, assignment, or lease of the whole or any part of the Project
Component or underlying real property; and (3) no changes shall occur with respect to
the ownership and/or control of Developer, including, without limitation, stock transfers,
sales of issuances, or transfers, sales or issuances of membership or ownership
interests, or statutory conversions (any of the above, a "Transfer"). Prior to the Fee
Transfer Release Date for a particular Project Component, City may approve or
disapprove a proposed Transfer in its sole and absolute discretion; provided, however,
City agrees to reasonably consider a Transfer to a transferee that has substantial
experience in developing and operating developments comparable in all material
respects to the Project or Project Component (as applicable), and the financial
capability to develop and operate the Project or Project Component (as applicable), as
determined pursuant to the factors set forth in Section 311.1 of this Agreement.
Notwithstanding the foregoing, City approval of a Transfer prior to the Fee
Transfer Release Date for a particular Project Component shall not be required in
connection with any of the following:
(a) The conveyance or dedication of any portion of the Property
to an appropriate governmental agency, or the granting of easements or permits to
facilitate construction of the Project.
(b) Any assignment for financing purposes (subject to such
financing being permitted pursuant to Section 311 of this Agreement), including the
grant of a deed of trust to secure the funds necessary for land acquisition, construction
and permanent financing of the Project or of a Project Component.
(c) The Transfer to a lender who has provided financing to
Developer (subject to such financing being permitted pursuant to Section 311 of this
Agreement) as a result of foreclosure by such lender of the deed of trust securing funds
necessary for land acquisition, construction, and permanent financing of the Project or
of a Project Component.
(d) The Transfer by Developer to an entity (i) whose managing
member, manager, or managing general partner is (A) Developer, or (B) an entity which
is at least fifty-one percent (51 %) owned and controlled by Developer, Meriwether, or
RGC, and (ii) which engages as the project/development manager for the Project
Component an entity which is at least fifty-one percent (51 %) owned and controlled by
Developer, Meriwether or RGC.
(e) The sale by Developer of Resort Residential Dwelling Units
to third party buyers.
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603.2 Transfers of Operational Obligations. Notwithstanding anything in
Section 603.1 to the contrary, (i) none of Developer, the Luxury Hotel Operator or the
Lifestyle Hotel Operator (or any permitted successor in interest) shall make any
Transfer of the operational and/or managerial control, including, but not limited to,
financial and managerial decision -making, of the Luxury Hotel or Lifestyle Hotel; and (ii)
no changes shall occur with respect to the ownership and/or control of Developer, RGC,
or of Meriwether, including, without limitation, stock transfers, sales of issuances, or
transfers, sales or issuances of membership or ownership interests, or statutory
conversions (either of the above, a "Management Transfer") without the prior written
approval of City, in City's sole and absolute discretion; provided, however, that transfers
of the stock, ownership and/or membership interests of Developer, RGC or Meriwether
may be made so long as such transfers do not result in the transfer, on a cumulative
basis, of more than forty-nine percent (49%) of the outstanding and voting stock,
ownership, and/or membership interests of Developer, RGC, or Meriwether.
Notwithstanding the foregoing, City approval shall not be required for a Management
Transfer of the Luxury Hotel to any of the entities approved by City to act as Luxury
Hotel Operator, or for a Management Transfer of the Lifestyle Hotel to any of the entities
approved by City to act as Lifestyle Hotel Operator, as set forth in Section 100 hereof
(any of the foregoing, an "Approved Operator"). To the extent that the operating
character or quality of any Approved Operator substantially changes between the
Effective Date and the date of the proposed Management Transfer, Developer or
Developer's successor in interest shall demonstrate that the Approved Operator
satisfies the requirements for transferee entities not designed as Approved Operators,
as outlined below in this Section 603.2. Any proposed Management Transfer to an
entity that is not designated as an Approved Operator shall be approved by the City
Council of City, in its sole and absolute discretion. In connection with any proposed
Management Transfer of the Luxury Hotel to any entity that is not designated as an
Approved Operator for the Luxury Hotel, Developer or Developer's successor in interest
shall demonstrate that the proposed operator has experience and reputation for
operating luxury hotels that is equivalent to the experience and reputation of an
Approved Operator. In connection with any proposed Management Transfer of the
Lifestyle Hotel to any entity that is not designated as an Approved Operator, Developer
or Developer's successor -in -interest shall demonstrate that the proposed operator has
the experience and reputation in operating lifestyle hotels that is equivalent to the
experience and reputation of an Approved Operator. Developer or Developer's
successor in interest shall provide such information as may be reasonably requested by
City to enable City to review and approve (or disapprove) any proposed operator, and
shall reimburse City for City's costs incurred in considering any such request.
603.3 Assignment and Assumption of Obligations. Except for the sale of
individual Resort Residential Dwelling Units, any Transfer (including Transfers not
requiring prior City approval) by Developer of any interest in the Property or of any
interest in this Agreement and all Management Transfers shall require the execution of
an assignment and assumption of obligations substantially in the form attached hereto
and incorporated herein as Attachment No. 9 (an "Assignment and Assumption
Agreement"). Transfers of Developer's rights and/or obligations under this Agreement
made without an executed Assignment and Assumption Agreement are null and void.
The requirement for the provision to City of an executed Assignment and Assumption
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Agreement shall apply regardless of whether City approval is required for the Transfer.
Developer agrees that (a) at least thirty (30) days prior to any Transfer it shall give
written notice to City of such proposed Transfer; and (b) within five (5) days after any
Transfer it shall provide City with a copy of the fully executed Assignment and
Assumption Agreement evidencing that the assignee has assumed in writing all
applicable obligations under this Agreement. A Party proposing to assign its obligations
under this Agreement (i) shall remain liable for the obligations until and unless City has
received a fully executed Assignment and Assumption Agreement, and (ii) shall remain
liable for any default hereunder that occurred prior to the effective date of the
assignment. Developer or Developer's successor in interest shall reimburse City for
any costs (other than staff time) City incurs in reviewing any Assignment and
Assumption Agreement required hereunder.
603.4 Successors and Assigns. All of the terms, covenants and
conditions of this Agreement shall be binding upon 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,
and the term "Developer" shall only mean the owner of a Project Component from time
to time during the period of such entity's ownership, provided that the procedures set
forth in this Agreement for that entity's acquisition and or disposition.
603.5 Assignment by City. City may assign or transfer any of its rights or
obligations under this Agreement with the approval of Developer, which approval shall
not be unreasonably withheld; provided, however, that City may assign or transfer any
of its interests hereunder to a joint powers authority in which City is a member at any
time without the consent of Developer.
604. Relationship Between City and Developer. It is hereby acknowledged that
the relationship between City and Developer is not that of a partnership or joint venture
and that City and 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, City shall have no rights, powers, duties or obligations with respect
to the development, operation, maintenance or management of the Project.
605. City Approvals and Actions. City shall maintain authority of this
Agreement and the authority to implement this Agreement through the City Manager.
The City Manager shall have the authority to make approvals, issue interpretations,
waive provisions, and/or enter into amendments of this Agreement on behalf of City so
long as such actions do not materially or substantially change the business terms of this
Agreement or the uses or development permitted on the Property, or materially or
substantially add to the costs incurred or to be incurred by City 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 material and/or
substantial interpretations, waivers, or amendments shall require the consideration,
action and written consent of the City Council. Wherever the approval of the City is
required under this Agreement, other than approvals required of the City acting in its
governmental capacity, such approval shall not be unreasonably withheld, conditioned
or delayed, unless expressly stated to the contrary in this Agreement.
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606. 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 two (2) originals, each of which is deemed to be an original.
607. 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.
608. Real Estate Brokerage Commission. City and 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 Developer's acquisition of the Property from City. 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.
609. 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.
610. 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.
611. 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.
612. 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. Developer shall be required to reimburse City for all
costs City incurs in negotiating, preparing, and processing any such alterations,
changes, or modifications requested by Developer or any lender or investor. In
connection with any request for an alteration, change or modification, Developer shall
deposit with City the sum of Ten Thousand Dollars ($10,000). Notwithstanding the
foregoing, the City Manager shall have the discretion to authorize a lesser deposit, in
the event he or she determines the proposed alteration, change or modification is minor.
In the event the funds on deposit are depleted, City shall notify Developer of the same,
882/015610-0065
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and Developer shall deposit with City an additional Five Thousand Dollars ($5,000) to
complete processing of the requested alteration, change or modification. Developer
shall make additional deposits to City, as needed, pursuant to the foregoing process,
until the requested alteration, change, or modification is finalized. Within sixty (60) days
after such alteration, change or modification is finalized, City shall reimburse Developer
any unused sums.
613. Severability. If any term, provision, condition or covenant of this
Agreement or its 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 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 by law.
614. 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 the day, that time shall be Pacific Time Zone time.
615. 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.
616. Time of Essence. Time is expressly made of the essence with respect to
the performance by City and Developer of each and every obligation and condition of
this Agreement.
617. 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.
618. Conflicts of Interest. No member, official or employee of City 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.
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619. Time for Acceptance of Agreement by City. This Agreement, when
executed by Developer and delivered to City, must be authorized, executed and
delivered by City on or before forty-five (45) days after signing and delivery of this
Agreement by Developer or this Agreement shall be void, except to the extent that
Developer shall consent in writing to a further extension of time for the authorization,
execution and delivery of this Agreement.
620. Attachments.
620.1 Incorporation by Reference; Definitions. Attachment Nos. 1-10 are
attached to this Agreement and made a part hereof by this reference. All capitalized
terms used in the Site Map, Schedule of Performance, Scope of Development, and
Preliminary Budget shall have the meanings ascribed to such terms in this Agreement.
620.2 Completion of Attachments. Each of the forms of Grant Deed,
Option Agreement, TOT Sharing Agreement, TOT Covenant Agreement, and Release
of Construction Covenants is designed for execution and recordation (if applicable) in
connection with each Phase, and with respect to the Release of Construction
Covenants, in connection with the completion of each Project Component. To
accommodate such multiple uses, the forms contain certain blanks that must be
completed and/or certain bracketed information that must be selected (with the
inapplicable bracketed information deleted) prior to execution.
[signatures on next page]
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IN WITNESS WHEREOF, City and Developer have executed this Purchase,
Sale, and Development Agreement as of the date set forth above.
ATTEST:
City Clerk
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
William S. Ihrke
City Attorney
CITY:
CITY OF LA QUINTA, a California
municipal corporation and charter city
City Manager
DEVELOPER:
SILVERROCK DEVELOPMENT
COMPANY, LLC,
a Delaware limited liability company
go
Its:
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ATTACHMENT NO. 1
PROPERTY LEGAL DESCRIPTION
[The Property Legal Description will be inserted by the Parties upon the recordation of
the Parcel Map]
882/015610-0065
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ATTACHMENT NO. 2
SITE MAP
LUXURYBRANDED
RESIDENTIAL PA 2
DEVELOPMENT LUXURY HOTEL
PARKING
_ i FNL17 i 1 PA
-- �117 CONFERENCE AND
sHAREQSERVICE FACILITY PA5
LIFESTYLE HOTEL. PORTION OF
PA10A
1 u II JJJ GOLF CLUBHOUSE
PA 10 A _ PA 6
`ry \ `tPOIENTIALFUTUREGOLDCOLRSB
\1y LIFESTYLEBRAND£D
\.�,. RESERVEJPL'BI.IC USE PARC - LS - RESIDENTIAL
�r`` DEVELOPMEM' PA 11
4 '��� � PUBLIC
PARK
•'1 �'?�— t FRAC IICI'P1
NG
PARKINGQ.
VI
PA g °/G f °la �a
GOLF COURSE
PA
LUXURY
HOTEL SPA ,•� i\ `-._ - .._° @ii FuluFUITNathcIIAL
al.rrnuRVE
6f Pt16l.IC L
PA 2
L CRY HOTEL
h
PA7 _ e �• � ti �. I n ' `�
PROMENADE
MIXED -USE VILLAGE \ I a \ ��'4---�J:I I.All
AREA - ti--''d '" IL�f_.�.-��il I:llt
PA 9 l` I
PROMENADE
nEDus 2
J� VILLAGE-AREAII
'�SLYf 1(E.ilGR .»�
PAS �
RE96RTRESIDE\T1AL y I ii �ylo••�
VILLAGE
LAND USE SUMMARY
1RNSWp �
1 GOLFC011RSE (E%ISTINS;1 iP3:A 1:0 ! yy, w✓kll'- llt
2 L[7XURY HOTEL 17:0 7A0 I ill J ,.I
3 LUXURY RRANDELIRLSIDENHALDEVELOI'MENT 13,0
a (;UN
FLRELY 1ENCE AND SHARED SERVICE FACIL10
5 LIF.SS"LEHOTEL 10.0 700
F IT IMTYI.E BRANDED RFSIDENTGILDEVELOPMENT lao 6c, - �!
T PROMENADE MIMED 115E VILLACEAREAI 10.5 I5fl � � PAID
R RESORT RESIDENTIAL VILLAGE 329 f POTEEV7"IALFUTU RE-
9 I'RCIMENADE MIXED lSSE VILIAGF.ARCAO IStl tl0' /
14A GOLFCLPHO'SEANDrOTENTIALNCA(:OLFHOLUTA 469 Z5 - f ' �� GOLF COURSE
L.'$ /lr.Cll-r i RESERVL/PUBLIC 11U PUBLIC PARK i;OLP HO[.ES 1W-78 RT.O ;,.IAINI?NA1 CE �+
17 FUBI.IC N 350 ./' L=3F. PARCELS
1: TRASLk UNAL45TATAL 6u.S "�
TDTAL
AVENVEM
MASTER PLAN
SILVERROCK RESORT
LA QUINTA, CALIFORNIA
882/015610-0065
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ATTACHMENT NO. 3
SCHEDULE OF PERFORMANCE
[See following document]
882/015610-0065
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SCHEDULE OF PERFORMANCE
Item of Performance
Start
Completion*
TRANSACTIONAL AGREEMENTS
Execution of PSDA, TOT Sharing Agreements,
and TOT Covenant Agreements
N/A
10 business days
following the date
of approval by the
La Quinta City
Council
Open Phase 1 Escrow and Phase 2 Escrow
N/A
Within 5 Business
Days following
Effective Date
PRE -DEVELOPMENT
Land & Site Planning
- Prepare, submit to City for approval, and
obtain City's approval of, plans for Golf
Course Realignment
1 month following
Effective Date
6 months following
Effective Date
- Master site design
1 month following
Effective Date
8 months following
Effective Date
Planning & Entitlements
- Preliminary Engineering & Mapping
1 month following
Effective Date
8 months following
Effective Date
- Site development plans
4 months
following Effective
Date
12 months
following Effective
Date
- Prepare, submit to City for approval, and
obtain City's approval of, Master Site
Infrastructure Improvements
Design/Construction Development
Drawings
8 months
following Effective
Date
12 months
following Effective
Date
Conditions to Closing
882/015610-0065
6895841.10 a10/30/14
Item of Performance
Start
Completion*
- Submit to City for approval and obtain
3 months prior to
15 Business Days
City's approval of, evidence of financing
anticipated Phase
prior to anticipated
for Phase 1 Master Site Infrastructure
1 Closing or
Phase 1 Closing or
Improvements or Phase 2 Master Site
Phase 2 Closing
Phase 2 Closing
Infrastructure Improvements
- All of Developer's Conditions Precedent
N/A
15 Business Days
to the Closing and City's Conditions
prior to anticipated
Precedent to the Closing have been
Phase 1 Closing or
satisfied, or waived by the appropriate
Phase 2 Closing
part
CONSTRUCTION AND INSTALLATION OF
MASTER SITE IMPROVEMENTS
PHASE 1
Phase 1 Closing (PA 2, PA 3, PA 4, PA 7, PA 8,
On or before
PA 9, and portion of PA 10A for Permanent Golf
Outside Date for
Clubhouse, parking, and hiking, biking, and/or
Phase 1 Closing
walking trails
Install construction fencing around Luxury Hotel
1 month following
1 month after start,
site.
Phase 1 Closing
and prior to
Date
commencement of
mass grading
Mass grading — Mass grade Phase 1 Property to
3 months
6 months after start
construct Project per SilverRock Specific Plan,
following Phase 1
including earthwork balance areas
Closing Date
Construct Golf Course Realignment
3 months
7 months after start
following Phase 1
Closing Date
Street C1 - Access from public road to Planning
12 months
14 months after
Area 2 and Planning Area 3, estimated 1,060
following Phase 1
start
linear feet with grading, street, storm drain,
Closing Date
water, sewer, dry utility, and landscape
improvements.
Street C2 - Access from Street C1 to Luxury
12 months
14 months after
Hotel site, estimated 870 linear feet with
following Phase 1
start
grading, street, storm drain, water, sewer, dry
Closing Date
utility, and landscape improvements.
Street C3 - Access from Street C1 to Luxury
12 months
14 months after
Hotel spa site, estimated 540 linear feet with
following Phase 1
start
grading, street, storm drain, water, sewer, dry
Closing Date
utility, and landscape improvements.
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Item of Performance
Start
Completion*
Emergency Vehicle Access (EVA) 1 (golf
3 months
7 months after start
crossing) — EVA crossing through Golf Course
following Phase 1
to connect Planning Area 3 to 52"d Avenue
Closing Date
Emergency Vehicle Access (EVA) 2 (golf
3 months
7 months after start
crossing) - EVA crossing to connect Luxury
following Phase 1
Hotel Planning Area 2 site with Permanent Golf
Closing Date
Clubhouse site in Planning Area 10A
Improvement D3 — Access from public road to
12 months
14 months after
perimeter of Planning Area 7, Planning Area 8,
following Phase 1
start
and Planning Area 9, estimated 1,000 lineal feet
Closing Date
with grading, street, storm drain, water, sewer,
dry utility, and landscape improvements.
Jefferson Project Entry Features — Construct
16 months
10 months after
private development entry features at Jefferson
following Phase 1
start
Street and SilverRock Way
Closing Date
PHASE 2
Phase 2 Closing (PA 5 and PA 6)
12 months
following Phase 1
Closing Date, but
not later than
Outside Date for
Phase 2 Closing
L4 Lift Station & Laterals — Remove existing
12 months
24 months after
CVWD irrigation water lift station and construct
following Phase 1
start
new irrigation pump station; remove estimated
Closing Date
1,432 linear feet of 16" RCP irrigation line,
remove 1,415 linear feet of 54" PVD irrigation
line, install 3,660 linear feet of 30" PVC irrigation
line.
Street D1 - — Access from public road to center
24 months
14 months after
of Planning Area 7 and Planning Area 9,
following Phase 1
start
estimated 450 linear feet with grading, street,
Closing Date
storm drain, water, sewer, dry utility, and
landscape improvements.
Improvement D2 (RiverWalk Canal) — Construct
24 months
14 months after
approximately 900 lineal foot water canal
following Phase 1
start
connecting existing golf irrigation lake at two
Closing Date
locations, with grading, street, storm drain,
water, sewer, dry utility, and landscape
improvements.
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Item of Performance
Start
Completion*
Improvement D4 (Promenade Walkway) -
24 months
14 months after
Access from public road to center of Planning
following Phase 1
start
Area 7 and Planning Area 9, estimated 900
Closing Date
linear feet with grading, street, landscape, storm
drain, sewer and water improvements.
CVWD Improvements - Per requirement of
12 months
48 months after
Water Agreement, as may be amended:
following Phase 1
start
complete (i) water booster station / pressure
Closing Date
reducing system, (ii) payment for domestic
water well and pumping plants, (iii) 2 domestic
water wells and pumping plants, abandon 14"
sewer force main and lift station.
CONSTRUCTION OF PROJECT
COMPONENTS
Prepare, submit to City for approval, and obtain
6 months prior to
Prior to start of
City's approval of, Project Component
anticipated start of
construction of
Design/Construction Development Drawings
construction of
applicable Project
applicable Project
Component
Component
Developer satisfies all conditions to develop set
N/A
Prior to start of
forth in Section 304 of Agreement
construction of
applicable Project
Component
Luxury Hotel
1 year following
2 years after start
(PA 2)
Phase 1 Closing
Date
Luxury Branded Residential Development
18 months
7 years after start.
(PA 3)
following start of
Project
Luxury Hotel
Component
considered
complete when
70% of units are
complete.
Conference and Shared Services Facility
N/A
1 year after
(PA 4)
completion of
Luxury Hotel
(If phased, phases
to be completed
pursuant to City -
approved phasing
plan)
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Item of Performance
Start
Completion*
Lifestyle Hotel
3 years following
2 years after start.
(PA 5)
completion of
Luxury Hotel
Lifestyle Hotel (phased option)
Subject to City
Subject to City
(PA 5)
approval of
approval of
Phasing to be approved by City
phasing plan
phasing plan
Lifestyle Branded Residential Development
18 months
7 years after start.
(PA 6)
following start of
Project
Lifestyle Hotel
Component
considered
complete when
70% of units are
com lete.
Promenade Mixed -Use Village
2 years following
8 years after start.
(PA 7)
completion of
Project
Luxury Hotel.
Component
considered
complete when
70% of units are
com lete.
Resort Residential Village
2 years following
8 years after start.
(PA 8)
completion of
Project
Luxury Hotel.
Component
considered
complete when
70% of units are
com lete.
Permanent Golf Clubhouse
N/A
Concurrent with
(PA 10A)
the opening of the
Luxury Hotel.
*Completion dates or timeframes listed in this table are the absolute outside dates permissible
under this Agreement.
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ATTACHMENT NO. 4
FORM OF GRANT DEED
[See following document]
882/015610-0065
6895841.10 a10/30/14
RECORDING REQUESTED BY,
MAIL TAX STATEMENTS TO
AND WHEN RECORDED MAIL TO:
SilverRock Development Company, LLC
C/o Meriwether Companies
11999 San Vicente Boulevard, Suite 220
Los Anqeles, California 90049
This document is exempt from payment of a
recording fee pursuant to Government Code
Section 27383
GRANT DEED
(Phase _)
For valuable consideration, receipt of which is hereby acknowledged,
The CITY OF LA QUINTA, a California municipal corporation and charter city
(the "City"), hereby grants to SILVERROCK DEVELOPMENT COMPANY, LLC, a
Delaware limited liability company ("Developer"), the real property hereinafter referred to
as the "Phase _ Property," 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. City excepts and reserves from the
conveyance herein described all interest of City 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 Phase _ 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 said Phase _ Property or other lands, but
without, however, any right to use either the surface of the Phase _ Property or any
portion thereof within five hundred (500) feet of the surface for any purpose or purposes
whatsoever, or to use the Phase _ Property in such a manner as to create a disturbance
to the use or enjoyment of the Phase _ Property.
2. Property Conveyance in Accordance With Redevelopment Plan,
Purchase, Sale, and Development Agreement. The Phase _ Property is conveyed in
accordance with and subject to the Redevelopment Plan for the La Quinta
Redevelopment Project Area No. 1 ("Redevelopment Plan") which was approved and
adopted by Ordinance No. 43, on November 29, 1983, of the City Council of the City of
La Quinta, and a Purchase, Sale, and Development Agreement entered into between
City and Developer dated (the "PSDA"), a copy of which is on file with City
at its offices as a public record and which is incorporated herein by reference. The
PSDA generally requires Developer to construct and operate on the Phase _ Property a
[Insert Project Description] (the "Phase _ Project"), and other requirements as set
forth therein. Except as otherwise defined herein, all terms used herein shall have the
same meaning as those used in the PSDA.
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6895841.10 a10/30/14
3. Permitted Uses. Developer covenants and agrees for itself, its
successors, its assigns, and every successor in interest to the Phase _ Property or any
part thereof, that upon the date of this Grant Deed ("Grant Deed") and during
construction through completion of development and thereafter, Developer shall devote
the Phase Property to the uses specified in the Redevelopment Plan for the periods of
time specified therein. All uses conducted on the Phase _ Property, including, without
limitation, all activities undertaken by Developer pursuant to the PSDA, shall conform to
the PSDA, the Redevelopment Plan, and all applicable provisions of the La Quinta
Municipal Code. The foregoing covenants shall run with the land.
4. Restrictions on Transfer. Developer further agrees that, except as
permitted or approved by City pursuant to Section 603 of the PSDA, (i) No voluntary or
involuntary successor in interest of Developer shall acquire any rights or powers under
the PSDA or this Grant Deed, nor shall Developer make any total or partial sale,
transfer, conveyance, assignment, subdivision, refinancing or lease of the whole or any
part of the Phase _ Property or the Phase _ Project thereon, and (ii) Developer shall
retain full managerial and operational control of the Phase _ Project. The restrictions
set forth in this Section 4 shall automatically terminate as to any individual residential
dwelling unit that has been sold and transferred to a buyer pursuant to the terms of the
PSDA.
5. Binding on Successors. All of the terms, covenants and conditions of
this Grant Deed shall be binding upon Developer and the permitted successors and
assigns of Developer. Whenever the term "Developer" is used in this Grant Deed, such
term shall include any other successors and assigns as herein provided.
6. Covenants Regarding Nondiscrimination. 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 any basis listed in subdivision (a) or
(d) of Section 12955 of the Government Code, as those bases are defined in Sections
12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955,
and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer,
use, occupancy, tenure, or enjoyment of the Phase _ Property, or any part thereof, nor
shall Developer, 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 Phase _ Property, or any part thereof. The foregoing
covenants shall run with the land.
Developer agrees for itself and any successor in interest that Developer shall
refrain from restricting the rental, sale, or lease of any portion of the Phase _ Property,
or contracts relating to the Phase _ Property, on the basis of race, color, creed, 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
882/015610-0065
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claiming under or through them, that there shall be no discrimination against or
segregation of, any person or group of persons on account of any basis listed in
subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are
defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision
(p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease,
sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein
conveyed, nor shall the grantee or any person claiming under or through him or her,
establish or permit any 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 premises 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 any basis listed in
subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are
defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision
(p) of Section 12955, and Section 12955.2 of the Government Code, 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 any basis listed in
subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are
defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision
(p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease,
sublease, transfer, use, occupancy, tenure, or enjoyment of the premises which are the
subject of this agreement, nor shall the grantee or any person claiming under or through
him or her, establish or permit any 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 premises herein conveyed. The foregoing
covenants shall run with the land."
The foregoing covenants against discrimination shall remain in effect in
perpetuity.
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 603 of the PSDA.
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,
882/015610-0065
6895841.10 a10/30/14 -3-
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 City. All covenants without regard to technical
classification or designation shall be binding for the benefit of City, and such covenants
shall run in favor of City for the entire period during which such covenants shall be in
force and effect, without regard to whether City is or remains an owner of any land or
interest therein to which such covenants relate. 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 proceedings to enforce the
curing of such breach. 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, or any person or entity having any interest in any other such realty.
Date:
ATTEST:
City Clerk
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
William S. Ihrke
City Attorney
Date:
CITY:
CITY OF LA QUINTA, a California
municipal corporation and charter city
City Manager
DEVELOPER:
SILVERROCK DEVELOPMENT
COMPANY, LLC,
a Delaware limited liability company
go
Its:
882/015610-0065
6895841.10 a10/30/14 -4-
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On
personally appeared
, before me,
( insert name and title of the officer)
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/she executed the
same in his/her authorized capacity, and that by his/her 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
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On
, before me,
( insert name and title of the officer)
(Seal)
personally appeared ,
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/she executed the
same in his/her authorized capacity, and that by his/her 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
(Seal)
882/015610-0065
6895841.10 a10/30/14 -5-
EXHIBIT A
LEGAL DESCRIPTION
[TO BE INSERTED]
882/015610-0065
6895841.10 a10/30/14
ATTACHMENT NO. 5
SCOPE OF DEVELOPMENT
I. GENERAL SUMMARY
This document outlines the general requirements for the improvements to be constructed on the
Property. Specific details are addressed in the SilverRock Specific Plan 2006-080, as amended
by Resolution No. 2006-083, which was duly adopted by the City Council on July 18, 2006
("Specific Plan"), as conformed by a finding of Substantial Conformance on November 4, 2014,
and in the construction plans that will be prepared for the development.
The Property is located at the southwest intersection of Jefferson Street and Avenue 52 in the
City of La Quinta, and is approximately 145 acres in size. The Specific Plan provides for the
development of a commercial development project that contains all of the following: a Luxury
Hotel, associated Luxury Branded Luxury Development, and related amenities, a Lifestyle Hotel,
Lifestyle Branded Residential Development, and related amenities, a Conference and Shared
Service Facility, a Promenade Mixed -Use Village, a Resort Residential Village, and associated
amenities, renovation of the existing Ahmanson Ranch House, the Golf Course Realignment,
and construction of a Permanent Golf Clubhouse.
Development of the Project requires the installation and construction of Master Site
Infrastructure Improvements. A depiction of the Master Site Infrastructure Improvements is
attached hereto and incorporated herein as Exhibit "A".
PROJECT COMPONENTS
A. Arnold Palmer Classic Golf Course — Planning Area 1
Planning Area 1 consists of approximately 173 acres, which consists primarily of the existing
Arnold Palmer Classic Golf Course. This Planning Area also contains the existing Ahmanson
Ranch House, which sits on a 1.5-acre parcel, and the 3-acre golf course maintenance facility
site located at the southern boundary of the SilverRock Resort Area adjacent to 54t" Avenue.
As currently contemplated by the project, the Golf Course will be modified to allow for the
development of the Luxury Hotel. This work will be performed by the Developer in concert with
City and Arnold Palmer Design Group.
B. Luxury Hotel - Planning Area 2
Planning Area 2 consists of approximately 17 acres planned for a 140-room (but not less than a
120-room) Luxury Hotel in an intimate setting, with a high level of service and a unique
architectural theme designed to blend with natural site attributes and close proximity to the
mountains. In total, the Luxury Hotel will consist of approximately 170,000 square feet of air-
conditioned and exterior spaces, comprising front -and -back -of -house functions. Table 2 below
contains a preliminary summary of the Project design program for the Luxury Hotel.
882/015610-0065
6895841.10 a10/30/14
TABLE 3
PLANNING AREA 2
Silver Rock Resort Specific Plan Luxury Hotel Planning Area
LUXURY HOTEL
PROJECT DESIGN PROGRAM
Space)
Total
Description Interior
Area
Total
Exterior
Area
Hotel Units
87,600 sf
16,700 sf
Food & Beverage
4,500 sf
2,300 sf
Back-of-House/Admin
13,000 sf
3,000 sf
Spa & Fitness
11,000 sf
6,500 sf
Recreation
1,300 sf
9,000 sf
Public Spaces
4,000 sf
6,000 sf
Retail
1,500 sf
0 sf
122,900 sf
43,500 sf
In addition to the Luxury Branded Residential Development, the Luxury Hotel will feature a day
spa & fitness center, conference, and back -of -house facilities shared with a Lifestyle Hotel
planned for construction in Planning Area 5.
The Luxury Hotel will be serviced by a Conference and Shared Service Facility, which houses
common back -of -house functions such as housekeeping, food & beverage, reservations, and
executive management offices shared with the Lifestyle Hotel described in Planning Area 5. In
addition, it will offer a variety of meeting spaces to appeal to group business and conferences,
with ballroom and boardroom programming. This facility is more fully described in Planning
Area 4.
Detailed information, including refinement of programming, site design, architecture, landscape
architecture, and other details will be presented to City for approval per the Site Development
Plan requirements of the Specific Plan.
TABLE 4
PLANNING AREA 2 - LAND USE
Silver Rock Resort Specific Plan Luxury Hotel Planning Area
GENERAL PLAN/LAND USE
ZONE ACRES MINIMUM UNITS/DENSITY
Luxury Hotel
120 rooms/120 keys
•
-®i120 ..keys
C. Luxury Branded Residential Development- Planning Area 3
Planning Area 3 will be developed into an enclave of exclusive for -sale single family detached
residences on fee simple lots. The residences will be sold with an amenity agreement, affording
owners and their guests with a host of privileges and access rights at the Luxury Hotel.
882/015610-0065
6895841.10 a10/30/14 -2-
The Luxury Branded Residential Development will consist of approximately 35 Resort
Residential Dwelling Units. Homes are expected to range from 2,800 — 4,500 square feet in
size, and some of the homes may have lock -offs. The architecture is anticipated to be
stylistically consistent with the theme of the Luxury Hotel. The product is expected to feature
generous interior volumes with some appropriately massed two-story elements possible.
TABLE 5
PLANNING AREA 3 - LAND USE
Silver Rock Resort Specific Plan Luxury Branded Residential Development Planning Area
PLAN/LANDGENERAL USE ZONEAPPROXIMATE
UNITS/DENSITY
CT Luxury Branded CT 14.0 35 DU SFD/2.5 DU/AC
Residential Development
TOTAL 14.0 35 DU SFD/2.5 DU/AC
D. — Conference and Shared Service Facility
Planning Area 4 consists of a Conference and Shared Service Facility and associated parking.
As explained previously, this facility will be shared by the Luxury Hotel and Lifestyle Hotel. By
combining services and amenities required by, and desirable to, both properties, advantageous
efficiencies can be achieved that enhance the economics of operations.
The Conference and Shared Service Facility will consist of one or more buildings containing
ballroom, meeting space and food service areas, as well as back -of -house functions including
executive and administrative offices, reservations, human resources, accounting, laundry and
valet, security, receiving and purchasing, and engineering and maintenance. These functions
may occur in one or a series of "pavilion -style" buildings, subject to final planning and design.
The total anticipated square footage is expected to be approximately 71,000 square feet,
predominantly interior air-conditioned space, but with some public and back -of -house exterior
areas as well. Table 4 below contains a summary of the Project design program for the
Conference and Shared Service Facility.
TABLE 6
PLANNING AREA 4
Silver Rock Resort Specific Plan Conference and Shared Service Facility Building
Planning Area
CONFERENCE■ SHARED SERVICE
BUILDING
PROJECT DESIGN PROGRAM (Net Interior
FACILITY
Space)
Description
Total Interior
Area
Total Exterior
Area
Meeting/Banquet
36,375 sf
5,000 sf
Food Services Areas
3,100 sf
0 sf
Back -of -House
11,600 sf
3,000 sf
Offices & Administrative
4,650 sf
0 sf
Public Spaces
2,075 sf
5,000 sf
882/015610-0065
6895841.10 a10/30/14 -3-
57,800 sf 13,000 sf
Site planning for the Conference and Shared Service Facility includes parking sufficient to
accommodate functions and events at the Conference and Shared Service Facility managed by
the hotel administration. .
TABLE 7
PLANNING AREA 4 - LAND USE
Silver Rock Resort Specific Plan Conference and Shared Service Facility Planning Area
C Conference and Shared CT 12.0 Approx. 71,000 sf of
T Service Facility front/back-of house
services and functions
TOTAL 12.0
E. Lifestyle Hotel - Planning Area 5
Planning Area 5 consists of approximately 10 acres planned for a Lifestyle Hotel. The Lifestyle
Hotel will take advantage of the natural site attributes and setting within the SilverRock Resort
Specific Plan. It is anticipated that the buildings will be two -and three-story design, with a
single -loaded exterior access corridor. All of the rooms will have views oriented towards the
adjacent Coral Reef Mountains.
The Lifestyle Hotel will consist of approximately 170,000 square feet of air-conditioned and
exterior space, comprising front -and -back -of -house functions. Table 8 below contains a
preliminary summary of the Project design program for the Lifestyle Hotel.
The Lifestyle Hotel will have an associated Lifestyle Branded Residential Development
consisting of approximately 60 single family attached residences in Planning Area 6, more fully
described below.
As mentioned previously, the Lifestyle Hotel will share some common facilities with the Luxury
Hotel described in Planning Area 2. Shared facilities include the Conference and Shared
Service Facility, which has been described in Planning Area 4.
TABLE 8
PLANNING AREA 5
Silver Rock Resort Specific Plan Lifestyle Hotel Planning Area
882/015610-0065
6895841.10 a10/30/14 -4-
Food & Beverage/Ent
12,200 sf
3,900 sf
Back-of-House/Admin
16,700 sf
2,800 sf
Fitness
4,800 sf
0 sf
Recreation
200 sf
10,000 sf
Public Spaces
4,800 sf
5,000 sf
Retail
1,300 sf
0 sf
126,000 sf
43,700 sf
TABLE 9
PLANNING AREA 5 - LAND USE
Silver Rock Resort Specific Plan Lifestyle Hotel Planning Area
GENERAL
PLAN/LAND USE
ZONE
ACRES
10.0
MINIMUM UNITS/DENSITY
A minimum number of hotel
CT
Lifestyle Hotel
CT
guest rooms such that when
combined with the hotel guest
rooms in the Luxury Hotel, the
combined total is not less than
340 hotel guest rooms
TOTAL
10.0
A minimum number of
hotel guest rooms such
that when combined with
the hotel guest rooms in
the Luxury Hotel, the
combined total is not
less than 340 hotel guest
rooms
F. Lifestyle Branded Residential Development - Planning Area 6
This Planning Area contains the Lifestyle Branded Residential Development associated with the
Lifestyle Hotel described in Planning Area 5. Approximately 60 Resort Residential Dwelling
Units may be developed on 10 acres. Homes are expected to range from 2,100 — 3,500 square
feet in size. Each Resort Residential Dwelling Unit will be designed with a lock -off unit, adding a
potential total key capacity of approximately 120 keys to the Lifestyle Hotel.
Architecture is expected to complement the style of the Lifestyle Hotel. The product is
envisioned to be expressed similarly as well, in two -and -three-story volumes. Programming will
emphasize active lifestyles, and embrace the site ambiance of the SilverRock Specific Plan with
its other amenities and strong view orientation to the Coral Reef Mountains.
TABLE 10
PLANNING AREA 6 - LAND USE
Silver Rock Resort Specific Plan Lifestyle Branded Residential Development Planning
Area
882/015610-0065
6895841.10 a10/30/14 -5-
CT Lifestyle Branded CT 10.0 60 DU SFA/6.0 DU/AC
Residential Development
60 lock -offs 120 keys)
TOTAL 10.0 60 DU SFA/6.0 DU/AC
G. Promenade Mixed -Use Village — Planning Areas 7 & 9
These Planning Areas are collectively referred to as the Promenade MU Village, featuring
residential, mixed -use, stand-alone, and pop-up retail/commercial uses, all as described in
Table 2 below.
TABLE 2
PLANNING AREAS 7 & 9 - LAND USE
Silver Rock Resort Specific Plan Promenade MU Village Areas I & II
GENERAL
USE
Pla ning Area 7 — Promenade
MU Villa
S
e Area I
C
River Walk Lofts
CT
Avg 1,000 SF MFR units; studio- 2 BR
T
mix
C
Bungalows
CT
Avg 1,500 SF SFD units; 1-2 BR mix,
T
C
Commercial/Retail
CT
Mixed -Use Comm'l: 16,000 SF
T
Stand -Alone Comm'l: 6,500 SF
Pop-up Comm'l: 2,500 SF
10.5
150,000 SF livable res./up to 25,000 SF
Comm'[
Planning Area 9 — Promenade
MU Villa
e Area 11
C
Public & Private Park
CT
15.0
Private & Public park & recreation
T
Residential
improvements, including water play
Commercial/Retail
facilities and ancillary entertainment,
dining, and retail;
Community gardens/heritage farm/agri-
tourism;
Branded/non-branded Glamping product;
Branded/non-branded residential
product;
Mixed -use, Stand-alone, Pop-up Comm'l
15.0
75,000 SF livable res./15,000 SF comm'l
TOTAL
25.5
225,000 SF livable res./up to 40,000 SF
comm'I
H. Resort Residential Village — Planning Area 8
882/015610-0065
6895841.10 a10/30/14 -6-
Planning Area 8 is planned as a Resort Residential Village featuring 160 residences on 32.5
acres located in the south part of the site. Homes are expected to range from 2,200 — 4,000 SF
in size, and may be developed in a combination of single family detached and attached product
of varying densities, each with access to a central amenity and community management facility.
I. Permanent Golf Clubhouse— Planning Area 10
Planning Area 10 consists of approximately 131.0 acres, divided into two sub -areas, Planning
Areas 10A and 1013. The uses within Planning Areas 10A and 10B consist of the Golf Course,
the location for the Permanent Golf Clubhouse, and a reservation of land area for possible
future golf improvements, as more fully described in Table 3 below.
TABLE 3
PLANNING AREA 10- LAND USE
Silver Rock Resort Specific Plan Golf Course & Public Use Area
GENERAL
Planning Area 10a
G
Permanent Golf
GC
6.0
Pro Shop/Starter
C
Clubhouse (Developer
Bar/Grill
owned and leased to City)
Kitchen & Prep (breakfast/lunch)
Changing Room & Restrooms
Administrative/Office
Foyer/Circ/Storage/Common Area
Total Conditioned Space: 5,000 -
5,500 SF
Cart Storage Building
Outdoor Patio Seating
Event Lawn
Twenty five 800 — 1,000 SF Golf Cabins
Total Unconditioned Space: 11,500 SF
G
Driving Range (city
GC
12.5
-
C
owned)
G
Public Use Area (city
GC
46
Potential future golf course/land reserve
C
owned)
area
Planning Area 10b
G
Public Use Area (city
GC
86.5
Potential future golf course/land reserve
C
owned)
area
TOTAL
151.0
25 Golf Cabins/16,500 SF (clubhouse
only) 1
'Final clubhouse space allocations subject to adjustment during site development permit process. All space references are
approximate.
III. DEVELOPMENT CONCEPT
882/015610-0065
6895841.10 a10/30/14 -7-
The Property 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 adopted in conjunction
with or subsequent to execution of this Agreement.
IV. 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 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 Project, including but not limited to sanitary sewers, storm drains, water,
electrical power, telecommunications, natural gas, cable television, etc.
V. LANDSCAPING
Developer shall be responsible to landscape the Project in accordance with the Specific Plan
and landscape plans approved by the City.
VI. ON -SITE AND OFF -SITE INFRASTRUCTURE IMPROVEMENTS
Developer shall be responsible for the construction of (i) Master Site Infrastructure
Improvements per this Agreement, and (ii), all on -site and off -site infrastructure improvements
that may be identified per the Specific Plan, including, but not limited to, all required internal
utilities. All such construction shall be done to City standards. Additionally, 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 payment and performance bonds
per the terms of this Agreement.
VII. DEVELOPMENT STANDARDS
All development on the Property shall conform to the development standards set forth in the
Specific Plan, and other applicable City codes and development standards per this Agreement.
882/015610-0065
6895841.10 a10/30/14 -$-
pp I
EXHIBIT "A"
DEPICTION OF MASTER SITE INFRASTRUCTURE IMPROVEMENTS
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882/015610-0065
6895841.10 a10/30/14 -4-
ATTACHMENT NO. 6
PRELIMINARY BUDGET
MASTER SITE INFRASTRUCTURE IMPROVEMENTS
$42,000,000
Mass grading, infrastructure and utilities
LUXURY HOTEL
$60,000,000
Planned for 140 roams & spa
LUXURY BRANDED RESIDENTIAL DEVELOPMENT
$40,000,000
Approximately 35 Units (3, 000-4, 500 sq)
CONFERENCE AND SHARED SERVICE FACILITY
$25,000,000
�l 71, 000 sq'
LIFESTYLE HOTEL
$54,000,000
Total combined rooms (with Luxury Hotel) = 340
LIFESTYLE BRANDED RESIDENTIAL DEVELOPMENT
$48,000,000
Approximately 60 units (, ,100-3, b00 sq)
PROMENADE MIXED -USE VILLAGE
$33,000,000
120 units (1, 000-2, 000 sq) & 4Q 000 sq' retail
RESORT RESIDENTIAL VILLAGE
$56,000,000
160 units (2, 00-4,000 sq)
'TOTAL BUDGET 1 $361,500,000 1
882/015610-0065
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ATTACHMENT NO. 7
FORM OF OPTION AGREEMENT
[See following document]
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FREE RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of La Quinta
78-495 Calle Tampico
La Quinta, CA 92253
Attn: City Manager
Space Above This Line for Recorder's Use
(Exempt from Recording Fee per Gov't Code § 6103 and 27383)
OPTION AGREEMENT
THIS OPTION AGREEMENT ("Option Agreement") is made this day of
(the "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 , 2014 (the "PSDA"), pursuant to which City conveyed to
Developer that certain 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
(the "[Phase 1 or Phase 2] Property"). The [Phase 1 or Phase 2] Property is legally
described in Exhibit 'A" which is attached hereto and incorporated herein by this
reference.
B. Pursuant to the PSDA, Developer has agreed to construct on the [Phase 1
or Phase 2] Property and on adjacent real property (the "[Phase 1 or Phase 2] Property"
and, collectively with the [Phase 1 or Phase 2] Property, the "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").
C. The Project shall be constructed on the Property in accordance with all of
the requirements set forth in the PSDA.
D. As a condition to City's conveyance of the [Phase 1 or Phase 21 Property
to Developer, Developer was required to grant to City (i) an option to repurchase the
[Phase 1 or Phase 21 Property, or certain portions thereof, from Developer if Developer
(a) fails to commence, continuously proceed with, or complete construction of the
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[Phase 1 or Phase 21 Master Site Infrastructure Improvements pursuant to the PSDA
within certain specified time frames, (b) fails to commence, continuously proceed with,
or complete construction of a Project Component pursuant to the PSDA within certain
specified time frames, (c) transfers the [Phase 1 or Phase 2] Property, or any portion
thereof, in violation of the terms of the PSDA; and (ii) a right of first offer to purchase the
[Phase 1 or Phase 21 Property, or any portion thereof, if (1) City's option under (i)(a),
(i)(b), or (i)(c) above has been triggered, (11) City did not timely exercise the applicable
option, (111) 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 1 or Phase 21
Property, all as further described herein.
E. Unless otherwise expressly defined in this Option Agreement, capitalized
terms used in this Option Agreement, including in the foregoing Recitals, shall have the
meanings ascribed thereto in the PSDA.
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 PSDA, Developer hereby grants to
City the following repurchase options:
1. Option I - Failure to Commence Construction of [Phase 1 or Phase 2]
Master Site Infrastructure Improvements
Subject to Section 7(f) hereof, Developer hereby grants to City an exclusive
option to repurchase all, but not less than all, of the [Phase 1 or Phase 2] Property
("Option I"), if Developer fails to commence construction of the [Phase 1 or Phase 2]
Master Site Infrastructure Improvements within ninety (90) days after the Effective Date.
For the purposes of this Section 1, the term "commence construction" shall mean
Developer's commencement of mass grading for the entire [Phase 1 or Phase 21
Property.
In the event of Developer's failure to commence construction of the [Phase 1 or
Phase 2] Master Site Infrastructure Improvements within the time period described
above, and such failure is not cured within the cure period provided for under Sections
7(b) and 7(c) below, then City shall be entitled to exercise, but is not obligated 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 8 of this 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 timely commence construction of the [Phase 1 or
Phase 2] Master Site Infrastructure Improvements or of any remedies City may have
under the terms of the PSDA or under any other agreement for Developer's failure to
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timely commence construction of the [Phase 1 or Phase 2] Master Site Infrastructure
Improvements.
(b) Repurchase Price - Option I
City's repurchase price for the [Phase 1 or Phase 2] Property, or portion thereof
("Option I Repurchase Price"), shall be the sum of (i) One Dollar ($1.00) and (ii) the cost
of any Plans City elects to purchase pursuant to Section 7(I) below with respect to all or
any portion of (a) the [Phase 1 or Phase 2] Master Site Infrastructure Improvements,
and/or (b) the Project Components comprising the Project.
2. Option II - Failure to Continuously Proceed With Construction of the
[Phase 1 or Phase 2] Master Site Infrastructure Improvements or to
Complete Construction of the [Phase 1 or Phase 2] Master Site
Infrastructure Improvements
Developer hereby grants to City an exclusive option ("Option II") to repurchase
those portions of the [Phase 1 or Phase 2] Property that remain subject to this Option
Agreement as of the date that Option II is exercised (the "Option II Property") if, after
commencement of construction of the [Phase 1 or Phase 2] Master Site Infrastructure
Improvements, Developer fails to continuously proceed with construction of the [Phase
1 or Phase 2] Master Site Infrastructure Improvements, or to complete the [Phase 1 or
Phase 2] Master Site Infrastructure Improvements, as evidenced by acceptance of such
[Phase 1 or Phase 2] Master Site Infrastructure Improvements by the La Quinta City
Council, within the applicable time period(s) set forth in the Master Site Infrastructure
Improvements Phasing Plan (each, as applicable, a "Master Site Infrastructure
Improvements Phase Completion Deadline"). For purposes of this Section 2, the term
"continuously proceed with construction" shall mean construction that is interrupted, if at
all, for periods of no longer than thirty (30) days.
In the event of Developer's failure to continuously proceed with construction of
the [Phase 1 or Phase 2] Master Site Infrastructure Improvements, or to complete
construction of the [Phase 1 or Phase 2] Master Site Infrastructure Improvements by the
applicable Master Site Infrastructure Improvements Phase Completion Deadline, and
such failure is not cured within the cure period provided for under Sections 7(b) and 7(c)
below, then City shall be entitled to exercise, but is not obligated to exercise, the
foregoing option for a period of sixty (60) days following the completion of the "Master
Site Infrastructure Improvements Cost Audit" (as that term is defined in Section 2(b)
below) and after expiration of such cure period ("Option II Period").
Notwithstanding anything to the contrary in this Section 2, Option II shall not
apply to, and the Option II Property shall not include, those portions of the [Phase 1 or
Phase 2] Property for which construction of the Project Component designated pursuant
to the PSDA to be constructed thereon has commenced. Such portions are addressed
in Section 4 below.
(a) Exercise of Option
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City shall exercise Option II by giving written notice to Developer, in accordance
with Section 8 of this 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 Developer's specific incidence of failure to
continuously proceed with construction of the [Phase 1 or Phase 21 Master Site
Infrastructure Improvements that gave rise to Option II or of Developer's failure to
complete construction of the [Phase 1 or Phase 2] Master Site Infrastructure
Improvements by the Master Site Infrastructure Improvements Phase Completion
Deadline (as applicable), but shall not constitute a waiver by City of Developer's breach
of its obligation to continuously proceed with construction of the [Phase 1 or Phase 2]
Master Site Infrastructure Improvements or to complete construction of the [Phase 1 or
Phase 2] Master Site Infrastructure Improvements by the Master Site Infrastructure
Improvements Phase Completion Deadline (as applicable) or of any remedies City may
have under the terms of the PSDA or under any other agreement for Developer's failure
to continuously proceed with construction of the [Phase 1 or Phase 21 Master Site
Infrastructure Improvements or to complete construction of the [Phase 1 or Phase 2]
Master Site Infrastructure Improvements by the Master Site Infrastructure Improvements
Phase Completion Deadline (as applicable).
(b) Determination of Repurchase Price - Option II
City's repurchase price for the Option II Property ("Option II Repurchase Price"),
shall be the sum of (i) one hundred percent (100%) of "Developer's Phase II Master Site
Infrastructure Improvements Construction Costs", and (ii) the cost of any Plans City
elects to purchase pursuant to Section 7(I) below with respect to all or any portion of (a)
the [Phase 1 or Phase 2] Master Site Infrastructure Improvements designated pursuant
to the PSDA to be constructed on the Option II Property, and/or (b) the Project
Components designated pursuant to the PSDA to be constructed on the Option II
Property.
For purposes of this Section 2, the term "Developer's Phase II Master Site
Infrastructure Improvements Construction Costs" shall mean the construction costs
actually incurred by Developer for construction of the [Phase 1 or Phase 2] Master Site
Infrastructure Improvements on the Option II Property from the Effective Date to the
date City exercises this Option 11, as determined by an independent audit (the "Phase II
Master Site Infrastructure Improvements Cost Audit"), performed by
[insert before the Phase 1 Closing the name of a third
party, 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: (1) 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,
and (111) 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 so-called "soft costs" incurred in the planning,
environmental review, or design of the [Phase 1 or Phase 2] Master Site Infrastructure
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Improvements constructed on the Option II Property, or 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). Developer shall promptly
provide City and the Auditor with all records and documentation necessary for the
Auditor to perform the Phase II Master Site Infrastructure Improvements Cost Audit. In
the event that there are any outstanding mortgages or deeds of trust that have been
approved by City pursuant to Section 309.1 of the PSDA (any of the foregoing, a "Valid
Lien") and that are recorded against the Option II Property at the time that Option II is
exercised, Developer and City agree that the Option II Repurchase Price shall be paid
to the lender on any such Valid Lien (any such lender with a Valid Lien, a "Lender"), up
to the then outstanding balance due under same including, without limitation, the
outstanding principal balance, all accrued and unpaid interest, and any prepayment fees
and costs (collectively, the "Outstanding Balance"). Any portion of the Option II
Repurchase Price not so needed to extinguish a Valid Lien shall be paid to Developer.
3. Option III - Failure to Commence Construction of one or more Project
Components.
Developer hereby grants to City an exclusive option ("Option III") to repurchase
all, but not less than all, of those portions of the [Phase 1 or Phase 2] Property that
remain subject to this Option Agreement as of the date that Option III is exercised (the
"Option III Property") if Developer fails to commence construction of any of the Project
Components designated pursuant to the PSDA to be constructed on a portion of the
Option III Property within ninety (90) days after City's issuance of a building permit for
such Project Component(s). For purposes of this Section 3, the term "commence
construction" shall mean Developer's commencement of precise grading for all of the
real property underlying such Project Component(s).
In the event of Developer's failure to commence construction of any of the
Project Components designated pursuant to the PSDA to be constructed on a portion of
the Option III Property within the time period described above, and such failure is not
cured within the cure period provided for under Sections 7(b) and 7(c) below, then City
shall be entitled to exercise, but is not obligated to exercise, the foregoing option for a
period of sixty (60) days following the expiration of such cure period (the "Option III
Period").
Notwithstanding anything to the contrary in this Section 3, Option III shall not
apply to, and the Option III Property shall not include, those portions of the [Phase 1 or
Phase 21 Property for which construction of the Project Component designated pursuant
to the PSDA to be constructed thereon has commenced. Such portions are addressed
in Section 4 below.
(a) Exercise of Option
City shall exercise Option III by giving written notice to Developer, in accordance
with Section 8 of this Option Agreement, prior to the expiration of the Option III Period.
Failure of City to exercise Option III shall constitute a waiver by City of City's right to
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exercise Option III only with respect to Developer's specific incidence of failure to
commence construction of one or more Project Component(s) designated pursuant to
the PSDA to be constructed on a portion of the Option III Property within the time period
described above in this Section 3, but shall not constitute a waiver by City of
Developer's breach of its obligation to commence construction of said Project
Component(s) or of any remedies City may have under the terms of the PSDA or under
any other agreement for Developer's failure to commence construction of said Project
Component(s) within the time period described above in this Section 3.
(b) Determination of Repurchase Price - Option III
City's repurchase price for the Option III Property ("Option III Repurchase Price"),
shall be the sum of (i) one hundred percent (100%) of "Developer's Phase III Master
Site Infrastructure Improvements Construction Costs", and (ii) the cost of any Plans City
elects to purchase pursuant to Section 7(I) below with respect to all or any portion of (a)
the [Phase 1 or Phase 2] Master Site Infrastructure Improvements designated pursuant
to the PSDA to be constructed on the Option III Property, and/or (b) the Project
Components designated pursuant to the PSDA to be constructed on the Option III
Property.
For purposes of this Section 3, the term "Developer's Phase III Master Site
Infrastructure Improvements Construction Costs" shall mean the construction costs
actually incurred by Developer for construction of the [Phase 1 or Phase 2] Master Site
Infrastructure Improvements on the Option III Property from the Effective Date to the
date City exercises this Option III, as determined by an independent audit (the "Phase
III Master Site Infrastructure Improvements Cost Audit"), performed by the Auditor,
which costs shall consist only of (1) 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, and (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 so-
called "soft costs" incurred in the planning, environmental review, or design of the
[Phase 1 or Phase 2] Master Site Infrastructure Improvements constructed on the
Option III Property, or 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). Developer shall promptly provide City and the Auditor with all
records and documentation necessary for the Auditor to perform the Phase III Master
Site Infrastructure Improvements Cost Audit. In the event that there are any Valid Liens
recorded against the Option III Property at the time that Option III is exercised,
Developer and City agree that the Option III Repurchase Price shall be paid to the
Lender on any such Valid Lien, up to the then Outstanding Balance due under same.
Any portion of the Option III Repurchase Price not so needed to extinguish a Valid Lien
shall be paid to Developer.
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4. Option IV - Failure to Continuously Proceed With Construction of one
or more Project Components or to Complete Construction of one or
more Project Components
Developer hereby grants to City an exclusive option ("Option IV") to repurchase
those portions of the [Phase 1 or Phase 2] Property that remain subject to this Option
Agreement as of the date that Option IV is exercised (the "Option IV Property") if, after
commencement of construction of any Project Component(s) designated pursuant to
the PSDA to be constructed on a portion of the Option IV Property, Developer fails to
continuously proceed with construction of said Project Component(s), or, subject to the
last sentence of this paragraph, to complete construction of said Project Component(s)
within twenty-four (24) months after Developer commences construction of said Project
Component(s) as evidenced by City's issuance of a certificate of occupancy for the
Project Component(s) (the "Option IV Project Component(s) Completion Deadline").
For purposes of this Section 4, the term "continuously proceed with construction" shall
mean construction that is interrupted, if at all, for periods of no longer than thirty (30)
days. Notwithstanding anything in this paragraph to the contrary, [Phase 1 only: (i) with
respect to each of the Resort Residential Village and the Promenade Mixed -Use
Village, City shall not be entitled to exercise Option IV, and the Option IV Property shall
not include the real property to be developed with either of said Project Components,
unless Developer fails to complete construction of at least seventy percent (70%) of the
Resort Residential Dwelling Units to be constructed within such Project Components,
and in addition, with respect to the Promenade Mixed -Use Village, seventy percent
(70%) of the commercial space to be constructed therein, within ten (10) years following
the issuance of the first building permit for a Resort Residential Dwelling Unit within the
Resort Residential Village or Promenade Mixed -Use Village, as applicable; (ii) with
respect to the Luxury Branded Residential Development, City shall not be entitled to
exercise Option IV, and the Option IV Property shall not include the real property to be
developed with the Luxury Branded Residential Development, unless Developer fails to
complete construction of at least seventy percent (70%) of the Resort Residential
Dwelling Units to be constructed within the Luxury Branded Residential Development
within ten (10) years following the issuance of the first building permit for the Luxury
Hotel] [Phase 2 only: with respect to the Lifestyle Branded Residential Development,
City shall not be entitled to exercise Option IV, and the Option IV Property shall not
include the real property to be developed with the Lifestyle Branded Residential
Development, unless Developer fails to complete construction of at least seventy
percent (70%) of the Resort Residential Dwelling Units to be constructed within the
Lifestyle Branded Residential Development within ten (10) years following the issuance
of the first building permit for the Lifestyle Hotel].
In the event of Developer's failure to continuously proceed with construction of
any Project Component(s) designated pursuant to the PSDA to be constructed on a
portion of the Option IV Property, or, subject to the last sentence of the immediately
preceding paragraph, Developer's failure to complete construction of any of said Project
Component(s) by the applicable Option IV Project Component(s) Completion Deadline,
and such failure is not cured within the cure period provided for under Sections 7(b) and
7(c) below, then City shall be entitled to exercise, but is not obligated to exercise, the
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foregoing option for a period of sixty (60) days following the completion of the "Option
IV Project Component(s) Cost Audit" (as that term is defined in Section 4(b) below) and
after expiration of such cure period ("Option IV Period").
Notwithstanding anything in this Option Agreement to the contrary, (i) City shall
not be obligated to purchase any portions of the Option IV Property on which
construction of the Project Component designated pursuant to the PSDA to be
constructed thereon has commenced; provided, however, that if City exercises Option
IV to purchase the [Phase 1 only: Luxury Hotel, City shall be obligated to purchase the
Luxury Branded Residential Development if the Luxury Branded Residential
Development remains subject to this Option Agreement at the time of City's exercise of
Option IV, and if City exercises Option IV to purchase the Luxury Branded Residential
Development, City shall be obligated to purchase the Luxury Hotel, if the Luxury Hotel
remains subject to this Option Agreement at the time of City's exercise of Option IV]
[Phase 2 only: Lifestyle Hotel, City shall be obligated to purchase the Lifestyle Branded
Residential Development if the Lifestyle Branded Residential Development remains
subject to this Option Agreement at the time of City's exercise of Option IV, and if City
exercises Option IV to purchase the Lifestyle Branded Residential Development, City
shall be obligated to purchase the Lifestyle Hotel, if the Lifestyle Hotel remains subject
to this Option Agreement at the time of City's exercise of Option IV].
(a) Exercise of Option
City shall exercise Option IV by giving written notice to Developer, in accordance
with Section 8 of this Option Agreement, prior to the expiration of the Option IV Period,
which notice shall set forth with specificity the portion of the Option IV Property City is
authorized and desires and/or is required to acquire (the "Option IV City Acquisition
Property"). Failure of City to exercise Option IV shall constitute a waiver by City of
City's right to exercise Option IV only with respect to Developer's specific incidence of
failure to continuously proceed with construction of the Project Component(s)
designated pursuant to the PSDA to be constructed on a portion of the Option IV
Property that gave rise to Option IV, or failure to complete construction of said Project
Component(s) by the applicable Option IV Project Component(s) Completion Deadline
that gave rise to Option IV, subject to the last sentence of the first paragraph of this
Section 4 (as applicable), but shall not constitute a waiver by City of Developer's breach
of its obligation to continuously proceed with construction of said Project Component(s),
or to complete construction of said Project Component(s) by the applicable Option IV
Project Component(s) Completion Deadline (as applicable) or of any remedies City may
have under the terms of the PSDA or under any other agreement for Developer's failure
to continuously proceed with construction of said Project Component(s), or to complete
construction of said Project Components by the Option IV Project Component(s)
Completion Deadline (as applicable).
(b) Determination of Repurchase Price - Option IV
City's repurchase price for the Option IV City Acquisition Property ("Option IV
Repurchase Price"), shall be the sum of (i) one hundred percent (100%) of "Developer's
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Option IV Project Component(s) Construction Costs", and (ii) the cost of any Plans City
elects to purchase pursuant to Section 7(I) below with respect to all or any portion of (a)
the [Phase 1 or Phase 2] Master Site Infrastructure Improvements designated pursuant
to the PSDA to be constructed on the Option IV City Acquisition Property, and/or (b) the
Project Components designated pursuant to the PSDA to be constructed on the Option
IV City Acquisition Property.
For purposes of this Section 4, the term "Developer's Option IV Project
Component(s) Construction Costs" shall mean the construction costs actually incurred
by Developer for construction of (1) the portion of the [Phase 1 or Phase 2] Master Site
Infrastructure Improvements constructed on the Option IV City Acquisition Property from
the Effective Date to the date City exercises this Option IV, and (11) the portion of the
Project Component(s) designated pursuant to the PSDA to be constructed on the
Option IV City Acquisition Property from the Effective Date to the date City exercises
this Option IV, all as determined by an independent audit (the "Option IV Project
Component(s) Cost Audit"), performed by 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, and (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 so-called "soft costs" incurred in the planning,
environmental review, or design of the [Phase 1 or Phase 2] Master Site Infrastructure
Improvements constructed on the Option IV Property or the Project Component(s)
designated pursuant to the PSDA to be constructed on the Option IV Property, or 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).
Developer shall promptly provide City and the Auditor with all records and
documentation necessary for the Auditor to perform the Option IV Project Component(s)
Cost Audit. In the event that there are any Valid Liens recorded against the Option IV
City Acquisition Property at the time that Option IV is exercised, Developer and City
agree that the Option IV Repurchase Price shall be paid to the Lender on any such
Valid Lien, up to the then outstanding balance due under same. Any portion of the
Option IV Repurchase Price not so needed to extinguish a Valid Lien shall be paid to
Developer.
5. Option V - Transfer of the [Phase 1 or Phase 2] Property, or Portion
Thereof, Prior to Completion of Project
Developer hereby grants to City an exclusive option ("Option W) to repurchase
all, but not less than all, of the [Phase 1 or Phase 2] Property that remains subject to
this Option Agreement as of the date that Option V is exercised (the "Option V
Property"), if, prior to the time Developer completes the Project, Developer transfers or
suffers an involuntary transfer of the [Phase 1 or Phase 2] Property or portion thereof in
violation of the terms of the PSDA ("Option V").
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In the event of Developer's transfer of the [Phase 1 or Phase 2] Property or
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 (i) the date of the Unauthorized Transfer that gives rise to
City's option under this Section 5, or (ii) City's discovery of the Unauthorized Transfer
that gives rise to Option V ("Option IV Period"). Notwithstanding anything to the
contrary in this Section 5, (a) Option V shall not apply to, and the Option V Property
shall not include, those portions of the [Phase 1 or Phase 2] Property that were not the
subject of an Unauthorized Transfer, and (b) City shall not be obligated to purchase any
portion of the Option V Property on which construction of the Project Component
designated pursuant to the PSDA to be constructed thereon has commenced; provided,
however, if City exercises Option V to purchase the [Phase 1 only: Luxury Hotel, City
shall be obligated to purchase the Luxury Branded Residential Development if the
Luxury Branded Residential Development remains subject to this Option Agreement at
the time of City's exercise of Option V, and if City exercises Option V to purchase the
Luxury Branded Residential Development, City shall be obligated to purchase the
Luxury Hotel, if the Luxury Hotel remains subject to this Option Agreement at the time of
City's exercise of Option V] [Phase 2 only: Lifestyle Hotel, City shall be obligated to
purchase the Lifestyle Branded Residential Development if the Lifestyle Branded
Residential Development remains subject to this Option Agreement at the time of City's
exercise of Option V, and if City exercises Option V to purchase the Lifestyle Branded
Residential Development, City shall be obligated to purchase the Lifestyle Hotel, if the
Lifestyle Hotel remains subject to this Option Agreement at the time of City's exercise of
Option V].
(a) Exercise of Option
City shall exercise Option V by giving written notice to Developer ("City's Notice
of Option IV Exercise"), in accordance with Section 8 of this Option Agreement, prior to
the expiration of the Option V Period, which notice shall set forth with specificity the
portion of the [Phase 1 or Phase 2] Property City is authorized and desires and/or is
obligated to acquire (the "Option V City Acquisition Property"). Failure of City to
exercise Option V shall constitute a waiver by City of City's right to exercise Option V
only with respect to the specific Unauthorized Transfer that gave rise to Option V, but
shall not constitute a waiver by City of Developer's breach of the transfer provisions in
the PSDA or pursuant to this 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 1 or Phase 21 Property or portion
thereof.
(b) Repurchase Price - Option V
City's repurchase price for the Option V City Acquisition Property ("Option V
Repurchase Price") shall be as follows:
i) In the event Developer has not yet commenced construction
of the [Phase 1 or Phase 2] Master Site Infrastructure Improvements to be constructed
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on the Option V City Acquisition Property at the time City exercises Option V, City's
Option I Price shall be the sum of (a) One Dollar ($1.00) and (b) the cost of any Plans
City elects to purchase pursuant to Section 7(I) below with respect to all or any portion
of (1) the [Phase 1 or Phase 2] Master Site Infrastructure Improvements, and/or (II) the
Project Components comprising the Project.
U) In the event Developer has commenced construction of the
[Phase 1 or Phase 2] Master Site Infrastructure Improvements on the Option V City
Acquisition Property at the time City exercises Option V, then (1) if City is authorized to
and elects to purchase all of the Option V Property, the Option V Repurchase Price
shall be the sum of (a) ninety percent (90%) of the purchase price paid to Developer in
connection with the Unauthorized Transfer that triggered City's right to exercise Option
V, and (b) the cost of any Plans City elects to purchase pursuant to Section 7(I) below
with respect to all or any portion of the [Phase 1 or Phase 2] Master Site Infrastructure
Improvements, and/or the Project Components comprising the Project; and (2) if City is
authorized hereunder and/or elects to purchase only a portion of the Option V Property,
then City's Option V Repurchase Price shall be the amount that would have been
payable under this Option Agreement by City to Developer if such portion of the Option
V Property would have been purchased by City pursuant to Option I, Option II, or Option
III, as applicable depending upon the status of construction upon such portion of the
Option V Property as of the date that Option V is exercised by City.
In the event that there are any Valid Liens recorded against the Option V City
Acquisition Property at the time that Option V is exercised, Developer and City agree
that the Option V Repurchase Price shall be paid to the Lender on any such Valid Lien,
up to the then Outstanding Balance due under same. Any portion of the Option V
Repurchase Price not so needed to extinguish a Valid Lien shall be paid to Developer.
6. 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 1 or Phase 2] Property, that remains
subject to this Option Agreement as of the date that City exercised the Right of First
Offer (the "Right of First Offer Property"), in accordance with the terms and conditions in
this Section 6, in the event that (i) City has had the right to exercise any of Option I,
Option 11, Option III, Option IV, or Option V and has failed to exercise or has elected not
to exercise Option I, Option II, Option III, Option IV, or Option V (as applicable) in
accordance with the terms of this Option Agreement and Developer's default that gave
rise to Option I, Option II, Option III, Option IV, or Option V (as applicable) has not been
cured, and (ii) Developer has determined to sell or otherwise transfer the [Phase 1 or
Phase 2] Property or portion thereof. Notwithstanding anything to the contrary in this
Section 6, (a) the Right of First Offer Property shall not include any portion of the [Phase
1 or Phase 2] Property that is not included in "Developer's Sale Notice" (as that term is
defined in Section 6(a) below, (b) in the event City elects to exercise City's Right of First
Offer, City may elect to purchase only those portions of the Right of First Offer Property
that City was authorized and desires (or is otherwise obligated) to purchase pursuant to
the terms of Option I, Option II, Option III, Option IV, or Option V (as applicable), and (c)
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[Phase 1 only: Luxury Hotel, City shall be obligated to purchase the Luxury Branded
Residential Development if the Luxury Branded Residential Development remains
subject to this Option Agreement at the time of City's exercise of City's Right of First
Offer, and if City exercises City's Right of First Offer to purchase the Luxury Branded
Residential Development, City shall be obligated to purchase the Luxury Hotel, if the
Luxury Hotel remains subject to this Option Agreement at the time of City's exercise of
City's Right of First Offer [Phase 2 only: Lifestyle Hotel, City shall be obligated to
purchase the Lifestyle Branded Residential Development if the Lifestyle Branded
Residential Development remains subject to this Option Agreement at the time of City's
exercise of City's Right of First Offer, and if City exercises City's Right of First Offer to
purchase the Lifestyle Branded Residential Development, City shall be obligated to
purchase the Lifestyle Hotel, if the Lifestyle Hotel remains subject to this Option
Agreement at the time of City's exercise of City's Right of First Offer. The portions of
the Right of First Offer Property City acquires hereunder shall be hereinafter referred to
as the "Right of First Offer City Acquisition Property".
(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 Right of First Offer Property, Developer shall provide City with
written notice of Developer's intent to sell such Right of First Offer 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 Right of First Offer City Acquisition Property,
at the price noted in Developer's Sale Notice ("City's Election to Exercise"); provided, however,
that if the Right of First Offer City Acquisition Property does not comprise all of the Right of
First Offer Property, then City's acquisition price shall be the amount that would have been
payable under this Option Agreement by City to Developer if such portion of the Right of First
Offer City Acquisition Property would have been purchased by City pursuant to Option I, Option
II, or Option III, as applicable depending upon the status of construction upon such portion of the
Right of First Offer City Acquisition Property as of the date that the Right of First Offer is
exercised by City.
(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 Right of First Offer Property
shall then terminate and City shall have no further right of first offer with respect to the Right of
First Offer 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 Right of First Offer Property to a third
party purchaser; provided, however, that in the event Developer determines to sell the Right of
First Offer Property at a price that is less than the price set forth in Developer's Sale Notice,
Developer shall provide City with a written notice of Developer's intent to sell the Right of First
Offer Property, 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 Right of First
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Offer 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.
7. Additional Terms Applicable to the Repurchase Options
The following additional terms shall apply to Option I, Option II, Option III, Option
IV, Option V, and City's Right of First Offer:
(a) Successors and Assigns. Option I, Option II, Option III, Option IV,
Option V, 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 1 or Phase 2] Property.
(b) Developer's Right to Cure Certain Defaults. Notwithstanding
anything herein to the contrary, but subject to the immediately following sentence, City
shall not be entitled to exercise Option I, Option II, Option III, or Option IV until City has
provided a written notice to Developer regarding Developer's failure to commence
construction, continuously proceed with construction, or to complete construction, as
applicable (with any of the above failures referred to hereinafter as an "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, for those Option
Triggering Events that cannot reasonably be cured, corrected, or remedied 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. If the
Option Triggering Event relates to the exercise of Option III or Option IV with respect to
construction of the [Luxury Hotel or Lifestyle Hotel], then the aforementioned cure
periods provided to Developer under this paragraph shall be one hundred twenty (120)
days.
(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
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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 7 to the contrary, City shall not be obligated to exercise Option
I, Option II, Option III, Option IV, Option V, or City's Right of First Offer.
(e) Termination of Option Agreement. In the event Developer
commences and completes construction of a Project Component, as evidenced by
City's issuance of a Release of Construction Covenants for such Project Component
and City has not exercised Option I, Option II, Option III, Option IV, Option V or City's
Right of First Offer with respect to such Project Component or the real property on
which such Project Component is designated pursuant to the PSDA to be constructed,
City shall execute and record a termination of this Option Agreement with respect to
said real property within fifteen (15) business days after City's issuance of a Release of
Construction Covenants for the Project Component. City shall, at or prior to the close of
escrow for the sale of each Residential Dwelling Unit at the Project to a third party
buyer, cause this Option Agreement to be terminated with respect to such Residential
Dwelling Unit. Within ten (10) days following City's receipt of written notice from
Developer of a pending escrow for the sale of any such Residential Dwelling Unit, City
shall (i) execute and have notarized a Quitclaim Deed and/or such other document(s)
required by the applicable escrow holder to evidence the termination of this Option
Agreement with respect to the Residential Dwelling Unit being sold, and (ii) deposit the
original of such executed and notarized document(s) into such escrow.
(0 Enforced Delay Pursuant to PSDA. Notwithstanding anything to
the contrary herein, in the event performance by Developer under the PSDA is
extended pursuant to Section 702 of the PSDA, such that the time by which Developer
is required thereunder to commence construction of the [Phase 1 or Phase 2] Master
Site Infrastructure Improvements, complete construction of the [Phase 1 or Phase 2]
Master Site Infrastructure Improvements, commence construction of one or more
Project Components designated pursuant to the PSDA to be constructed on a portion of
the Property, or complete construction of one or more Project Components designated
pursuant to the PSDA to be constructed on a portion of the Property, is extended, such
extensions shall automatically apply hereto to (as applicable) extend the time by which
Developer is required to commence construction of the [Phase 1 or Phase 2] Master
Site Infrastructure Improvements, complete construction of the [Phase 1 or Phase 2]
Master Site Infrastructure Improvements, commence construction of one or more
Project Components designated pursuant to the PSDA to be constructed on a portion of
the Property, or complete construction of one or more Project Components designated
pursuant to the PSDA to be constructed on a portion of the Property, by the same time
as extended under the PSDA.
(g) Subordination. City and Developer shall enter into with the Lender
a subordination or similar agreement that provides for all of the following: (i) the Lender
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to notify City, in writing, of any default by Developer under the Lender's loan documents
concurrently with its notification to Developer of such default, (ii) the Lender to notify
City, in writing, of the Lender's intention to record a notice of default (a "Notice of
Default") in the Official Records of the County of Riverside, State of California (the
"Official Records") not less than two (2) weeks prior to any such recordation; (iii) the
right of City to cure the default at any time prior to the foreclosure (or recording of a
deed in lieu thereof) on the Lender's deed of trust, (iv) the right of City to negotiate with
the Lender regarding the default at any time prior to the foreclosure (or recording of a
deed in lieu) on the Lender's deed of trust, (v) the Lender's agreement that Lender shall
not conduct a foreclosure sale (or exercise a power of sale or record a deed in lieu of
foreclosure or any similar action that would result in the ownership and vesting of title in
the name of Lender or its assignee or designee) prior to the date that is at least six (6)
months after the Lender records a Notice of Default, and (vi) the Lender's agreement to
allow City to extend the six (6) month period referenced in clause (v) for at least six (6)
months by paying to the Lender the regular monthly loan payments due during such
extension period. The foregoing provisions in clauses (i)-(v), and any other additional
terms and conditions that City, Developer, and Lender may deem necessary or
appropriate, shall be in any subordination or other agreement as may be requested or
required by either the Lender or Developer, which agreement would result in this Option
Agreement having lower priority from any other instrument or encumbrance (including
but not limited to a mortgage, deed of trust, regulatory agreement, temporary or
permanent easement, reciprocal servitude, and any covenants, codes, and restrictions
or restrictive use covenant) that is executed on behalf of and for the benefit of either the
Lender or Developer, or both, and to be recorded in the Official Records.
(h) City's Investigation of [Phase 1 or Phase 21 Property. City shall
have forty-five (45) days after the occurrence of an event that triggers City's ability to
exercise any of Option I, Option II, Option III, Option IV, Option V, or City's Right of First
Offer, to enter upon the [Phase 1 or Phase 2] Property (or applicable portion thereof) to
conduct any tests, inspections, investigations, or studies of the condition of the [Phase 1
or Phase 21 Property (or applicable portion thereof). Developer shall permit City access
to the [Phase 1 or Phase 2] Property (or applicable portion thereof) for such purposes.
City's obligation to close "Escrow" (as defined 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, 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 1 or Phase 2] Property (or applicable portion thereof).
(i)
Escrow Provisions.
i) Within five (5) business days after City has exercised Option
I, Option II, Option III, Option IV, Option V, 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 portions of the [Phase 1 or Phase 2] Property to be acquired by City pursuant
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to this Option Agreement. Escrow shall be deemed opened on the date that a fully
executed copy of this 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,
Option III, Option IV, Option V, 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 portions of the [Phase 1 or Phase 2] Property conveyed to
the City pursuant to this Option Agreement shall be delivered to City at the Close of
Escrow.
This 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
event of any conflict between the provisions of this Option Agreement and Escrow
Holder's standard instructions, this 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 1 or Phase 2] Property from City to Developer shall be
removed by Developer at its sole expense prior to the Close of Escrow pursuant to this
Section 7(i) 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 1 or Phase 2] Property (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. In the event the [Phase 1 or Phase 2] Property is encumbered
by a Valid Lien, City shall be permitted to unilaterally instruct Escrow Holder to satisfy
the indebtedness secured thereby out of the proceeds payable to Developer through the
foregoing Escrow. Any additional amount necessary to satisfy such Valid Lien,
including, without limitation, (1) the amount of the unpaid indebtedness secured by such
Valid Lien, including principal and interest and all other sums secured by the Valid Lien,
including, without limitation, any prepayment fees and costs, shall be paid by City at the
Closing.
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
I Repurchase Price, the Option II Repurchase Price, the Option III Repurchase Price,
the Option IV Repurchase Price, the Option V Repurchase Price, or the price noted in
Developer's Sale Notice or Developer's Second Sale Notice (as applicable, and as may
be adjusted pursuant to Section 7(a) above) (the "Right of First Offer Repurchase
Price"); (ii) one-half (1/2) of the escrow fees; (iii) the portion of the title insurance
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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 I Repurchase Price, the Option II Repurchase Price, the Option III
Repurchase Price, the Option IV Repurchase Price, the Option V 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 1 or Phase 2] Property, or
applicable portion thereof, 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 1 or Phase 21 Property, or applicable portion thereof, 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, the Option III
Repurchase Price, the Option IV Repurchase Price, the Option V 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 1 or Phase 2] Property, or applicable
portion thereof, 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 portion of the applicable of the Option I Repurchase Price, the Option II
Repurchase Price, the Option III Repurchase Price, the Option IV Repurchase Price,
the Option V Repurchase Price, or the Right of First Offer Repurchase Price remaining
after payment of all Valid Liens, if any, to Developer.
0) City's Right to Acquire the [Phase 1 or Phase 21 Property.
Notwithstanding anything herein to the contrary, upon City's exercise of Option I, Option
II, Option III, Option IV, Option V, or City's Right of First Offer, 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 1 or Phase 2] Property (or applicable
portion thereof).
(k) City's Repurchase of Uncompleted Portions of the Property.
Notwithstanding anything herein to the contrary, in the event that as a result of City
exercising Option III or Option IV City acquires the [Phase 1 or Phase 2] Property, or
portion thereof, if Developer has obtained from City a certificate of occupancy and has
sold to third parties one or more of the Residential Dwelling Units developed thereon,
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the provisions of this Option Agreement shall apply only to those portions of the [Phase
1 or Phase 21 Property which have not been sold to third parties ("Uncompleted Portion
of the Repurchase Property") and any calculations for determining the Option III
Repurchase Price or the Option IV Repurchase Price (as applicable) shall be based
solely upon the Uncompleted Portion of the Repurchase Property.
(1) City's Right to Purchase Plans. At the time City exercises any of
Option I, Option II, Option III, Option IV, Option V, 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,
all (but not less than all) 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 [Phase 1 or Phase 2] Master Site
Infrastructure Improvements designated pursuant to the PSDA to be constructed on the
portions of the Property to be acquired by City, and/or (b) all or any of the Project
Components designated pursuant to the PSDA to be constructed on the portions of the
Property to be acquired by City, together with copies of all of the Plans, as have been
prepared for the development of the [Phase 1 or Phase 21 Property to date of City's
exercise of Option I, Option II, Option III, Option IV, 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.
(m) 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, Option II, Option III, Option IV, or
Option V. Notwithstanding anything to the contrary herein or in the PSDA, in the event
City exercises any of Option I, Option II, Option III, Option IV, or Option V (as
applicable) to acquire the [Phase 1 or Phase 2] Property, or a portion thereof, 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, Option II, Option
III, Option IV, or Option V (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 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, Option II, Option III,
Option IV, or Option V (as applicable), and the payment by City of the Option I
Repurchase Price, the Option II Repurchase Price, the Option III Repurchase Price, the
Option IV Repurchase Price, or the Option V Repurchase Price (as applicable) and the
conveyance of the [Phase 1 or Phase 2] Property, or applicable portion thereof, by
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Developer to City, is fair and reasonable. City and Developer agree that the
(discounted) Option I Repurchase Price, Option II Repurchase Price, Option III
Repurchase Price, Option IV Repurchase Price, or Option V 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, Option II, Option III, Option IV, or Option V
(as applicable). If City does not exercise Option I, Option II, Option III, Option IV, or
Option V, 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.
8. 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: City of La Quinta
78-495 Calle Tampico
La Quinta, California 92253
Attn: City Manager
With a copy to: Rutan & Tucker, LLP
611 Anton Boulevard., Suite 1400
Costa Mesa, California 92626
Attn: William H. Ihrke, Esq.
To Developer: c/o Meriwether Companies
11999 San Vicente Boulevard, Suite 220
Los Angeles, California 90040
Attn: Graham Culp
With a copy to: Glaser Weil Fink Howard Avchen & Shapiro, LLP
10250 Constellation Boulevard, 19t" Floor
Los Angeles, California 90067
Attn: Saul Breskal, Esq.
and to:
The Robert Green Company
Attn: Robert Green
Notices personally delivered or delivered by document delivery service shall be
deemed effective upon receipt. Notices mailed in the manner provided above shall be
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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.
9. 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
Option Agreement. This 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, 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 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 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.
10. City Right to Assign
In the event City has the right to exercise any of Option I, Option II, Option III,
Option IV, Option V, 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 8
of this Option Agreement, and thereafter entering into an assignment and assumption
agreement with such assignee.
11. 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 Option Agreement.
12. Nondiscrimination
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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 [Phase 1 or Phase 2] Property.
13. 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.
14. Entire Agreement
This Option Agreement integrates all of the terms and conditions mentioned
herein, or incidental hereto, and, with the exception of the PSDA, 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
City and Developer.
15. 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.
16. 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.
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IN WITNESS WHEREOF, the Parties have executed this Option Agreement as
of the date first above written.
"DEVELOPER"
SILVERROCK DEVELOPMENT
COMPANY, LLC,
a California limited liability company
Its:
"CITY"
CITY OF LA QUINTA a California
municipal corporation and charter city
By:
Its: City Manager
ATTEST:
City Clerk
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
City Attorney
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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
State of California )
County of Riverside )
On , before me,
(Seal)
(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)
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EXHIBIT "A"
LEGAL DESCRIPTION OF THE (PHASE 1 OR PHASE 21 PROPERTY
[To be inserted]
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ATTACHMENT NO. 8
RELEASE OF CONSTRUCTION COVENANTS
[See following document]
882/015610-0065
6895841.10 a10/30/14
RECORDING REQUESTED BY,
AND WHEN RECORDED MAIL TO:
SilverRock Development Company, LLC
C/o Meriwether Companies
11999 San Vicente Boulevard, Suite 220
Los Angeles, California 90049
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 CITY OF LA QUINTA, a California municipal corporation and charter city (the
"City"), in favor of SILVERROCK DEVELOPMENT COMPANY, LLC, a Delaware
limited liability company (the "Developer"), as of
RECITALS
A. City and Developer have entered into that certain Purchase, Sale, and
Development Agreement (the "PSDA") dated concerning the
development of certain real property situated in the City of La Quinta, California, a
portion of which is more fully described in Exhibit "A" attached hereto and made a part
hereof (the "Property").
B. As referenced in Section 310 of the PSDA, City is required to furnish
Developer or its successors with a Release of Construction Covenants upon
Developer's completion of construction of the
[Insert applicable Project Component,
as that term is described in Section 100 of the PSDA] (as defined in Section 100 of
the PDA), 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 PSDA.
C. City has conclusively determined that such construction and development
has been satisfactorily completed.
NOW, THEREFORE, City hereby certifies as follows:
1. The
[Insert applicable Project Component,
as that term is described in Section 100 of the PSDA] to be constructed by
Developer has been fully and satisfactorily completed in conformance with the PSDA.
Any operating requirements and all use, maintenance or nondiscrimination covenants
contained in the PSDA and other documents executed and recorded pursuant to the
PSDA shall remain in effect and enforceable according to their terms.
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2. This Release of Construction Covenants does not constitute evidence of
compliance with or satisfaction of any obligation of 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 Property, or any part hereof.
3. This Release of Construction Covenants does not denote completion of
any work required to be completed, other than on the Property.
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 PSDA.
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IN WITNESS WHEREOF, City has executed this Release as of the date set forth
above.
CITY OF LA QUINTA, a California
municipal corporation and charter city
Its:
ATTEST:
City Clerk
APPROVED BY DEVELOPER:
SILVERROCK DEVELOPMENT
COMPANY, LLC,
a Delaware limited liability company
Its:
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STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On
personally appeared
, before me,
( insert name and title of the officer)
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/she executed the
same in his/her authorized capacity, and that by his/her 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
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On
personally appeared
, before me,
( insert name and title of the officer)
(Seal)
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/she executed the
same in his/her authorized capacity, and that by his/her 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
(Seal)
882/015610-0065
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EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
[TO BE ATTACHED]
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ATTACHMENT NO. 9
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
[See following document]
REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of La Quinta
78-495 Calle Tampico
La Quinta, CA 92253
Attn: Citv Manaaer
Exempt From Recording Fee Pursuant to Government Code § 27383
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement ("Assignment") is entered
into this day of by and between SILVERROCK DEVELOPMENT
COMPANY, LLC, a Delaware limited liability company ("Assignor") and
a
("Assignee") with reference to the following:
RECITALS
A. Assignor is the owner in fee simple of certain real property located at
the southwest intersection of Jefferson Street and Avenue 52 in the City of La
Quinta, California (the "Site"). The Site is more particularly described on Exhibit
"A", which is attached hereto and incorporated herein by this reference.
B. Assignor acquired the Site and certain other adjacent real property
(collectively with the Site, the "Development Property") from the City of La
Quinta, a California municipal corporation and charter city ("City") pursuant to the
terms of that certain Purchase, Sale, and Development Agreement dated on or
about , 2014 (the "PSDA"). A Memorandum of Purchase,
Sale, and Development Agreement was recorded in the Official Records of the
County of Riverside on as Instrument No. to
provide notice of the PSDA.
C. On or about the same date as the City and Assignor executed the
PSDA, the City and Assignor entered into that certain Development Agreement,
which was recorded against the Development Property in the Official Records of
the County of Riverside on 2014, as Instrument No.
(the "Development Agreement").
D. Pursuant to the terms of the PSDA and the Development Agreement,
the Property was to be used for a (the ["Project" or
"Project Component"]).
E. Pursuant to the terms of the PSDA the City and Assignor entered
into that certain [insert other applicable documents encumbering the Property,
such as Option Agreement, Agreement to Share Transient Occupancy Tax
Revenue, and/or Agreement Containing Covenants, Conditions, and Restrictions
Affecting Real Property].
IIT
Agreements")
PSDA, Development Agreement, and
are collectively referred to hereinafter as the ("Project
G. Assignor now desires to transfer the Site to Assignee, and
concurrently therewith, to transfer to Assignee all of Assignor's rights and
responsibilities under the Project Agreements to the extent that such rights and
responsibilities relate to the Site.
NOW, THEREFORE, in consideration of the foregoing Recitals, which are
incorporated herein by this reference, and for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
Assignor hereby assigns to Assignee all of Assignor's rights and
responsibilities under the terms of the Project Agreements, [but only to the
extent that such rights and responsibilities arise from the ownership of the
Project Component and/or Site] from and after the "Effective Date" (as that
term is defined in Section 4 below) of this Assignment (collectively, the
"Assigned Rights and Obligations").
2. Assignee hereby accepts the foregoing assignment of the Assigned Rights
and Obligations, and agrees to be bound by the terms of the Project
Agreements [to the extent that such terms affect or are affected by
ownership of the Site].
3. The parties hereto acknowledge and agree that Assignee shall not be
responsible for any of the obligations of the Project Agreements which
arise from ownership of any portion of the Site and which arise prior to the
Effective Date hereof, [or which arise from any portion of the Development
Property other than the Site after the Effective Date hereof]. As such, a
default by Assignor under any of the Project Agreements prior to the
Effective Date hereof, [or with respect to any portion of the Development
Property other than the Site] after the Effective Date hereof ("Assignor's
Default") shall not be deemed a default by Assignee, and Assignor shall
indemnify, defend and hold harmless Assignee from any and all losses,
claims or liability, including without limitation reasonable attorneys' fees
and costs, arising from an Assignor's Default. A default by Assignee
under any of the Project Agreements with respect to the Site after the
Effective Date hereof ("Assignee's Default") shall not be deemed a default
by Assignor, and Assignee shall indemnify, defend and hold harmless
Assignor from any and all losses, claims or liability, including without
limitation reasonable attorneys' fees and costs, arising from an Assignee's
Default.
4. This Assignment shall be deemed effective upon the last of the following
events to occur: (a) conveyance of the Site to Assignee as evidenced by
the recording of the grant deed therefor in the Official Records of the
County of Riverside, California, and (b) the written consent to this
Assignment by the City with respect to the Assigned Obligations arising
under the Project Agreement (herein referred to as the "Effective Date").
5. Except as otherwise described in paragraph 4 above, the parties hereto
each warrant and represent that they have taken all necessary corporate
action to authorize the execution and performance of this Assignment and
that the individuals executing this document on behalf of the parties are
authorized to do so, and by doing so, create binding obligations as
described herein of the party represented.
6. This Assignment shall be governed by the internal laws of the State of
California, without regard to conflict of law principles.
[End — Signature page follows]
WHEREFOR, the parties hereto have executed this Assignment on the date first
written above.
"Assignor"
SILVERROCK DEVELOPMENT COMPANY,
LLC, a Delaware limited liability company
in
It:
"Assignee"
in
Its:
CONSENT
By execution below, the City hereby consent to the foregoing assignment.
CITY OF LA QUINTA, a California
municipal corporation and charter city
By:
Its: City Manager
ATTEST:
City Clerk
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
City Attorney
EXHIBIT "A"
LEGAL DESCRIPTION OF THE PROPERTY
EXHIBIT "B"
LEGAL DESCRIPTION OF HOTEL PROPERTY
[To be provided.]
ATTACHMENT NO. 10
MEMORANDUM OF PURCHASE, SALE, AND DEVELOPMENT AGREEMENT
[See following document]
882/015610-0065
6895841.10 a10/30/14
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of La Quinta
78-495 Calle Tampico
La Quinta, CA 92253
Attn: City Manager
(Space Above For Recorder's Use)
This Memorandum of Purchase, Sale, and
Development Agreement is recorded at the request
and for the benefit of the City of La Quinta and is
exempt from the payment of a recording fee pursuant
to Government Code § 27383.
MEMORANDUM OF PURCHASE, SALE, AND DEVELOPMENT AGREEMENT
This MEMORANDUM OF PURCHASE, SALE, AND DEVELOPMENT
AGREEMENT ("Memorandum") is entered into this day of ,
by and between the CITY OF LA QUINTA, a California municipal corporation and
charter city ("City"), and SILVERROCK DEVELOPMENT COMPANY, LLC, a Delaware
limited liability company ("Developer").
This Memorandum is made with reference to the following:
1. On or about , City and Developer entered into that
certain Purchase, Sale, and Development Agreement (the "Agreement") which provides
for (i) City to sell to Developer that certain real property located in the City of La Quinta,
County of Riverside, State of California, more particularly described in the legal
description attached hereto as Exhibit "A" and incorporated herein by this reference (the
"Property"), and (ii) Developer to develop and operate on the Property a commercial
development with one luxury hotel with associated branded luxury residential units, one
lifestyle hotel with associated lifestyle branded residential units, a conference and
shared service facility, a resort residential village, a mixed -use village, and related
amenities. The definitions of all terms contained in the Agreement shall apply to this
Memorandum.
2. On or about the date of this Memorandum, Developer acquired from City
fee title to a portion of the Property.
3. The Agreement provides for City and Developer to enter into this
Memorandum and to record the same in the Official Records of the County of Riverside
to provide notice to all persons of the existence of said Agreement and to cause the
Agreement to run with the Property and be binding on Developer and Developer's
successors -in -interest as to the Property.
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4. This Memorandum may be executed in several counterparts, and all so
executed shall constitute one agreement binding on both parties hereto, notwithstanding
that both parties are not signatories to the original or the same counterpart.
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IN WITNESS WHEREOF, City and Developer have entered into this
Memorandum as of the date first set forth above.
ATTEST:
City Clerk
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Attorneys for the City of La Quinta
"City"
CITY OF LA QUINTA, a California municipal
corporation and charter city
Its: City Manager
"Developer"
SILVERROCK DEVELOPMENT COMPANY,
LLC, a Delaware limited liability company
go
Its:
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STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On
personally appeared
, before me,
( insert name and title of the officer)
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/she executed the
same in his/her authorized capacity, and that by his/her 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
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On , before me,
( insert name and title of the officer)
(Seal)
personally appeared ,
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/she executed the
same in his/her authorized capacity, and that by his/her 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
(Seal)
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EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
882/015610-0065
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ATTACHMENT NO. 11
FORM OF TOT SHARING AGREEMENT
[See following document]
926586.5
AGREEMENT TO SHARE TRANSIENT OCCUPANCY TAX REVENUE
This AGREEMENT TO SHARE TRANSIENT OCCUPANCY TAX REVENUE (the
"Agreement") is entered into this day of , 2014, by and between the CITY
OF LA QUINTA, a California municipal corporation and charter city ("City"), and
SILVERROCK DEVELOPMENT COMPANY, LLC, a Delaware limited liability company
("Participant") (individually a "Party" and collectively the "Parties").
RECITALS
A. City and Participant are parties to that certain Purchase, Sale, and Development
Agreement (the "PSDA"), pursuant to which City has agreed to sell to Participant certain real
property in the City of La Quinta, County of Riverside, State of California (the "Development
Property"), and Participant has agreed to develop and cause to be operated thereon a
commercial project containing hotels and associated amenities, branded residential units, a
mixed use village, and a resort residential village (the "Development Project").
B. Pursuant to the PSDA, (i) City has agreed to convey to Participant fee title to a
portion of the Development Property designated in the PSDA and in the site map attached hereto
and incorporated herein as Exhibit "A" as PA [_](the "Site"), and (ii) Participant has agreed
to develop on the Site the hotel defined in the PSDA as the [Luxury Hotel or Lifestyle Hotel]
(the "Hotel").
C. Pursuant to the PSDA, Participant is required to enter into a hotel management
agreement and all ancillary agreements, including, without limitation, a technical services
agreement, hotel brand licensing agreement, and use and access development agreement
(collectively, a "Hotel Management Agreement"), with a City -approved hotel operator (the
"Hotel Manager"), who shall be responsible for the management and operation of the Hotel
pursuant to the terms of the Hotel Management Agreement.
D. In consideration for Participant's execution of an Agreement Containing
Covenants, Conditions, and Restrictions Affecting Real Property substantially in the form
attached hereto and incorporated herein as Exhibit `B" (the "Covenant Agreement"), City has
agreed to make certain periodic payments to Participant to assist Participant in the continued
operation of the Hotel, in an amount equal to a portion of the transient occupancy tax generated
by the Hotel (the "Transient Occupancy Tax"), subject to and in accordance with the other
terms and conditions set forth in this Agreement and the Covenant Agreement.
E. By its approval of this Agreement, the City Council of City has found and
determined as follows: (i) that the value to City of Participant's performance of its obligations
set forth in the Covenant Agreement in each fiscal year during which City payments are to be
made (in terms of economic revitalization, generation of additional local tax revenues that will
help to fund vital public services, provision of expanded and more accessible hotel guest rooms
and related amenities for persons wishing to visit the City of La Quinta for business or pleasure,
and job growth and retention) will be not less than the amount of such payments; and (ii) that the
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926586.5
imposition of the covenants and use restrictions upon the Site pursuant to the Covenant
Agreement in exchange for the payments to be made by City constitutes a valid public purpose.
COVENANTS
Based upon the foregoing Recitals, which are incorporated herein by this reference, and
for other good and valuable consideration, the receipt and sufficiency of which is acknowledged
by both Parties, City and Participant hereby agree as follows:
1. Defined Terms. Any capitalized terms contained in this Agreement, which are
not defined in this Agreement, shall have the meanings ascribed to such terms in the Covenant
Agreement.
2. Execution and Recordation of Covenant Agreement. Concurrently with City's
and Participant's execution of this Agreement, Participant shall fill in the blanks, date, and
execute, with signatures notarized, the Covenant Agreement. At the ["Phase 1 Closing" or
"Phase 2 Closing"] (as that term is defined in the PSDA), Participant shall record the Covenant
Agreement against the Site and provide a copy of the recorded Covenant Agreement to City.
City agrees to cooperate in the recordation of the Covenant Agreement against the Site, at no
cost to City, and the City Manager or his designee is hereby authorized on behalf of City to
execute all documents and take all actions necessary or appropriate to implement this
Agreement.
3. Termination of Agreement. This Agreement shall automatically terminate and be
of no further force or effect upon termination of the Covenant Agreement, in accordance with the
terms thereof. City shall, within ten (10) days following the termination of this Agreement,
cause the Covenant Agreement to be released from record title to the Site by recording in the
Official Records of Riverside County such documents as a nationally recognized title company
shall reasonably require for such purpose.
4. Assignment. Except as otherwise set forth in the Covenant Agreement or
otherwise in connection with a transfer or transfers of interests in the Development Property
and/or the Development Project allowable pursuant to Section 603 of the PSDA, Participant shall
not assign, hypothecate, encumber, or otherwise transfer any of its rights and/or obligations set
forth in this Agreement and/or the Covenant Agreement to any other person or entity without
City's prior written consent, which consent City may grant or withhold in its sole and absolute
discretion.
5. Cooperation in the Event of Legal Challenge; Validation Action. In the event any
third party files an action seeking to invalidate this Agreement or the Covenant Agreement or
seeking any equitable remedy that would prevent the full performance hereof or thereof, City and
Participant agree to cooperate in the defense of such action. Such cooperation shall include,
without limitation: (i) an agreement by each Party to not default or allow a compromise of said
action without the prior written consent of the other Party; (ii) an agreement by each Party to
make available to the other Party all non -privileged information necessary or appropriate to
conduct the defense of the action; and (iii) an agreement by each Party to make available to the
other Party, without charge, any witnesses within the control of the first Party upon reasonable
8
926586.5
notice who may be called upon to execute declarations or testify in said action. Participant shall
pay all of City's costs and expenses (including reasonable attorney's fees) and City shall have
the sole right to select its legal counsel; provided however, Participant shall have the right,
exercisable upon written notice to City, to retain counsel of Participant's choice, but subject to
City's reasonable approval, to defend City against any such third party action, in which event
Participant shall not be responsible for any costs incurred by City in connection with the defense
of such third party action.
In addition to the foregoing, if Participant delivers a written request for such action to
City (c/o the City Manager) not later than thirty (30) days after the date the City Council of City
approves this Agreement at a public meeting, City shall file an action in Riverside County
Superior Court pursuant to California Code of Civil Procedure Section 860 et seq. to validate this
Agreement and the Covenant Agreement and each and every one of its and their provisions.
In such event, City and Participant shall reasonably cooperate in drafting the complaint, briefs,
the proposed judgment of validation, and such other pleadings, documents, and filings as may be
required or desirable in connection with the validation action. City and its legal counsel shall file
and prosecute the validation action, but shall reasonably coordinate and cooperate with
Participant concerning the drafting of pleadings and other documents and with regard to the
litigation strategy to be employed. Participant shall reimburse City within fifteen (15) days after
written demand therefor for all reasonable costs ("Costs") of the validation action actually
incurred by City. Costs include without limitation, reasonable attorney's fees, filing fees and
court reporter fees (if any), costs of publication and to effectuate service of process, reasonable
photocopying and other reproduction charges, travel time and mileage expenses, and other costs
and expenses reasonably incurred by City. In the event of an appeal of such action, the Parties
shall cooperate with respect to the appeal to the same extent as at the Superior Court level of the
proceedings.
Upon the entry of a final non -appealable judgment of any court with jurisdiction
invalidating or enjoining the performance of any material covenant set forth in this Agreement or
the Covenant Agreement, this Agreement and the Covenant Agreement shall automatically
terminate without the need of further action by either Parry, except that any reimbursement
obligations of either Party shall survive such termination.
6. Compliance with Laws. During the entire Operating Period, Participant shall
cause the Hotel to be operated on the Site in conformity with all applicable federal, state, and
local laws, ordinances, and regulations, the requirements of the PSDA, and any other
discretionary permits issued by City for the Hotel, including, without limitation, all of the
conditions of approval issued in connection therewith.
Nothing herein constitutes a representation or warranty by City that the construction of
the Hotel was not a "public work" or otherwise subject to California Health and Safety Code
Sections 33423 through 33426, or Chapter I of Part 7 of the California Labor Code
(commencing with section 1720), and all applicable statutory and regulatory provisions related
thereto, and Participant expressly waives any right of reimbursement for any "increased costs"
under California Labor Code Section 1781 or otherwise with respect to the Hotel or Participant's
development thereof. Participant shall indemnify, defend, and hold City and City's
representatives, volunteers, officers, officials, members, employees, and agents harmless,
7
926586.5
including, but not limited to, litigation costs, expert witness fees, and reasonable attorneys' fees,
from and against any and all claims pertaining to the payment of wages in connection with
Participant's development of the Hotel on the Site or failure to comply with federal or state labor
laws, regulations, or standards.
7. Compliance with Hotel Management Agreement. During the entire Operating
Period, Participant shall cause the Hotel to be operated on the Site in conformity with all of the
requirements set forth in the Hotel Management Agreement.
8. Representation and Warranty Regarding Hotel. As of the Commencement Date,
Participant represents and warrants to City that (i) the Hotel Management Agreement is in full
force and effect, (ii) Participant is not in material default of any of its obligations under the Hotel
Management Agreement, and (iii) there are no existing conditions or occurrences that, with the
passage of time, would constitute a material default under the Hotel Management Agreement.
9. Integration and Amendment. This Agreement and the Covenant Agreement
attached hereto constitute the entire agreement by and between the Parties pertaining to the
specific subject matter hereof, and supersede all prior agreements and understandings of the
Parties with respect thereto. This Agreement may not be modified, amended, or otherwise
changed except by a writing executed by both Parties.
10. Notices. Notices to be given by City or Participant hereunder may be delivered
personally or may be delivered by certified mail or by reputable overnight delivery service
providing a delivery confirmation receipt, with mailed notices to be addressed to the appropriate
address(es) hereinafter set forth or to such other address(es) that a Parry may hereafter designate
by written notice. If served by overnight delivery service or certified mail, service will be
considered completed and binding on the Party served on the date set forth in the confirmation or
certification receipt. If delivered personally, service will be considered completed and binding
on the Parry served on the date of such personal delivery.
If notice is to City: City of La Quinta
78-495 Calle Tampico
La Quinta, CA 92253
Attention: Frank J. Spevacek, City Manager
with a copy to: Rutan & Tucker, LLP
611 Anton Boulevard, Suite 1400
Costa Mesa, CA 92626
Attention: William H. Ihrke, City Attorney
10
926586.5
If notice is to Participant: SilverRock Development Company, LLC
c/o The Robert Green Company
3551 Fortuna Ranch Road
Encinitas, CA 92024
Attention: Robert S. Green, Jr.
SilverRock Development Company, LLC
c/o Meriwether Companies
11999 San Vicente Blvd., Suite 220
Los Angeles, CA 90049
Attention: Graham Culp
with a copy to: Glaser Weil LLP
10250 Constellation Blvd., 19th Floor
Los Angeles, CA 90067
Attention: Saul Breskal
11. Authority to Execute. 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.
12. Counterparts. This Agreement may be executed in two or more counterparts,
each of which when so executed and delivered shall be deemed an original and all of which,
when taken together, shall constitute one and the same instrument.
13. Legal Actions. This Agreement shall be governed by and construed in
accordance with 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 in this
Agreement, including without limitation in Section 5 and in this Section 13, either Party may
institute legal action to seek specific performance of the terms of this Agreement, or to cure,
correct or remedy any default, or to obtain any other legal or equitable remedy consistent with
the purpose of this Agreement. City shall also have the right to pursue damages for Participant's
defaults but in no event shall Participant be entitled to recover damages of any kind from City,
except for damages up to, but not exceeding, the amount that Participant would have received
under this Agreement but for City's default of its covenants under this Agreement, but excluding
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, 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.
11
926586.5
14. Nonliability of City Officials. No member, official or employee of City shall be
personally liable to Participant, or any successor in interest, in the event of any Default or breach
by City or for any amount which may become due to Participant or its successors, or on any
obligations under the terms of this Agreement or the Covenant Agreement.
[End — Signature page follows]
12
926586.5
IN WITNESS WHEREOF, City and Participant have executed this Agreement to be
effective as of the date first set forth above.
"City"
CITY OF LA QUINTA,
a California municipal corporation and charter
city
By:
Date: 12014 Frank J. Spevacek, City Manager
ATTEST:
Susan Maysels, City Clerk
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
William H. Ihrke, City Attorney
"Participant"
SILVERROCK DEVELOPMENT
COMPANY, LLC,
a Delaware limited liability company
Date: 92014 By:
Its:
13
926586.5
EXHIBIT "A"
SITE MAP
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MASTER PLAN
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LA QUINTA, CALIFORNIA
✓�E B;PW E aH ER ROSE4-(GR.EEN I •, L1 �C ... .
EXHIBIT "A"
926586.5
EXHIBIT `B"
AGREEMENT CONTAINING COVENANTS, CONDITIONS, AND RESTRICTIONS
AFFECTING REAL PROPERTY
[See following document]
EXHIBIT "B"
926586.5
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of La Quinta
78-495 Calle Tampico
La Quinta, CA 92253
Attn: City Clerk
[SPACE ABOVE FOR RECORDER.]
EXEMPT FROM RECORDER's FEE PER GOV. CODE §27383
AGREEMENT CONTAINING COVENANTS, CONDITIONS, AND RESTRICTIONS
AFFECTING REAL PROPERTY
This AGREEMENT CONTAINING COVENANTS, CONDITIONS, AND
RESTRICTIONS AFFECTING REAL PROPERTY (the "Covenant Agreement") is entered
into as of this day of , 2014 ("Covenant Agreement Effective Date"), by
and between the CITY OF LA QUINTA, a California municipal corporation and charter city
("City"), and SILVERROCK DEVELOPMENT COMPANY, LLC, a Delaware limited liability
company ("Owner") (individually a "Party" and collectively the "Parties").
RECITALS
A. City is the owner of that certain real property located in the City of La Quinta,
County of Riverside, State of California, which is more particularly described in the legal
description attached hereto as Exhibit No. 1 and incorporated herein by this reference (the
"Site").
B. City has agreed to sell to Owner the Site pursuant to that certain Purchase, Sale,
and Development Agreement entered into by and between City and Owner on or about the same
date hereof (the "PSDA"). The PSDA sets forth the terms and conditions for City to sell to
Owner the Site and certain adjacent real property (collectively, the "Development Property"),
and for Owner to thereafter develop and operate on the Development Property a commercial
project containing hotels and associated amenities, branded residential units, a mixed use village,
and a resort residential village (the "Development Project").
C. Pursuant to the PSDA, Owner has agreed to develop on the Site a portion of the
Development Project consisting of the hotel defined in the PSDA as the [Luxury Hotel or
Lifestyle Hotel] (the "Hotel").
D. Pursuant to the PSDA, Participant is required to enter into a hotel management
agreement and all ancillary agreements, including, without limitation, a technical services
agreement, hotel brand licensing agreement, and use and access development agreement
(collectively, a "Hotel Management Agreement"), with a City -approved hotel operator (the
"Hotel Manager"), who shall be responsible for the management and operation of the Hotel
pursuant to the terms of the Hotel Management Agreement.
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E. Concurrently herewith, City and Owner have entered into that certain unrecorded
Agreement to Share Transient Occupancy Tax Revenue (the "Agreement") which provides for
the recordation of this Covenant Agreement against the Site.
F. In consideration for Owner's rights and obligations set forth in the Agreement and
within this Covenant Agreement, City has agreed to make certain payments to Owner, the
amount of which are measured by the "Transient Occupancy Tax" (as that term is defined below)
generated by the operation of the Hotel on the Site. City and Owner have agreed that the portion
of Transient Occupancy Tax required to be paid by City to Owner hereunder during each
"Payment Period" of the "Operating Period" (as those terms are defined below) provided for
herein is a fair exchange for the consideration to be furnished by Owner to City in that Payment
Period.
COVENANTS
Based upon the foregoing Recitals, which are incorporated herein by this reference, and
for other good and valuable consideration, the receipt and sufficiency of which is acknowledged
by both Parties, City and Owner hereby agree as follows:
DEFINED TERMS.
The following terms when used in this Covenant Agreement shall have the meanings set
forth below:
The term "Affiliate" shall mean any corporation, partnership, limited liability company
or other organization or entity which is Controlled by, Controlling or under common Control
with (directly or indirectly) Owner.
The term "Aggregate Preopening Expenses" shall mean all hard and soft costs actually
incurred by Owner in connection with the Hotel prior to the Commencement Date including,
without limitation, (i) permit fees and other entitlement costs, (ii) professional fees and costs paid
to architects, engineers, lawyers and accountants, (iii) all horizontal and vertical construction
costs including grading, excavation, demolition, construction and landscaping, (iv) general and
administrative development expenses, (v) development fees, (vi) insurance premiums, (vi)
property taxes, (vii) costs associated with procuring construction financing and interest paid in
connection with such construction financing, (viii) the cost to purchase and install all furniture,
fixtures and equipment including, without limitation, all information systems hardware and
software, (ix) license fees, (x) costs to install and use utilities including electricity, water, gas,
telephone, internet and cable or satellite television, (xi) wages and other costs associated with
hiring and training employees prior to the opening of the Hotel to the public, and (xii) the cost of
all movable personal property and inventory required to open the Hotel for business on the
Commencement Date including, without limitation, linen, bathroom supplies, food and
beverages.
The term "Agreement" shall have the meaning ascribed to it in Recital E of this
Covenant Agreement.
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The term "Budgeted Preopening Expenses" shall mean all hard and soft costs estimated
to be incurred by Owner in connection with the Hotel prior to the Commencement Date, as set
forth in the Hotel Budget.
The term "Business Day" shall mean a calendar day which is not a weekend day or a
Federal or State holiday, and a day upon which the City is open for business.
The term "Commencement Date" shall mean the first day of the first full calendar
month following the date upon which the Hotel opens for business and accepts its first paying
overnight guest.
The term "Control", "Controlled" or "Controlling" shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management or policies of an
entity or person, whether through the ability to exercise voting power, by contract or otherwise.
The term "Covenant Agreement" shall mean this Agreement Containing Covenants,
Conditions, and Restrictions Affecting Real Property.
The term "Covenant Payments" shall mean the amounts to be paid by City to Owner
with respect to each Payment Period during the Operating Period.
The term "Default" shall have the meaning ascribed to it in Section 5.1 of this Covenant
Agreement.
The term "Gross Revenue" shall mean, for each Payment Period or Operating Year (as
applicable) during the Operating Period, all revenue generated by the Hotel from all sources
during such Payment Period or Operating Year (as applicable) including, without limitation,
room rentals, food and beverage sales, parking charges, television charges, telephone charges
and sundry services.
The term "Hotel" shall have the meaning ascribed to it in Recital C of this Covenant
Agreement.
The term "Hotel Budget" shall mean the budget of all hard and soft costs to be incurred
by Owner in connection with the development and opening of the Hotel (including costs of the
type included within the definition of Aggregate Preopening Expenses), which budget shall be
prepared by Owner and delivered to City for review and approval, which approval shall not be
unreasonably withheld, prior to the commencement of construction of the Hotel and which
budget may be revised from time to time subject to the reasonable approval of City.
The term "Hotel Management Agreement" shall have the meaning ascribed to it in
Recital D of this Covenant Agreement.
The term "Hotel Manager" shall have the meaning ascribed to it in Recital D of this
Covenant Agreement.
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The term "Improvements" shall mean and include all buildings, structures, fixtures,
parking, sidewalks, pedestrian lighting, landscaping, irrigation of landscaping, and other
improvements of whatsoever character to be constructed or performed by Owner on the Site.
The term "Mortgage" shall mean any mortgage, deed of trust, pledge (including a pledge
of equity interests in Owner), hypothecation, charge, encumbrance or other security interest
granted to a lender, made in good faith and for fair value, encumbering all or any part of Owner's
interest in (i) this Covenant Agreement, (ii) the Site, (iii) the Improvements, or (iv) any equity
interest in Owner.
The term "Mortgagee" shall mean any mortgagee or beneficiary under any Mortgage.
The term "Municipal Code" shall mean the La Quinta Municipal Code.
The term "Net Operating Income" shall mean, for each Payment Period or Operating
Year (as applicable) during the Operating Period, the Gross Revenue generated by the Hotel
during such Payment Period or Operating Year (as applicable), less the Operating Expenses
incurred in connection with the Hotel during such Payment Period or Operating Year (as
applicable).
The term "Operating Expenses" shall mean, for each Payment Period or Operating Year
(as applicable) during the Term, all ordinary expenses actually incurred by Owner during such
Payment Period or Operating Year (as applicable) and relating to the operation and/or
maintenance of all the facilities of the Hotel determined in accordance with generally accepted
accounting principles, including, without limitation, (a) centralized sales and marketing
expenses, (b) charges related to programs implemented by the Hotel Manager and chargeable to
the Owner, whether such programs are optional or required under the Hotel Management
Agreement (e.g., a loyalty rewards program), (c) expenses incurred by the Hotel Manager and
reimbursable by the Owner pursuant to the Hotel Management Agreement, (d) hotel personnel
expenses including, without limitation, salaries, benefits and severance payments, (e) repair
costs, (f) maintenance costs, (g) utility charges, (h) administrative expenses, (i) costs of
advertising, marketing and business promotion, 0) all amounts payable to the Hotel Manager
pursuant to the Hotel Management Agreement including, without limitation, the management
fee, (k) taxes, (1) insurance premiums and deductibles, (m) capital expenditures, (n) expenditures
on furniture, fixtures and equipment, (o) funding of reserves required under the Hotel
Management Agreement, (p) "asset management" costs and expenses incurred by Owner's
personnel in relation to the Hotel, provided such costs and expenses do not exceed one percent
(1%) of Gross Revenue for the applicable Payment Period or Operating Year (as applicable), (q)
professional fees and costs including fees paid to attorneys, accountants, auditors and appraisers,
provided that the types and amounts of such fees and costs shall be reasonable and consistent
with the industry standard for such fees and costs, (r) capital and equipment leases expenses, (s)
costs of all goods and services provided to guests and patrons in the normal course of business
for all departments of the Hotel (t) permit and license fees; provided, however, "Operating
Expenses" expressly excludes (i) principal and interest on any third party debt, (ii) capital
expenditures, and (iii) depreciation.
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The term "Operating Period" refers to the period commencing upon the
Commencement Date and ending upon the Termination Date.
The term "Operating Year" shall mean a period of twelve (12) consecutive months, the
first of which shall commence upon the Commencement Date, with each subsequent Operating
Year commencing upon the day immediately following the expiration of the preceding Operating
Year.
The term "Payment Date" shall mean the date that is ten (10) days after City's receipt of
(i) an Estimated Annual NOI Notice, with respect to the first three (3) quarters of each Operating
Year, or (ii) an NOI Notice, with respect to last quarter of each Operating Period.
The term "Payment Period" shall mean a period of three (3) consecutive calendar
months during the Operating Period, with the first such period commencing upon the
Commencement Date and each successive such period commencing upon the first day
immediately following the expiration of the immediately preceding period.
The term "PSDA" shall have the meaning ascribed to it in Recital B of this Covenant
Agreement.
The term "Required Annual Return" means, for each Operating Year during the Term,
an amount equal to the lesser of (i) the Aggregate Preopening Expenses, or (ii) the Budgeted
Preopening Expenses, multiplied by eleven percent (11%).
The term "Site" shall have the meaning ascribed to it in Recital A of this Covenant
Agreement.
The term "Term" shall mean the term of this Covenant Agreement, which shall be the
period commencing on the Commencement Date and ending on the Termination Date.
The term "Termination Date" shall mean the date that is the earlier of (i) the fifteenth
(15th) anniversary of the Commencement Date; or (ii) the date upon which this Covenant
Agreement is terminated pursuant to Section 5.2 or Section 5.3.
The term "Transient Occupancy Tax" means, for each Payment Period, or part thereof,
during the Operating Period, that portion of transient occupancy taxes remitted by Owner or the
Hotel Manager to City pursuant to Chapter 3.24 of the Municipal Code (and any amendments or
replacements to the Municipal Code) and are generated from the use and occupancy of hotel
guest rooms in the Hotel. If said Municipal Code Section is amended or repealed during the
Operating Period such that Transient Occupancy Taxes are no longer payable to City, then, for
the purposes of this Agreement, the term "Transient Occupancy Tax" shall include any substitute
tax imposed upon occupants of hotel guest rooms and payable to the City of La Quinta.
Notwithstanding anything herein to the contrary, Transient Occupancy Tax shall not
include any interest or penalty that has been paid by Owner or the Hotel Manager pursuant to
Chapter 3.24 of the Municipal Code, and any costs City incurs during a particular Payment
Period in enforcing Chapter 3.24 of the Municipal Code or any provision of this Covenant
882/015610-0065 CJ
6895841.10 a10/30/14
Agreement shall be deducted from the amount of the Covenant Payment payable by City to
Owner for such Payment Period.
CONDITION TO OWNER'S RIGHT TO RECEIVE COVENANT PAYMENTS.
City's obligation to make the Covenant Payments pursuant to Section 4.1 of this
Covenant Agreement for any Payment Period (or portion thereof) during the Operating Period
shall be contingent and conditional upon Owner's performance of its obligations set forth in
Section 3 of this Covenant Agreement during such Payment Period.
OWNER'S OBLIGATIONS.
Continuous Operation. During the Operating Period, Owner covenants and agrees to
cause the Hotel to be continuously operated on the Site, subject to temporary and reasonable
interruptions for casualty losses, repairs, labor unrest, "acts of God", and the like (each, a
"Permitted Closure").
Use Restriction. During the Operating Period, the Site shall not be put to any use other
than the operation of the Hotel and uses ancillary thereto, and such use shall qualify as a transient
occupancy use under Chapter 3.24 of the Municipal Code.
1.1 Maintenance and Repair of Site and Hotel; Landscaping.
(a) During the Operating Period, Owner, at its sole cost and expense, shall
keep and maintain the Site and the Improvements thereon and all facilities appurtenant thereto in
first class condition and repair, in accordance with the "Maintenance Standards" (as that term is
hereinafter defined).
(b) To comply with the maintenance obligations set forth in this Section 3.3,
Owner shall cause the Hotel Manager to 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 Covenant Agreement.
(c) Owner shall, or shall cause the Hotel Manager and its/their maintenance
staff, contractors or subcontractors to comply with the following standards ("Maintenance
Standards"):
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, safe road conditions, including 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
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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 Site and Hotel shall be maintained in conformance and in
compliance with the approved Site construction and architectural plans and design
scheme, 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 Site shall be maintained as required by this Section in good
condition.
During the Operating Period, Owner shall not abandon any portion of the
Site or leave the Site unguarded or unprotected, and shall not otherwise act or fail to act
in such a way as to unreasonably increase the risk of any damage to the Site or of any
other impairment of City's interest set forth in this Covenant Agreement.
1.2 Failure to Maintain Site and Hotel. In the event Owner does not maintain the Site
or the Hotel, or otherwise cause the Site or the Hotel to be maintained, in the manner set forth
herein and in accordance with the Maintenance Standards, City shall have the right, but not the
obligation, to maintain such private and/or public improvements, or to contract for the correction
of such deficiencies, in accordance with the provisions of this Section 3.4. City shall notify
Owner 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 Owner to cure
the deficiencies. Subject to the following sentence, upon notification of any maintenance
deficiency, Owner shall have thirty (30) days within which to correct, remedy or cure the
deficiency, provided that if the deficiency cannot reasonably be cured within thirty (30) days,
then Owner shall have up to but not exceeding sixty (60) days within which to correct, remedy or
cure the deficiency so long as Owner commences to correct, remedy or cure the deficiency
within said thirty (30) period and diligently prosecutes the correction, remedy or cure to
completion. If the written notification states the problem is urgent relating to the public health
and safety of City, then Owner shall have forty-eight (48) hours to correct, remedy, or cure the
problem.
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In the event Owner or any person or entity acting on behalf of Owner fails to correct, remedy, or
cure after notification and after the period of correction has lapsed [or, for deficiencies that
cannot reasonably be corrected, remedied, or cured within such period, if Owner or any person or
entity acting on behalf of Owner has not commenced correcting, remedying or curing such
maintenance deficiency within such period and diligently pursued such correction, remedy or
cure to completion], then City shall have the right to maintain such improvements. Owner
agrees to reimburse City for its actual costs reasonably incurred in connection with such
maintenance performed by City pursuant to this Section. Until so paid, City shall have a lien on
the Site for the amount of such unpaid reimbursement, which lien shall be perfected by the
recordation of a "Notice of Claim of Lien" against the Site. Upon recordation of a Notice of a
Claim of Lien against the Site, such lien shall constitute a lien on the fee estate in and to the Site
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 Covenant
Agreement shall date from the date of the recordation of the Notice of Claim of Lien. Any lien
in favor of City created or claimed hereunder is expressly made subject and subordinate to the
lien of 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. 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 Site free of any lien imposed by City that has
accrued up to the time of the foreclosure sale, and upon taking title to the Site, such foreclosure -
purchaser shall only be obligated to pay costs associated with this Covenant Agreement accruing
after the foreclosure -purchaser acquires title to the Site. Owner acknowledges and agrees City
may also pursue any and all other remedies available in law or equity. Owner shall be liable for
any and all reasonable attorneys' fees, and other legal costs or fees incurred in collecting said
maintenance costs.
Level of Service. During the Term, Owner shall cause the Hotel to be operated as [a first
class hotel offering luxury amenities, full service accommodations, on -site full service
restaurants and a level of personalized and professional service by Hotel Manager or such other
hotel operator approved by City pursuant to the terms of the PSDA] [a first class "lifestyle hotel"
operated by Hotel Manager or such other hotel operator approved by City pursuant to the terms
of the PSDA], and in accordance with the terms of the Hotel Management Agreement. Owner
shall cause the Hotel to be operated in a manner that maximizes the generation of Transient
Occupancy Tax to be remitted to City.
Compliance with Laws. During the Operating Period, Owner shall cause the Hotel to be
operated on the Site (i) in conformity with all valid and applicable federal, state (including
without limitation the California Civil Code, the California Government Code, the California
Health & Safety Code, the California Labor Code, the California Public Resources Code, and the
California Revenue & Taxation Code), and local laws, ordinances, and regulations, provided that
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Owner does not waive its right to challenge the validity or applicability thereof to Owner or the
Site, and (ii) in compliance with all of the requirements of the PSDA and any discretionary
permits issued by City for the Hotel, including, without limitation, all of the conditions of
approval issued in connection therewith, if any.
Nothing herein constitutes a representation or warranty by City that the construction of
the Hotel is not or will not be a "public work" or otherwise subject to California Health and
Safety Code Sections 33423 through 33426, or Chapter 1 of Part 7 of the California Labor Code
(commencing with section 1720), and all applicable statutory and regulatory provisions related
thereto, and Owner expressly waives any right of reimbursement for any "increased costs" under
California Labor Code Section 1781 or otherwise with respect to the Hotel or Owner's
development thereof. Owner shall indemnify, defend, and hold City and City's representatives,
volunteers, officers, officials, members, employees, and agents harmless, including, but not
limited to, litigation costs, expert witness fees, and reasonable attorneys' fees, from and against
any and all claims pertaining to the payment of wages in connection with Owner's development
of the Hotel on the Site or failure to comply with federal or state labor laws, regulations, or
standards.
Compliance with Hotel Management Agreement. Owner shall comply with all of
Owner's obligations under the Hotel Management Agreement. Owner shall promptly provide
City with copies of any notices of default received by Owner from the Hotel Manager with
respect to Owner's obligations under the Hotel Management Agreement.
Non -Discrimination. Owner shall cause the Hotel Manager to open and operate the Hotel
in a manner that does not violate applicable laws that prohibit discrimination against any person
or class of person by reason of gender, marital status, sexual orientation, race, color, creed,
mental or physical disability, religion, age, ancestry, or national origin.
Indemnification of City. Owner shall defend, indemnify, assume all responsibility for,
and hold City, and City's representatives, volunteers, officers, officials, members, employees and
agents, harmless from any and all claims, demands, damages, defense costs or liability of any
kind (including reasonable attorneys' fees and costs), that arise from Owner's operation of the
Hotel on the Site or which may be caused by any acts or omissions of the Owner under this
Covenant Agreement, whether such activities or performance thereof be by Owner or by anyone
directly or indirectly employed or contracted with by Owner and whether such damage shall
accrue or be discovered before or after termination of this Covenant Agreement.
OBLIGATIONS OF CITY.
Covenant Payments to Owner.
Amount of Covenant Payments. In consideration for Owner's undertakings
pursuant to this Covenant Agreement, City shall make the following payments (each, a
"Covenant Payment") to Owner on each Payment Date during the Operating Period:
During the first ten (10) years of the Operating Period, the Covenant Payments
due and payable by City on each Payment Date shall be an amount equal to ninety-five percent
882/015610-0065 9
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(95%) of the Transient Occupancy Taxes paid to City during the immediately preceding Payment
Period.
During the last five (5) years of the Operating Period, the Covenant Payments due
and payable by City on each Payment Date shall be an amount equal to seventy-five percent
(75%) of the Transient Occupancy Taxes paid to City during the immediately preceding Payment
Period.
It is understood and agreed that the Covenant Payments are in consideration of Owner's
performance during each Payment Period, or portion thereof, and are not repayments of a loan.
Cap on Annual Covenant Pam. Notwithstanding Section 4.1.1 above, City's
obligation to make Covenant Payments is subject to (i) the amount of the Covenant Payment
payable on any Payment Date not exceeding the Maximum Quarterly Payment for the applicable
Payment Period, and (ii) the aggregate of all Covenant Payments payable for any Operating Year
not exceeding the Maximum Annual Payment for such Operating Year. For the purposes of this
Section 4.1.2, the following capitalized terms shall have the following meanings:
"Maximum Annual Payment" means, for each Operating Year, the difference
between (i) the Required Annual Return, and (ii) the Net Operating Income generated by the
Hotel during such Operating Year.
"Maximum Quarterly Payment" means, (i) for each of the first three (3)
Payment Dates with respect to a particular Operating Year, the difference between (I) twenty-
five percent (25%) of the Estimated Annual NOI as of such Payment Date, and (II) the Net
Operating Income generated by the Hotel during the immediately preceding Payment Period, and
(ii) for the final Payment Date with respect to a particular Operating Year, if applicable, a Fourth
Quarter Covenant Payment, pursuant to Section 4.1.3 below.
"Estimated Annual NOV means Owner's reasonable estimate of the projected
annual Net Operating Income for the Operating Year in which an Estimated Annual NOI Notice
is delivered.
"Estimated Annual NOI Notice" means a written notice to be prepared by
Owner and delivered to City following the end of each of the first three (3) quarters of each
Operating Year and which shall include (i) operating statements showing the Net Operating
Income during the immediately preceding Payment Period, and (ii) Owner's reasonable
projections for the aggregate Net Operating Income over the entire applicable Operating Year.
Annual Reconciliation. Following the end of each Operating Year, Owner shall
deliver to City written notice (each, a "NOI Notice") of the actual Net Operating Income during
such Operating Year. If the actual Net Operating Income during such Operating Year exceeds
the amount of the Maximum Annual Payment, then Owner shall pay to City, concurrent with its
delivery of the NOI Notice to City, the amount of such excess less the difference between the
Maximum Annual Payment and the collective amount of the Covenant Payments paid by City
for the first three (3) Payment Periods of the Operating Year. If the amount of the Maximum
Annual Payment exceeds the actual Net Operating Income during such Operating Year, then,
subject to Section 4.1.5 below, City shall pay to Owner the sum of (a) the amount of such excess,
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and (b) the difference between the collective amount of the Covenant Payments paid by City for
the first three (3) Payment Periods of the Operating Year, and the Maximum Annual Payment
(any such payment, a "Fourth Quarter Covenant Payment") within the later of (i) thirty (30)
days following City's receipt of the Reconciliation Notice, or (ii) thirty (30) days following the
final determination of an Auditor pursuant to Section 4.1.5 below.
Determination of Required Annual Return. As soon as reasonably possible
following the Commencement Date, Owner shall deliver to City written notice (the "Annual
Return Notice") of Owner's determination of the Aggregate Preopening Expenses and the
Required Annual Return, together with a line item summary of each category of costs included in
the Aggregate Preopening Expenses and reasonable backup to substantiate that all such costs
were actually incurred. Within thirty (30) days following City's receipt of the Annual Return
Notice, City shall have the right to either accept or reject Owner's determination of the Required
Annual Return; provided, however, if City rejects such determination, then it shall provide
Owner with a reasonably detailed explanation for its rejection (the "City's Rejection Notice").
If the Parties are not able to reach agreement on the amount of the Required Annual Return
within thirty (30) days following Owner's receipt of City's Rejection Notice, then the Parties
shall jointly engage a certified public accountant (the "Auditor") to review Owner's books and
records and determine the amount of the Required Annual Return. If the Parties cannot agree
upon a choice of the Auditor within forty-five (45) days following Owner's receipt of City's
Rejection Notice, then (i) each Party shall engage, at its sole cost, an auditor, provided each such
auditor must be a certified public accountant with a nationally recognized firm and with at least
ten (10) years of experience auditing hotel developers and operators. If said auditors'
determinations of Required Annual Return differ by less than ten percent (10%), then the final
determination of Required Annual Return shall be the average of amounts determined by said
two auditors. If said auditors' determinations of Required Annual Return differ by ten percent
(10%) or more, then the Parties shall instruct said auditors to engage a third auditor with the
qualifications described above and the final determination of Required Annual Return shall be
the average of the two auditors' determinations that are closest in value. The fees of such third
auditor, if required, shall be paid by the Parties in equal fifty percent (50%) shares. The
determination of the Required Annual Return pursuant to this Section shall be final and binding
on the Parties for all purposes under this Covenant Agreement.
Determination of Net Operating Income. Within folly -five (45) dqys following
City's receipt of an NOI Notice, City shall have the right to review the books and records of the
Hotel to determine the accuracy of the NOI Notice and to either accept or reject Owner's
determination of Net Operating Income in such NOI Notice; provided, however, if City rejects
such determination, then it shall provide Owner with a reasonably detailed explanation for its
rejection (a "City's NOI Rejection Notice"). If the Parties are not able to reach agreement on
the amount of the Net Operating Income within thirty (30) days following Owner's receipt of a
City's NOI Rejection Notice, then the Parties shall jointly engage a certified public accountant
(the "Auditor") to review Owner's books and records and determine the amount of the Net
Operating Income. If the Parties cannot agree upon a choice of the Auditor within forty-five
(45) days following Owner's receipt of City's NOI Rejection Notice, then (i) each Party shall
engage, at its sole cost, an auditor, provided each such Auditor must be a certified public
accountant with a nationally recognized firm and with at least ten (10) years of experience
auditing hotel operators. If said auditors' determinations of Net Operating Income differ by less
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than ten percent (10%), then the final determination of Net Operating Income shall be the
average of the two amounts determined by said two auditors. If said auditors' determinations of
Net Operating Income differ by ten percent (10%) or more, then the Parties shall instruct said
auditors to engage a third auditor with the qualifications described above and the final
determination of Net Operating Income shall be the average of the two auditors' determinations
that are closest in value. The fees of such third auditor, if required, shall be paid by the Parties in
equal fifty percent (50%) shares.
Source of Payments. The Covenant Payments shall be payable from any source of funds
legally available to City. In this regard, it is understood and agreed that the Transient Occupancy
Tax is being used merely as a measure of the amount of the Covenant Payments that are
periodically owing by City to Owner, and that City is not pledging any portion of the actual
Transient Occupancy Tax generated from the Site to Owner.
Books and Records. Upon the written request of either Party, the other Party shall make
available for inspection (at City Hall in the event of a review of City records and at Owner's
place of business in La Quinta in the event of a review of Owner's records) such of its books and
records as the requesting Party may reasonably determine must be reviewed in order to
determine whether the correct amount of Covenant Payments have been made or are being made
hereunder. Notwithstanding the foregoing, City shall not be required to produce any books or
records that it is prohibited from producing by law and Owner shall not be required to produce
information that violates the statutorily prescribed privacy rights of individual customers.
No Acceleration. It is acknowledged by the Parties that any payments by City provided
for in this Covenant Agreement are in consideration for the performance by Owner during the
time period(s) for which payments are due. Therefore, City's failure to timely make any
payments or City's failure to perform any of its other obligations hereunder shall not cause the
acceleration of any anticipated future Covenant Payments by City to Owner.
DEFAULTS AND REMEDIES.
Defaults. Subject to Section 8.7 of this Covenant Agreement, the occurrence of any of the
following shall constitute a "Default":
the failure by either Party to perform any obligation of such Party for the payment
of money under this Covenant Agreement if such failure is not cured within ten (10) calendar
days following receipt of written notice of default; or
the failure by either Party to perform any of its obligations (other than obligations
described in clause (a) of this Section 5.1) set forth in this Covenant Agreement, if such failure is
not cured within thirty (30) days following receipt of written notice of default, or, if such failure
is of a nature that cannot reasonably be cured within thirty (30) days, the failure by such Party to
commence such cure within such thirty (30) days and thereafter diligently prosecute such cure to
completion; or
any representation or warranty by a Party set forth in this Covenant Agreement
proves to have been incorrect in any material respect when made; or
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Owner closes the Hotel, except for a Permitted Closure; or
Owner defaults under the Hotel Management Agreement or the PSDA and has not
cured the default within the applicable cure period (if any); or
the Hotel is materially damaged or destroyed by fire or other casualty during the
Operating Period and Owner fails to commence restoration of the improvements within a
reasonable time or thereafter fails to diligently proceed to complete such restoration in
accordance with this Covenant Agreement; or
Owner concludes a "Transfer" (as defined below) without the prior written
approval of City, except for a "Permitted Transfer" (as defined below); or
Owner, or any constituent member of Owner (1) is the subject of an order for
relief for a bankruptcy court, or is unable or admits its inability to pay its debts as they mature, or
makes an assignment for the benefit of creditors; (2) applies for or consents to the appointment
of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or
any part of its property; or (3) institutes or consents to any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution, custodianship, conservatorship,
liquidation, rehabilitation or similar proceeding relating to it or any part of its property, or any
similar proceeding is instituted without the consent of Owner and continues undismissed or
unstayed for ninety (90) days; or
any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar
officer is appointed without the application or consent of Owner, and the appointment continues
undischarged or unstayed for ninety (90) days; or any judgment, writ, warrant of attachment or
execution, or similar process is issued or levied against the Site and is not released, vacated, or
fully bonded within ninety (90) days after its issue or levy; or
Owner is enjoined or otherwise prohibited by any governmental agency from
occupying the Site at any time during the Operating Period and such injunction or prohibition
continues unstayed for ninety (90) days or more for any reason.
City's Remedies Upon Default by Owner. Upon the occurrence of any Default by
Owner, and after Owner's receipt of written notice of default and expiration of the time for
Owner to cure such Default as provided in Section 5.1, City may, at its option:
suspend the payment of Covenant Payments otherwise due and payable to Owner
hereunder for the period that Owner remains in Default. If City has so suspended its payments in
accordance with the terms of this clause, then upon Owner's cure of such Default, City shall
resume its payment obligations, but shall have no obligation to make payments for any Payment
Period during which City's obligation to make payments was so suspended; or
if the Default continues uninterrupted for a period of six (6) months following
Owner's receipt of written notice thereof, City may terminate this Covenant Agreement, in
which case City's obligation to make payments to Owner for any period of time after the
occurrence of the Default shall be finally terminated and discharged.
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Owner's Remedies Upon Default by City. Upon the occurrence of any Default by City,
and after City's receipt of written notice of Default from Owner and expiration of the time for
City to cure such Default as provided in Section 5.1, Owner may terminate this Covenant
Agreement by written notice to City and/or seek whatever legal or equitable remedies may be
available to Owner, subject to the provisions of this Section 5.3, Section 4.4 (No Acceleration)
and Section 8.4 (Legal Actions). Notwithstanding the foregoing, in no event shall Owner be
entitled to recover damages of any kind from City, except for damages up to, but not exceeding,
the amount that Owner would have received under this Covenant Agreement but for City's
default of its covenants under this Covenant Agreement, but excluding damages for economic
loss, lost profits, or any other economic or consequential damages of any kind.
Cumulative Remedies; No Waiver. Except as expressly provided herein, the
nondefaulting Party's rights and remedies hereunder are cumulative and in addition to all rights
and remedies provided by law from time to time and the exercise by the nondefaulting Party of
any right or remedy shall not prejudice such Party in the exercise of any other right or remedy.
None of the provisions of this Covenant Agreement shall be considered waived by either Party
except when such waiver is delivered in writing. No waiver of any Default shall be implied from
any omission by City to take action on account of such Default if such Default persists or is
repeated. No waiver of any Default shall affect any Default other than the Default expressly
waived, and any such waiver shall be operative only for the time and to the extent stated. No
waiver of any provision of this Covenant Agreement shall be construed as a waiver of any
subsequent breach of the same provision. A Party's consent to or approval of any act by the
other Party requiring further consent or approval shall not be deemed to waive or render
unnecessary the consenting Party's consent to or approval of any subsequent act. A Parry's
acceptance of the late performance of any obligation shall not constitute a waiver by such Parry
of the right to require prompt performance of all further obligations. A Party's acceptance of any
performance following the sending or filing of any notice of Default shall not constitute a waiver
of that Party's right to proceed with the exercise of its remedies for any unfulfilled obligations.
A Parry's acceptance of any partial performance shall not constitute a waiver by that Party of any
rights relating to the unfulfilled portion of the applicable obligation.
Limitations on City's Liability. Owner acknowledges and agrees that: (i) this Covenant
Agreement shall not be deemed or construed as creating a partnership, joint venture, or similar
association between Owner and City, the relationship between Owner and City pursuant to this
Covenant Agreement is and shall remain solely that of contracting Parties, that the operation of
the Hotel is a private undertaking, and City neither undertakes nor assumes any responsibility
pursuant to this Covenant Agreement with respect to the operation of the Hotel on the Site other
than as expressly provided for herein, and Owner shall rely entirely on its own judgment with
respect to such matters; provided, that nothing herein is intended to release City from whatever
obligations it may have pursuant to applicable laws independent of this Covenant Agreement;
(ii) by virtue of this Covenant Agreement, City shall not be directly or indirectly liable or
responsible for any loss or injury of any kind to any person or property resulting from any
occupancy or use of the Site, whether arising from: (a) any defect in any building, grading,
landscaping, or other onsite or offsite improvement; (b) any act or omission of Owner or any of
Owner's agents, employees, independent contractors, licensees, lessees, or invitees; or (c) any
accident on the Site or any fire or other casualty or hazard thereon, and (iii) by accepting or
approving anything required to be performed or given to City under this Covenant Agreement,
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including any certificate, NOI Notice, or insurance policy, City shall not be deemed to have
warranted or represented the sufficiency or legal effect of the same, and no such acceptance or
approval shall constitute a warranty or representation by City to anyone.
ASSIGNMENT AND TRANSFER.
Definitions. As used in this Article 6, the term "Transfer" means:
Any total or partial sale, transfer, assignment or conveyance of the Development
Project or the Improvements, or any part thereof or any ownership interest therein, or any
contract or agreement to do any of the same; or
Any total or partial sale, assignment or conveyance, or any transfer in any other
mode or form, of or with respect to more than fifty percent (50%) ownership interest in Owner,
or any contract or agreement to do any of the same, but only to the extent such transfer results in
a change of Control.
Purpose of Restrictions on Transfer. This Covenant Agreement is entered into solely for
the purpose of development and operation of the Development Project and its subsequent use in
accordance with the terms of this Covenant Agreement. The qualifications and identity of
Owner are of particular concern to City, in view of`
the importance of the development of the Development Project to the general
welfare of the community;
the financial resources, reputation and experiences of Owner in development of
projects; and
the fact that a Transfer as defined in Section 5.1 above is for practical purposes a
transfer or disposition of the Development Project.
It is because of the qualifications and identity of Owner that City is entering into
this Covenant Agreement with Owner and that Transfers are permitted only as provided in this
Covenant Agreement.
Prohibited Transfers. Owner shall not make or create or suffer to be made or created, any
Transfer, other than a Permitted Transfer, either voluntarily or by operation of law, without the
prior written approval of City which approval shall not be unreasonably withheld, conditioned or
delayed. In the event of a proposed Transfer (other than a Permitted Transfer), Owner shall
submit to City such documentation as City determines is sufficient to evaluate the relevant
experience, financial capability and reputation of the proposed transferee necessary to fulfill the
Owner's obligations under this Covenant Agreement.
Permitted Transfers. Notwithstanding the provisions of Section 5.3, Owner shall have
the right to affect the following Transfers without the prior approval of City (each a "Permitted
Transfer"):
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Any Transfer creating a Mortgage or other security for financing for the Project
provided such financing has been approved by City pursuant to the PSDA.
Any Transfer directly resulting from the foreclosure of a Mortgage or other
security financing interest or the granting of a deed in lieu of foreclosure of a Mortgage
(including, without limitation, a conveyance in lieu of foreclosure or a pledge of equity interests)
or other security financing interest and the first subsequent transfer to any buyer or successor
after such foreclosure or granting of a deed or conveyance in lieu of foreclosure.
The leasing or licensing of space within the Improvements.
The leasing of a Hotel to a Hotel Manager.
The conveyance or dedication of a portion of the Development Property to any
public entity, including a public utility, required to allow for the development or operation of the
Improvements.
The granting of temporary or permanent easements, licenses, rights -of- way, or
permits to facilitate development and/or operation of the Development Project.
A Transfer which may result from any merger, consolidation or reorganization
involving Owner so long as the same shall possess all or substantially all of the business and
assets of Owner immediately prior thereto.
in Owner.
The Transfer of a non -Controlling direct or indirect interest in the equity interests
A Transfer to Affiliates of Owner or to Affiliates of Owner's members.
All Transfers other than those enumerated in this Section 6.4 shall require the
written approval of City, which approval shall not be unreasonably withheld, conditioned, or
delayed.
Transfers of Interest in Owner. Notwithstanding Section 6.3, City shall not unreasonably
withhold its approval of a Transfer of a Controlling direct or indirect equity interest in Owner if
the replacement member, partner or shareholder has, together with its affiliates, sufficient
financial resources and liquidity to fulfill Owner's obligations under this Covenant Agreement.
For purposes hereof an individual or entity shall be considered to have sufficient financial
resources and liquidity if it, or its Affiliates, has a net worth or assets under management
(whether through a separate account or other investment vehicle), including the Site, equal to or
exceeding Twenty Million Dollars ($20,000,000), determined based on financial statements of
such transferee, at the time of the Transfer.
Binding Effect. This Covenant Agreement shall run with the land and shall be binding
on, and inure to the benefit of the Parties hereto and their respective successors and assigns, as
limited by this Section 6. In the event of any assignment that is consented to in writing by City,
the references in this Covenant Agreement to "Owner" shall be deemed to refer to the assignee.
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MORTGAGEE PROTECTIONS.
No Termination. No action by Owner or City to cancel or surrender this Covenant
Agreement or to materially modify the terms of this Covenant Agreement shall be binding upon
a Mortgagee without its prior written consent, which such Mortgagee shall not unreasonably
withhold, condition or delay, unless (solely with respect to cancelling or surrendering this
Covenant Agreement) such Mortgagee shall have failed to cure a default within the time frames
set forth in this Article 7.
Notices. If City shall give any notice of default to Owner hereunder, City shall
simultaneously give a copy of such notice of default to any Mortgagee that has filed or recorded
a request for such notice, at the address theretofore designated by it. No notice of default given
by City to Owner shall be binding upon or affect said Mortgagee unless a copy of said notice of
default shall be given to Mortgagee pursuant to this Article 7. In the case of an assignment of
such Mortgage or change in address of such Mortgagee, said assignee or Mortgagee, by written
notice to City, may change the address to which such copies of notices of default are to be sent.
City shall not be bound to recognize any assignment of such Mortgage unless and until City shall
be given written notice thereof, a copy of the executed assignment, and the name and address of
the assignee. Thereafter, such assignee shall be deemed to be the Mortgagee hereunder with
respect to the Mortgage being assigned. If such Mortgage is held by more than one person,
corporation or other entity, no provision of this Covenant Agreement requiring City to give
notices of default or copies thereof to said Mortgagee shall be binding upon City unless and until
all of said holders shall designate in writing one of their number to receive all such notices of
default and copies thereof and shall have given to City an original executed counterpart of such
designation.
Performance of Covenants. Mortgagee shall have the right (but not the obligation) to
perform any term, covenant or condition and to remedy any default by Owner hereunder within
the time periods specified herein, and City shall accept such performance with the same force
and effect as if furnished by Owner; provided, however, that said Mortgagee shall not thereby or
hereby be subrogated to the rights of City. Notwithstanding the foregoing, nothing herein shall
be deemed to permit or authorize such Mortgagee (or its designee) to undertake or continue the
construction or completion of the Improvements without first having expressly assumed Owner's
obligations hereunder, under the PSDA, and under any other agreements between City and
Owner that relate to the Hotel, to City or its designee by written agreement satisfactory to City.
Default by Owner. In the event of a default by Owner, City agrees not to terminate this
Covenant Agreement (1) unless and until Owner's and Mortgagee's notice and cure periods have
expired, and (2) as long as:
In the case of a default which cannot practicably be cured by a Mortgagee without
taking possession of the Improvements, said Mortgagee shall proceed diligently to obtain
possession of the Improvements as Mortgagee (including possession by receiver) and, upon
obtaining such possession, shall proceed diligently to cure such default; or
In the case of a default which is not susceptible to being cured by a Mortgagee,
said Mortgagee shall institute foreclosure proceedings and diligently prosecute the same to
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completion (unless in the meantime it shall acquire Owner's right, title and interest hereunder,
either in its own name or through a nominee, by assignment in lieu of foreclosure) and upon such
completion of acquisition or foreclosure such default shall be deemed to have been cured.
No Obligation to Cure. Mortgagee shall not have any obligation or duty pursuant to the
terms set forth in this Covenant Agreement to perform the obligations of Owner or other
affirmative covenants of Owner hereunder, or to guarantee such performance and nothing herein
contained shall require any Mortgagee to cure any default of Owner referred to above. However,
in the event that Mortgagee elects not to cure any default susceptible of being cured, City's
obligation to further fund any Covenant Payments shall be suspended until such time as the
default is cured (or such earlier time that Mortgagee cures the default).
Separate Agreement. City may, upon request, execute, acknowledge and deliver to each
Mortgagee, an agreement prepared at the sole cost and expense of Owner, in form satisfactory to
each Mortgagee, between City, Owner and the Mortgagees, agreeing to all of the provisions
hereof.
Form of Notice. Any Mortgagee shall be entitled to receive the notices required to be
delivered to it hereunder provided that such Mortgagee shall have delivered to City a notice
substantially in the following form:
"The undersigned, whose address is , does hereby certify that it is the
Mortgagee (as such term is defined in that certain Agreement to Share Transient
Occupancy Tax Revenue ("TOT Agreement") dated as of , 2014
between [XXXX] and the City of La Quinta, of the parcel of land described on
Exhibit A attached hereto. In the event that any notice shall be given of a default
of Owner under the TOT Agreement, a copy thereof shall be delivered to the
undersigned who shall have the rights of a Mortgagee to cure the same, as
specified in the TOT Agreement. Failure to deliver a copy of such notice shall in
no way affect the validity of the notice to Owner, but no such notice shall be
effective as it relates to the rights of the undersigned under the TOT Agreement
with respect to the Mortgage, including the commencement of any cure periods
applicable to the undersigned, until actually received by the undersigned."
All notices to be provided by Mortgagee to City shall be provided in accordance
with Section 8.8 below.
Further Assurances. City and Owner agree to cooperate in including in this Covenant
Agreement, by suitable amendment, any provision which may be reasonably requested by any
Mortgagee or any proposed Mortgagee for the purpose of (i) more fully or particularly
implementing the mortgagee protection provisions contained herein, (ii) adding mortgagee
protections consistent with those contained herein and which are otherwise commercially
reasonable, (iii) allowing such Mortgagee reasonable means to protect or preserve the security
interest of such mortgagee in the collateral, including its lien on the Site and the collateral
assignment of this Covenant Agreement, and/or (iv) clarifying terms or restructuring elements of
the transactions contemplated hereby; provided, however, in no event shall City be obligated to
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materially and adversely modify any of Owner's obligations or City's rights under this Covenant
Agreement in any manner not already contemplated in this Article 7.
GENERAL PROVISIONS.
Integration and Amendment. This Covenant Agreement, the PSDA, and the Agreement
constitute the entire agreement by and between the Parties pertaining to the subject matter
hereof, and supersede all prior agreements and understandings of the Parties with respect thereto.
This Covenant Agreement may not be modified, amended, supplemented, or otherwise changed
except by a writing executed by both Parties.
Captions. Section headings used in this Covenant Agreement are for convenience of
reference only and shall not affect the construction of any provisions of this Covenant
Agreement.
Counterparts. This Covenant Agreement may be executed in two or more counterparts,
each of which when so executed and delivered shall be deemed an original and all of which,
when taken together, shall constitute one and the same instrument.
Legal Actions. This Covenant Agreement shall be governed by and construed in
accordance with the internal laws of the State of California without regard to conflict of law
principles.
Intentionally Omitted.
Effect of Violation of the Terms and Provisions of this Covenant Agreement. The
covenants established in this Covenant Agreement shall, without regard to technical
classification and designation, be binding for the benefit and in favor of City, its successors and
assigns, as to those covenants which are for its benefit. The covenants contained in this
Covenant Agreement shall remain in effect for the periods of time specified therein. City is
deemed the beneficiary of the terms and provisions of this Covenant 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 Covenant Agreement and the covenants running with the land have been provided.
This Covenant Agreement and the covenants shall run in favor of City, without regard to whether
City has been, remains, or is an owner of any land or interest in the Site. City shall have the
right, if the Covenant 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 to which it or any other beneficiaries of this Covenant Agreement and
covenants may be entitled.
Force Majeure. Notwithstanding any other provision set forth in this Covenant
Agreement to the contrary, in no event shall a Party be deemed to be in Default of its obligations
set forth herein where delays or failures to perform are caused by circumstances without the fault
and beyond the reasonable control of such Party, which circumstances shall include, without
limitation, fire/casualty losses; strikes; litigation; unusually severe weather; inability to secure
necessary labor, materials, or tools; delays of any contractor, subcontractor, or supplier;
unjustified acts or failure to act by City or other governmental agency; litigation by third parties
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challenging the validity or enforceability of the Agreement or this Covenant Agreement; and acts
of God (collectively, "force majeure"). Adverse market conditions or Owner's inability to
obtain financing or approvals to operate the Hotel shall not constitute events of force majeure. In
the event of a force majeure, the Party so delayed shall notify the other Party of the
circumstances and cause of the delay within a reasonable time period after commencement of the
delay, it shall keep the other Party informed at reasonable intervals upon request regarding the
status of its efforts to overcome said delay, and it shall exercise commercially reasonable
diligence to perform as soon as practicable thereafter.
Notices. Notices to be given by City or Owner hereunder may be delivered personally or
may be delivered by certified or registered mail, postage prepaid, or by reputable overnight
delivery service providing a delivery confirmation receipt with time and date of delivery, with
mailed notices to be addressed to the appropriate address(es) hereinafter set forth or to such other
address(es) that a Party may hereafter designate by written notice. If served by overnight
delivery service or certified mail, service will be considered completed and binding on the Party
served on the date set forth in the confirmation or certification receipt. If delivered personally,
service will be considered completed and binding on the Party served on the date of such
personal delivery.
If notice is to City: City of La Quinta
78-495 Calle Tampico
La Quinta, CA 92253
Attention: Frank J. Spevacek, City Manager
with a copy to: Rutan & Tucker, LLP
611 Anton Boulevard, Suite 1400
Costa Mesa, CA 92626
Attention: William H. Ihrke, City Attorney
If notice is to Owner: SilverRock Development Company, LLC
c/o The Robert Green Company
3551 Fortuna Ranch Road
Encinitas, CA 92024
Attention: Robert S. Green, Jr.
SilverRock Development Company, LLC
c/o Meriwether Companies
11999 San Vicente Blvd., Suite 220
Los Angeles, CA 90049
Attention: Graham Culp
with a copy to: Glaser Weil LLP
10250 Constellation Blvd., 19th Floor
Los Angeles, CA 90067
Attention: Saul Breskal
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City Approvals and Actions. City shall maintain authority of this Covenant Agreement
and the authority to implement this Covenant 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 Covenant 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 Covenant 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.
Further Acts. Each Parry agrees to take such further actions and to execute such other
documents as may be reasonable and necessary in the performance of its obligations hereunder;
reserving to City, however, its lawful discretionary and police power authority. Without limiting
the generality of the foregoing, upon the expiration or termination of the Operating Period, City
will execute and deliver such instruments as may be prepared by Owner at Owner's expense to
release the cloud upon title to the Site created by this Covenant Agreement; provided, however,
that any such document shall be in a form reasonably acceptable to the City Attorney of City.
Third Party Beneficiaries. With the exception of the specific provisions set forth in this
Covenant Agreement for the benefit of Mortgagees, there are no intended third party
beneficiaries under this Covenant Agreement and no such other third parties shall have any rights
or obligations hereunder.
Estoppel Certificates. Either Party to this Covenant Agreement shall, promptly (but
under all circumstances within ten (10) days) following the request of the other Party, execute,
acknowledge and deliver to or for the benefit of such other Party, a certificate certifying: (i) that
this Covenant Agreement is unmodified and in full force and effect (or, if there have been
modifications, that this Covenant Agreement is in full force and effect, as modified, and stating
the modifications), (ii) whether there are then existing any defaults on the part of the party
requesting the certificate known to the Party delivering the certificate in the performance or
observance of any agreement, covenant or condition hereof to be performed or observed and
whether any notice has been given of any default which has not been cured (and, if so, specifying
the same), and (iii) such other matters as may be reasonably requested. In the event City is
requested to provide more than one such certificate in any twelve (12) month period, Owner shall
reimburse City for all reasonable fees and costs City incurs from attorneys and consultants in the
preparation of the same.
Inspection of Books and Records. Not more than once per calendar quarter, City has the
right at all reasonable times during normal business hours and following at least ten (10)
Business Days prior written notice to Owner to inspect, on a confidential basis, the books,
records and all other documentation of Owner pertaining to its obligations under this Covenant
Agreement. Not more than once per year, Owner also has the right at all reasonable times during
normal business hours and upon ten (10) Business Days prior written notice to inspect the books,
records and all other documentation of City pertaining to its obligations under this Covenant
Agreement.
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Severability. If any term, provision, covenant or condition of this Covenant Agreement is
held in a final disposition by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions shall continue in full force and effect unless the rights
and obligations of the Parties have been materially altered or abridged by such invalidation,
voiding or unenforceability.
Standard of Approval. Any consents or approvals required or permitted under this
Covenant Agreement shall not be unreasonably delayed, conditioned or withheld, except where it
is specifically provided that a sole discretion standard applies.
Time of the Essence. Time is of the essence for each provision of this Covenant
Agreement of which time is an element.
[End — Signature page follows]
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IN WITNESS WHEREOF, the Parties have executed this Covenant Agreement to be
effective as of the Covenant Agreement Effective Date.
Date: .2014
ATTEST:
Susan Maysels, City Clerk
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
William H. Ihrke, City Attorney
Date: 92014
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6895841.10 a10/30/14
"City"
CITY OF LA QUINTA,
a California municipal corporation and charter
city
Frank J. Spevacek, City Manager
"Owner"
SILVERROCK DEVELOPMENT
COMPANY, LLC, a Delaware limited liability
company
By:
Its:
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
State of California )
County of Riverside )
On , before me,
(Seal)
(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
882/015610-0065 24
6895841.10 a10/30/14
(Seal)
EXHIBIT NO. 1
LEGAL DESCRIPTION OF SITE
[To be inserted]
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TABLE OF CONTENTS
Page
100. DEFINITIONS.....................................................................................................1
200. CONVEYANCE OF THE PROPERTY..............................................................11
201. Disposition of the Property.....................................................................11
202. Escrow...................................................................................................11
203.
Review of Title of Property.....................................................................15
204.
Title Insurance.......................................................................................16
205.
Conditions of Closing.............................................................................16
206.
Studies and Reports..............................................................................22
207.
Condition of the Property.......................................................................
24
208.
Installation of Luxury Hotel Fence; Implementation of Dust
ControlProgram....................................................................................28
209.
Master Site Infrastructure Improvements Land Use Approvals..............29
210.
Master Site Infrastructure Improvements Design Approvals..................29
211.
Approval of Financing (Master Site Infrastructure Improvements) .........30
212.
Access to Property for Planning, Entitlement, Design, and
FinancingPurposes...............................................................................
31
300. DEVELOPMENT OF THE PROJECT...............................................................32
301.
Scope of Development...........................................................................32
302.
Design Review.......................................................................................33
303.
Schedule of Performance......................................................................33
304.
Conditions to Develop............................................................................33
305.
Phasing of Development........................................................................35
306.
Insurance Requirements........................................................................39
307.
Indemnity...............................................................................................41
308.
Rights of Access During Construction....................................................42
309.
Compliance With Laws; Payment of Taxes............................................42
310.
Release of Construction Covenants......................................................44
311. Financing of the Project.........................................................................44
312. Developer CC&Rs.................................................................................47
313. Interference with Golf Course................................................................47
314. Pipeline Across Luxury Branded Residential Development ...................47
315. Temporary Clubhouse...........................................................................48
316. Golf Course Realignment.......................................................................48
317. Permanent Clubhouse Lease................................................................48
318. Compliance with State Construction General Permit .............................48
319. City Payment for Ahmanson Ranch House............................................49
400. USE AND OPERATION OF THE PROPERTY.................................................49
401.
Operation of the Project.........................................................................49
402.
Use in Accordance with Redevelopment Plan.......................................49
403.
Maintenance Covenants........................................................................
50
404.
Obligation to Refrain from Discrimination...............................................50
405.
Covenants Regarding Nondiscrimination...............................................50
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Page
406. Effect of Violation of the Terms and Provisions of this Agreement
After Completion of Construction........................................................... 51
407. Representations and Warranties...........................................................52
408. Rights of Access During Operation........................................................ 55
500. DEFAULTS AND REMEDIES...........................................................................55
501. Default Remedies..................................................................................55
502. Institution of Legal Actions..................................................................... 55
503. Termination Prior to the Close of the Phase 1 Escrow ..........................56
504. Termination Prior to Phase 2 Closing....................................................56
505. City Option to Acquire Plans.................................................................. 57
506. Option Agreement..................................................................................58
507. Acceptance of Service of Process......................................................... 58
508. Rights and Remedies Are Cumulative ................................................... 58
509. Inaction Not a Waiver of Default............................................................ 58
510.
Applicable Law.......................................................................................58
511.
Non -Liability of Officials and Employees of City.....................................58
512.
Attorneys' Fees......................................................................................59
600. GENERAL PROVISIONS.................................................................................
59
601.
Notices, Demands and Communications Between the Parties ..............
59
602.
Enforced Delay; Extension of Times of Performance ............................60
603.
Transfers of Interest in Property or Agreement......................................60
604.
Relationship Between City and Developer.............................................63
605.
City Approvals and Actions....................................................................
63
606.
Counterparts........................................................................... ........64
607.
Integration..............................................................................................
64
608.
Real Estate Brokerage Commission......................................................
64
609.
Titles and Captions................................................................................
64
610.
Interpretation..........................................................................................
64
611.
No Waiver..............................................................................................64
612.
Modifications..........................................................................................64
613.
Severability............................................................................................65
614.
Computation of Time.............................................................................65
615.
Legal Advice..........................................................................................
65
616.
Time of Essence....................................................................................
65
617.
Cooperation...........................................................................................65
618.
Conflicts of Interest................................................................................65
619.
Time for Acceptance of Agreement by City ............................................
66
620.
Attachments...........................................................................................66
ATTACHMENTS
Attachment No. 1 -
Legal Description of Property
Attachment No. 2 -
Site Map
Attachment No. 3 -
Schedule of Performance
Attachment No. 4 -
Form of Grant Deed
Attachment No. 5 -
Scope of Development
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Page
Attachment No. 6 -
Preliminary Budget
Attachment No. 7 -
Form of Option Agreement
Attachment No. 8 -
Release of Construction Covenants
Attachment No. 9 -
Form of Assignment and Assumption Agreement
Attachment No. 10 -
Memorandum of PSDA
Attachment No. 11 -
Form of TOT Sharing Agreement
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