2018-11-28 (10) Option Agrmt Phase 1B + PL Areas 7, 8, & 9 DOC # 2018-0464677DOC # 2018-0464677
FREE RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of La Quinta
78-495 Calle Tampico
La Quinta, CA 92253
Attn: Citv Manaaer
C,ll (�, re C 0 ba-ck A
11 /28/2018 03:02 PM Fees: $0.00
Page 1 of 25
Recorded in Official Records
County of Riverside
Peter Aldana
Assessor -County Clerk -Recorder
"This document was electronically submitted
to the County of Riverside for recording"
Receipted by: TERESA #134
Space Above This Line for Recorders Use
(Exempt from Recording Fee per Gov't Code § 6103 and 27383)
THIS OPTION AGREEMENT (PHASE 1B PROPERTY — PA 7, 8 & 9 ) ("PA 7, 8 & 9
Option Agreement") is made this & day of November, 2018 (the "Option Agreement Effective
Date"), by and between SILVERROCK PHASE I, 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."
A. Developer has entered into a Purchase, Sale, and Development Agreement dated
November 19, 2014 ("Original PSDA"), as amended by Amendment No. 1 to Purchase, Sale,
and Development Agreement dated October 29, 2015 ("Amendment No. 1 "") and by Amendment
No. 2 to Purchase, Sale, and Development Agreement dated on or about April 18, 2017
("Amendment No. 2") and by Amendment No. 3 to Purchase, Sale, and Development Agreement
dated on or about November 7�, 2018 ("Amendment No. 3") (collectively, and as may be further
amended, the "PSDA"), pursuant to which City agreed to convey to Developer approximately
301.71 acres of real property located at the southwest intersection of Avenue 52 and Jefferson
Street in the City of La Quinta, County of Riverside, State of California, described in the Original
PSDA as "Phase 1" or "Phase 1 Property" and "Phase 2" or the "Phase 2 Property", and as
modified and described in Amendment No. 2 as "Phase 1A"" and "Phase 1A Property" and
"Phase 1 B" and "Phase 113 Property" and Phase 1 C" and "Phase 1 C Property" and
"Phase 1 D" and "Phase 1 D Property." The term "PA 7, 8 & 9 Property" for purposes of this PA
7, 8 & 9 Option Agreement consists collectively of only that portion of the "Phase 1 B Property"
consisting of Parcels 10, 11, and 12 of Parcel Map 37207 per map filed in Book 242, pages 72
through 87 inclusive, of Parcel Maps, in the official records in the recorder's office of the County
Recorder ("Recorder's Office") of Riverside County, State of California, and sometimes
collectively referred to herein as "PA 7, 8 and 9". The PA 7, 8 & 9 Property is legally described in
Exhibit "A", which is attached hereto and incorporated herein by this reference. Unless otherwise
expressly defined in this PA 7, 8 & 9 Option Agreement, capitalized terms used in this PA 7, 8 &
9 Option Agreement shall have the meanings ascribed thereto in the PSDA.
B. Pursuant to the PSDA, Developer has agreed to construct on the PA 7, 8 & 9
Property a mixed use village and a resort residential village and associated amenities, as more
particularly described in the PSDA (collectively, the "Project").
C. The Project shall be constructed on the PA 7, 8 & 9 Property in accordance with
all of the requirements set forth in the PSDA.
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D. As a condition to City's conveyance of the Phase 1 B Property to Developer,
Developer was required to grant to City (i) an option to repurchase the PA 7, 8 & 9 Property, or
certain portions thereof, from Developer if Developer (a) fails to commence, continuously proceed
with, or complete construction of the Master Site Infrastructure Improvements, subject to the
Master Site Infrastructure Improvements Phasing Plan (defined in Amendment No. 3) (the "MSI
Phasing Plan"), 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 PA 7, 8 & 9 Property, or any portion
thereof, in violation of the terms of the PSDA; and (ii) a right of first offer to purchase the PA 7, 8
& 9 Property, or any portion thereof, if (1) City's option under (i)(a), (i)(b), or (i)(c) above has been
triggered, (II) City did not timely exercise the applicable option, (III) the default which gave rise to
City's option has not been cured, and (IV) Developer has determined to sell or otherwise transfer
the PA 7, 8 & 9 Property, all as further described herein. In further explanation of Options I, 11, III,
IV and V, and corresponding Rights of First Offer herein contained, once a phase of the Master
Site Infrastructure Improvements has been completed in accordance with the MSI Phasing Plan
and accepted by the City (and, if applicable, any other governmental agency) in accordance with
the Master Site Infrastructure Improvements Land Use Approvals issued to Developer pursuant
to Section 209 of the Original PSDA, then the Parcels upon which such Master Site Infrastructure
Improvements have been completed will no longer be subject to Options 1 and II (and
corresponding Rights of First Offer) of this Option Agreement except with respect to the
commencement, continuation and completion of Project Components on said Parcels; and then,
and once the Project Components have been completed in accordance with the Schedule of
Performance attached to Amendment No. 3 and accepted by the City by the recording of a
Release of Construction Covenants in accordance with Section 310 of the Original PSDA as
amended by Amendment No. 3 and the form attached thereto, the Parcels upon which such
Project Components are located will no longer be subject to Options III, IV, and V (and
corresponding Rights of First Offer) in this Option Agreement.
E. Unless otherwise expressly defined in this PA 7, 8 & 9 Option Agreement,
capitalized terms used in this PA 7, 8 & 9 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:
Option I - Failure to Commence Construction of PA 7. 8 & 9 Master Site
Infrastructure Improvements
Subject to Section 7(f) hereof, Developer hereby grants to City an exclusive option
("Option I") to repurchase any or all of the Parcels of the PA 7, 8 & 9 Property that remain subject
to this Option Agreement as of date the Option I is exercised (the "Option I Property"), if
Developer fails to commence construction of the PA 7, 8 & 9 Master Site Infrastructure
Improvements in accordance with the MSI Phasing Plan. For the purposes of this Section 1, the
term "commence construction" shall mean the start date in accordance with the MSI Phasing
Plan; provided, however, if any portion of Master Site Infrastructure Improvements is to be
performed by or on behalf of the City, the start date in the MSI Phasing Plan shall be contingent
upon the City timely commencing, continuing and completing such portion of the Master Site
Infrastructure Improvements for which the City is responsible, and any delay in commencement,
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continuation or completion not caused by Developer and caused by the City shall serve to
reasonably extend the applicable start date under the MSI Phasing Plan.
In the event of Developer's failure to commence construction of the PA 7, 8 & 9 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 I
City shall exercise Option I by giving written notice to Developer ("City's Notice of Option
I Exercise"), in accordance with Section 8 of this PA 7, 8 & 9 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 only with respect to Developer's failure to commence construction
of a phase of Master Site Infrastructure Improvements by the identified start date in the MSI
Phasing Plan, but no other phase, and shall not constitute a waiver by City of Developer's breach
of its obligation to commence construction of any other phase of the Master Site Infrastructure
Improvements for which the start date has not yet occurred as of the date of expiration of the
Option 1 Period for the phase of Master Site Infrastructure Improvements deemed waived, nor
shall such failure constitute a waiver by City of any remedies City may have under the terms of
the PSDA or under any other agreement for Developer's failure to timely commence construction
of the Master Site Infrastructure Improvements pursuant to the start dates identified in the MSI
Phasing Plan.
(b) Repurchase Price - Option I
City's repurchase price for the PA 7, 8 & 9 Property ("Option I Repurchase Price"), shall
be the sum of (i) One Dollar ($1.00), (ii) one hundred percent (100%) of Developer's PA 7, 8 & 9
MSI Construction Costs incurred on or after this Option Agreement Effective Date, and (iii) the
cost of any Plans City elects to purchase pursuant to Section 7(I) below with respect to (a) the PA
7, 8 & 9 Master Site Infrastructure Improvements, and/or (b) the Project Components comprising
the Project.
For purposes of this Section 1, the term "Developer's PA 7, 8, & 9 MSI Construction
Costs" shall mean the construction costs actually incurred by Developer for construction of the
Master Site Infrastructure Improvements on the PA 7, 8 & 9 Property on or after this Option
Agreement Effective Date to the date of the Developer's receipt of City's Notice of Option I
Exercise, as determined by an independent audit (the "PA 7, 8 & 9 MSI Construction Cost
Audit"), performed by an independent auditor who shall be selected by City and be a partner at
a nationally recognized firm of accountants with experience in auditing large-scale, mixed use
construction projects (the "Auditor"), which costs shall consist only of: (1) the amount(s) paid by
Developer to the contractor or contractors performing the construction, (11) reasonable inspection,
supervision, and testing costs paid by Developer to independent third party engineers, architects,
or consultants in conjunction with said construction, (III) any amounts paid by Developer to
material suppliers and equipment suppliers in connection with the construction (but, subject to the
immediately preceding paragraph, not including any costs, fees, charges, or profits allocated to
Developer's own internal administrative, payroll, or overhead expenses or to any person or entity
affiliated with Developer), and (IV) if the PA 7, 8 & 9 Master Site Infrastructure Improvements work
is completed and accepted by City, then amounts that include design plans (such as architectural
renderings and drawings) used by Developer to complete the construction of the PA 7, 8 & 9
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Master Site Infrastructure Improvements work, as applicable. In explanation of clause (IV) in the
preceding sentence, Developer's PA 7, 8, & 9 MSI Construction Costs shall not include any design
plans Developer may have contracted for or obtained if the PA 7, 8 & 9 Master Site Infrastructure
Improvements, as applicable, which are not completed as evidenced by the City accepting all
work for the PA 7, 8 & 9 Master Site Infrastructure Improvements. Developer shall promptly
provide City and the Auditor with all records and documentation necessary for the Auditor to
perform the PA 7, 8 & 9 MSI Construction Cost Audit.
2. Option II - Failure to Continuously Proceed With Construction of the PA 7, 8, & 9
Master Site Infrastructure Improvements or to Complete Construction of the Master
Site Infrastructure Improvements
Developer hereby grants to City an exclusive option ("Option II") to repurchase any or all
of the Parcels of the PA 7, 8 & 9 Property that remain subject to this PA 7, 8 & 9 Option Agreement
as of the date that Option II is exercised (the "Option II Property") if, after commencement of
construction of the PA 7, 8, & 9 Master Site Infrastructure Improvements, Developer fails to
continuously proceed with construction of the PA 7, 8, & 9 Master Site Infrastructure
Improvements in accordance with the MSI Phasing Plan, or to complete the PA 7, 8 & 9 Master
Site Infrastructure Improvements in accordance with the MSI Phasing Plan, as evidenced by
acceptance of such PA 7, 8 & 9 Master Site Infrastructure Improvements by the La Quinta City
Council, within the applicable time period(s) set forth in the MSI Phasing Plan to finish such phase
of Master Site Infrastructure Improvements (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; provided, however, if any portion of Master Site
Infrastructure Improvements is to be performed by or on behalf of the City, such continuous
construction by Developer and any such Master Site Infrastructure Improvements Phase
Completion Date shall be contingent upon the City timely commencing, continuing and completing
such portion of the Master Site Infrastructure Improvements for which the City is responsible, and
any delay in continuation or completion not caused by Developer and caused by the City shall
serve to reasonably extend the 30-day interruption period and/or the Master Site Infrastructure
Improvements Phase Completion Date as applicable under the MSI Phasing Plan.
In the event of Developer's failure to continuously proceed with construction of the PA 7,
8 & 9 Master Site Infrastructure Improvements, or to complete construction of the 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 PA 7, 8 & 9 Property for which
construction of the Project Component(s) designated pursuant to the PSDA to be constructed
thereon has commenced. Such portions are addressed in Section 4 below.
(a) Exercise of Option II
City shall exercise Option II by giving written notice to Developer ("City's Notice of
Option li Exercise"), in accordance with Section 8 of this PA 7, 8 & 9 Option Agreement, prior to
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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 PA 7, 8 & 9 Master Site Infrastructure
Improvements that gave rise to Option II or of Developer's failure to complete construction of the
PA 7, 8 & 9 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 Master
Site Infrastructure Improvements or to complete construction of the 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 Master Site
Infrastructure Improvements or to complete construction of the Master Site Infrastructure
Improvements by the Master Site Infrastructure Improvements Phase Completion Deadline (as
applicable).
(b) 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 PA 7, 8 & 9 MSI Construction
Costs", and (ii) the cost of any Plans City elects to purchase pursuant to Section 7(I) below with
respect to (a) the Master Site Infrastructure Improvements designated pursuant to the PSDA to
be constructed on the Option II Property, and/or (b) the Project Component(s) designated
pursuant to the PSDA to be constructed on the Option II Property.
For purposes of this Section 2, the term "Developer's PA 7, 8 & 9 MSI Construction
Costs" shall mean the construction costs actually incurred by Developer for construction of the
Master Site Infrastructure Improvements on the Option II Property on or after this Option
Agreement Effective Date to the date of the Developer's receipt of City's Notice of Option II
Exercise, as determined by an independent audit (the "Option II PA 7, 8 & 9 MSI Construction
Cost Audit"), performed by an independent auditor who shall be selected by City and be a partner
at a nationally recognized firm of accountants with experience in auditing large-scale, mixed use
construction projects (the "Auditor"), which costs shall consist only of: (1) the amount(s) paid by
Developer to the contractor or contractors performing the construction, (11) 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 Master Site Infrastructure 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 Option II MSI Construction Cost
Audit. In the event that there are any outstanding mortgages or deeds of trust that have been
approved by City pursuant to Section 311.1 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.
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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 any or all
of the Parcels of the PA 7, 8 & 9 Property that remain subject to this PA 7, 8 & 9 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 on or prior to the start date for
commencement of such Project Component set forth in the Schedule of Performance attached to
Amendment No. 3. 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 PA 7, 8 & 9 Property for which
construction of the Project Component(s) designated pursuant to the PSDA to be constructed
thereon has commenced. Such portions are addressed in Section 4 below.
(a) Exercise of Option III
City shall exercise Option III by giving written notice to Developer ("City's Notice of
Option III Exercise"), in accordance with Section 8 of this PA 7, 8 & 9 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 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) 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 PA 7, 8 & 9 MSI Construction
Costs", and (ii) the cost of any Plans City elects to purchase pursuant to Section 7(1) below with
respect to all or any portion of (a) the 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 PA 7, 8, & 9 MSI Construction
Costs" shall mean the construction costs actually incurred by Developer for construction of the
Master Site Infrastructure Improvements on the Option III Property on or after this Option
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Agreement Effective Date to the date of Developer's receipt of City's Notice of Option III Exercise,
as determined by an independent audit (the "Option III MSI Construction 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 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 Option III MSI Construction 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.
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 any or all
of the Parcels of the PA 7, 8 & 9 Property that remain subject to this PA 7, 8 & 9 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 the time period for completion of such Project
Component(s) set forth in the Schedule of Performance attached to Amendment No. 3 as
evidenced by City's issuance of a certificate of occupancy for such 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: (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 the time period for completion of such Project Component set forth in the Schedule
of Performance attached to Amendment No. 3 for a Resort Residential Dwelling Unit within the
Resort Residential Village or Promenade Mixed -Use Village, as applicable.
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
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DOC #2018-0464677 Page 8 of 25
obligated to exercise, the 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 PA 7, 8 & 9 Option Agreement to the contrary, but subject
to Section 7(e) below, (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.
(a) Exercise of Option IV
City shall exercise Option IV by giving written notice to Developer ("City's Notice of
Option IV Exercise"), in accordance with Section 8 of this PA 7, 8 & 9 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 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 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 Master Site Infrastructure Improvements constructed on the
Option IV City Acquisition Property on or after this Option Agreement Effective Date to the date
of Developer's receipt of City's Notice of Option IV Exercise, and (II) the portion of the Project
Component(s) designated pursuant to the PSDA to be constructed on the Option IV City
Acquisition Property to the date of Developer's receipt of City's Notice of Option IV Exercise, 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
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DOC #2018-0464677 Page 9 of 25
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 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 PA 7, 8 & 9 Property, or Portion Thereof, Prior to
Completion of Project
Developer hereby grants to City an exclusive option ("Option V") to repurchase any or all
of the Parcels of the PA 7, 8 & 9 Property that remain subject to this PA 7, 8 & 9 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 PA 7, 8 & 9
Property or portion thereof in violation of the terms of the PSDA.
In the event of Developer's transfer of the PA 7, 8 & 9 Property or any portion thereof in
violation of the PSDA (an "Unauthorized Transfer") and such Unauthorized Transfer is not cured
within the cure period provided 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 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
V 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 PA 7, 8 & 9 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.
(a) Exercise of Option V
City shall exercise Option V by giving written notice to Developer ("City's Notice of
Option V Exercise"), in accordance with Section 8 of this PA 7, 8 & 9 Option Agreement, prior to
the expiration of the Option V Period, which notice shall set forth with specificity the portion of the
PA 7, 8 & 9 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 PA 7, 8 & 9 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 PA 7, 8 & 9 Property or portion thereof.
(b) Repurchase Price - Option V
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DOC #2018-0464677 Page 10 of 25
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
Master Site Infrastructure improvements to be constructed 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 Master Site Infrastructure Improvements, and/or (II) the
Project Components comprising the Project.
(ii) In the event Developer has commenced construction of the 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(l) below with respect to all or any portion of the Master Site Infrastructure
Improvements, and/orthe Project Components comprising the Project; and (2) if City is authorized
hereunder and 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 PA 7, 8 & 9
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, Option III, or Option IV 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 any or all of the Parcels of the PA 7, 8 & 9 Property, that remain subject to this PA 7, 8
& 9 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 PA 7, 8 & 9 Option Agreement
and Developer's default that gave rise to Option I, Option 11, Option III, Option IV, or Option V (as
applicable) has not been cured, and (ii) Developer has determined to sell or otherwise transfer
the PA 7, 8 & 9 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 PA 7, 8 & 9
Property that is not included in "Developer's Sale Notice" (as that term is defined in Section 6(a)
below, and (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 11, Option
III, Option IV, or Option V (as applicable). 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".
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(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 PA 7, 8 & 9
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 11, Option III, or Option
IV 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 Offer Property, in
accordance with the process outlined in subparagraph (a) above and this subparagraph (b).
(c) Transfer Restrictions of PSDA
Notwithstanding any of the provisions in Option V (Section 5 above) or this Section 6 to
the contrary, nothing in this Option Agreement is intended to or shall have the effect of waiving
the transfer restrictions set forth in the PSDA, any of City's rights related thereto in the PSDA or
any other agreements between City and Developer relating to the PSDA Property, 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 11, Option 111, 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 PSDA Property.
(b) Developer's Right to Cure Certain Defaults. Notwithstanding anything in
this PA 7, 8 & 9 Option Agreement to the contrary (A) City shall not be entitled to exercise Option
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DOC #2018-0464677 Page 12 of 25
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 and (B) City shall not be entitled to
exercise Option V until City has provided a written notice to Developer regarding an Unauthorized
Transfer (an "Option V Triggering Event") and Developer has not, within thirty (30) days after
receipt of such notice, cured, corrected or remedied such Option V Triggering Event.
(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 (including, but not
limited to, an Option V 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 (except
in the event of an Option V Triggering Event, in which case the cure period shall be thirty (30)
days), 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.
(d) No City Obligation: Purchase of Whole Project Components.
0) Notwithstanding any covenant, term, or provision in this Option
Agreement to the contrary, City shall not be obligated to exercise Option I, Option ll, Option III,
Option IV, Option V, or City's Right of First Offer.
(ii) Notwithstanding anything to the contrary in this PA 7, 8 & 9 Option
Agreement, if City elects to purchase any part of a Project Component pursuant to Option IV,
Option V, or City's Right of First Offer, then City shall be obligated to purchase all of such Project
Component that remains subject to this PA 7, 8 & 9 Option Agreement as of date of such election.
(e) Release of PA 7, 8 & 9 Option Agreement Upon Completion of Project
Component. 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's issuance
of a Release of Construction Covenants for such Project Component shall act to automatically
release this PA 7, 8 & 9 Option Agreement with respect to said Project Component and the real
property on which such Project Component is designated pursuant to the PSDA to be constructed
with no further action required by City or Developer; provided, however, upon request of
Developer, City shall execute and record a termination and release of this PA 7, 8 & 9 Option
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DOC #2018-0464677 Page 13 of 25
Agreement. Notwithstanding the foregoing to the contrary, 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 PA 7, 8 & 9 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 PA 7, 8 & 9 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.
(f) 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 602 of the PSDA, such that the time by which Developer is required thereunder to
commence construction of the Master Site infrastructure Improvements, complete construction of
the 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 PA 7, 8 & 9
Property, or complete construction of one or more Project Components designated pursuant to
the PSDA to be constructed on a portion of the PA 7, 8 & 9 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 Master Site Infrastructure Improvements, complete construction
of the 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 PA 7, 8 & 9
Property, or complete construction of one or more Project Components designated pursuant to
the PSDA to be constructed on a portion of the PA 7, 8 & 9 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 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 provide City with a copy of any Notice
of Default (each, a "Notice of Default") recorded against the title to the PA 7, 8 & 9 Property in
the Official Records of the County of Riverside, State of California (the "Official Records")
concurrently with its delivery of such Notice of Default to Developer; (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, and
(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 delivers written notice of the default to City and
Developer pursuant to clause (i) above. 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 PA 7, 8 & 9 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.
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DOC #2018-0464677 Page 14 of 25
(h) City's and City's Assignee's Investigation of PA 7, 8 & 9 Property.
(i) City shall have a period of forty-five (45) days, commencing on the
date of an event that triggers City's ability to exercise any of Option I, Option Il, Option III, Option
IV, Option V, or City's Right of First Offer, to enter upon the PA 7, 8 & 9 Property (or applicable
portion thereof) to conduct any tests, inspections, investigations, or studies of the condition of the
PA 7, 8 & 9 Property (or applicable portion thereof) (the "Option Agreement Tests and
Investigations"). Developer shall permit City access to the PA 7, 8 & 9 Property (or applicable
portion thereof) for such purposes. City's obligation to close "Escrow" (as that term is defined in
Section 7(i) 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 PA 7, 8
& 9 Property (or applicable portion thereof).
(ii) In the event City assigns its rights under this PA 7, 8 & 9 Option
Agreement City's assignee shall have the right to enter upon the PA 7, 8 & 9 Property (or
applicable portion thereof) during the period commencing on the date of City's assignment of this
PA 7, 8 & 9 Option Agreement to said assignee and ending on the "Closing Date" (as that term
is defined in Section 7(i) below) to conduct any PA 7, 8 & 9 Option Agreement Tests and
Investigations elected by the assignee. Developer shall permit City's assignee access to the PA
7, 8 & 9 Property (or applicable portion thereof) for such purposes, provided that, prior to any
entry upon the PA 7, 8 & 9 Property by such assignee or its employees, agents, representatives
or consultants, City shall cause such assignee to provide Developer with evidence that it has a
liability insurance policy that names Developer as an additional insured, which policy shall have
limits of coverage and be on terms reasonably acceptable to Developer. City's obligation to close
"Escrow" (as defined in Section 7(i) below) shall be subject to City's assignee's approval of any
environmental and other site testing conducted by said assignee in said assignee's discretion.
City shall cause said assignee to indemnify, defend, and hold harmless Developer and its officers,
directors, shareholders, employees, agents, and representatives from and against all claims,
liabilities, or damages, and including expert witness fees and reasonable attorney's fees and
costs, arising out of any such testing, inspection, or investigatory activity on the PA 7, 8 & 9
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
PA 7, 8 & 9 Property to be acquired by City pursuant to this PA 7, 8 & 9 Option Agreement.
Escrow shall be deemed opened on the date that a fully executed copy of this PA 7, 8 & 9 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
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DOC #2018-0464677 Page 15 of 25
Grant Deed") is recorded in the Official Records. Possession of the portions of the PSDA
Property conveyed to the City pursuant to this PA 7, 8 & 9 Option Agreement shall be delivered
to City at the Close of Escrow.
(iii) This PA 7, 8 & 9 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 PA 7, 8 & 9 Option Agreement and Escrow Holder's
standard instructions, this PA 7, 8 & 9 Option Agreement shall prevail.
(iv) The Escrow shall be subject to City's approval of a then -current
preliminary title report. Any monetary lien(s) or encumbrance(s) shown on such preliminary title
report that is (are) created concurrent with or after the close of escrow that conveyed the Phase
1A Property or Phase 1B 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 1A Property or Phase 1B 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 PA 7, 8 & 9 Property (or applicable
portion thereof subject to the Escrow) 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 (the last two are referred to herein as the "Right of First Offer
Repurchase Price"); (ii) one-half (1/2) of the escrow fees; (iii) the portion of the title insurance
premium attributable to any extra or extended coverages, or any additional charge resulting from
City's request that the amount of insurance be higher than the applicable of the Option 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 PA
7, 8 & 9 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 PA 7, 8 & 9 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").
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DOC #2018-0464677 Page 16 of 25
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
PA 7, 8 & 9 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 PA 7, 8 & 9 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 PA 7, 8 & 9 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, Option IV or Option V City acquires the PA 7, 8 & 9 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, the provisions of this PA 7, 8 & 9
Option Agreement shall apply only to those portions of the PA 7, 8 & 9 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, the Option IV Repurchase Price or
the Option V 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 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 PA 7,
8 & 9 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.
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DOC #2018-0464677 Page 17 of 25
(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
11, Option III, Option IV, or Option V (as applicable) to acquire the PA 7, 8 & 9 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 PA 7, 8 & 9 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 PA 7, 8 & 9 Property, or applicable portion thereof, by 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 11, Option III, Option IV, or Option V (as applicable). If
City does not exercise Option I, Option 11, 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: SilverRock Development Company, LLC
c/o The Robert Green Company
3551 Fortuna Ranch Road
Encinitas, California 92024
Attn: Robert S. Green, Jr.
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DOC #2018-0464677 Page 18 of 25
Notices personally delivered or delivered by document delivery service shall be deemed
effective upon receipt. Notices mailed in the manner provided above shall be deemed received
and 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 PA 7, 8 & 9 Option
Agreement. This PA 7, 8 & 9 Option Agreement shall be governed by, and construed under, the
internal laws of the State of California, without regard to conflict of law principles. In addition to
any other rights or remedies and subject to the restrictions otherwise set forth in this PA 7, 8 & 9
Option Agreement, including without limitation in this Section 9, 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 PA 7, 8 & 9 Option Agreement, to obtain declaratory or
injunctive relief, or to obtain any other remedy consistent with the purposes of this PA 7, 8 & 9
Option Agreement. City shall also have the right to pursue damages for Developer's defaults but
in no event shall Developer be entitled to recover damages of any kind from City, including
damages for economic loss, lost profits, or any other economic or consequential damages of any
kind. The rights and remedies of the Parties are cumulative and the exercise by either Party of
one or more of such rights or remedies shall not preclude the exercise by it, at the same or
different times, of any other rights or remedies for the same default or any other default by the
other Party. Service of process on City shall be made in the manner required by law for service
on a public entity. Service of process on Developer shall be made in any manner permitted by
law and shall be effective whether served within or outside of California.
If either Party to this PA 7, 8 & 9 Option Agreement is required to initiate or defend, or is
made a party to, any action or proceeding in any way connected with this PA 7, 8 & 9 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 PA 7, 8 & 9 Option
Agreement, and thereafter entering into an assignment and assumption agreement with such
assignee.
11. City Approvals and Actions
City shall maintain authority of this PA 7, 8 & 9 Option Agreement and the authority to
implement this PA 7, 8 & 9 Option Agreement through the City Manager. The City Manager shall
have the authority to make approvals, issue - interpretations, waive provisions, negotiate and
enter into amendments to this PA 7, 8 & 9 Option Agreement and/or negotiate and enter into
implementing agreements or documents on behalf of City so long as such actions. do not
materially or substantially change the business terms of this PA 7, 8 & 9 Option Agreement, or
4839-5818-8153.3 -18-
DOC #2018-0464677 Page 19 of 25
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.
12. Nonliabillty 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 PA 7, 8 & 9 Option Agreement.
13. Nondiscrimination
Developer covenants for itself, its heirs, executors, assigns, and all persons claiming
under or through them, that there shall be no discrimination against any person on account of
race, color, creed, religion, sex, marital status, national origin, ancestry, or any other protected
class under the laws of the United States, California, and any applicable local jurisdiction with
respect to this PA 7, 8 & 9 Option Agreement or use of the PA 7, 8 & 9 Property.
14. Interpretation
The terms of this PA 7, 8 & 9 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 PA 7, 8 & 9 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 PA 7, 8 & 9 Option Agreement.
15. Entire Agreement
This PA 7, 8 & 9 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 PA 7, 8 & 9 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.
16. Counterparts
This PA 7, 8 & 9 Option Agreement may be executed in counterparts, each of which, after
all the Parties hereto have signed this PA 7, 8 & 9 Option Agreement, shall be deemed to be an
original, and such counterparts shall constitute one and the same instrument.
17. Severability
In the event any section or portion of this PA 7, 8 & 9 Option Agreement shall be held,
found, or determined to be unenforceable or invalid for any reason whatsoever, the remaining
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DOC #2018-0464677 Page 20 of 25
provisions shall remain in effect, and the Parties hereto shall
reasonably necessary and available to them to effectuate th
[ Signature page follows ]
e
4839-5818-8153.3 -20-
DOC #2018-0464677 Page 21 of 25
IN WITNESS WHEREOF, the Parties have executed this PA 7, 8 & 9 Option Agreement
as of the date first above written.
Date: /V 0 Uy a 20_6
"DEVELOPER"
SILVERROCK PHASE I, LLC,
a Delaware limited liability company
By: The Robert Green Company,
a California corporation
Its: Manager—'1 11
By:
Name: Robert S. Gr n, Jr.
Its: President andZhief Executive Officer
[Signature page continues next page]
4839-5818-8153.3 -21-
DOC #2018-0464677 Page 22 of 25
"CITY"
CITY OF LA QUINTA, aCnia municipal
Corporation apd cha ity
ATTEST: 04�t/
City Clerk
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
City Attorney
4839-5818-8153.3 -22-
DOC #2018-0464677 Page 23 of 25
ACKNOWLEDGMENT
A notary public or other officer completing this
ce,, incate verifies only the identity of the individual!
who signed the document to which this certificate is
I attached, and not the truthfulness, accuracy, or
valicit�y of that document.
State of California CCU—nty of San, Diego
1Jo%rr ben 5� poi 8 before me. Diana L. Lytle, Notary Public
;insert name and title of, the officer)
personally appeared ROber+ 4, gnfm. \Tr
110 proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) isiare
subscribed to the within instrument and acknowledged to me that he/shelthey 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 behaif 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
?aragraph is true and correct.
*My
DIANAL. LYTLE
i?, `SS nd n i — Notary Public - California
. lIT NT.,� my hay. a,,c o�:iciaSeal. < San Diego County
Commission # 2160643
Comm. Expires Aug 19, 2020
DOC #2018-0464677 Page 24 of 25
A Notary Public or other officer completing this certificate verifies only the identity of the individual who
signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of
that document.
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On \v �� 4/VW Q�(2. �C� 0 , before me A�
(insert name and title of thb officer)
oersonally aooeared �Y1R/1% MA)V- whn nrnvPri to mP
on the basis of satisfactory evidence to be the pLarson whose name is subscribed to the within
instrument and acknowledged to me that he/sloe executed the same in hisA;ef authorized
capacity, and that by his/#eta 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.
MONIKA RADEVA
WITNESS y han and o IClaI seal. Notary Public • California
z =� Riverside County i
Z Commission # 2168979
Signature My Comm. Expires Oct 22, 2020
(Seal)
A Notary Public or other officer completing this certificate verifies only the identity of the individual who
signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of
that document.
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On before me
(insert name and title of the officer)
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)
4839-5818-8153.3 -23-
DOC #2018-0464677 Page 25 of 25
EXHIBIT "A"
LEGAL DESCRIPTION OF THE PA 7, 8 & 9 PROPERTY
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF LA QUINTA IN
THE COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
PA 7, 8, & 9 Property:
PARCELS 10, 11, AND 12 OF PARCEL MAP NO. 37207, IN THE CITY OF LA QUINTA,
COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, FILED IN BOOK 242, PAGES 72
THROUGH 87 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY.
4839-5818-8153.3 -1-