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2021-10-05 Staff Report - SRR PSDA Amend 4 with SDC City of La Quinta CITY COUNCIL MEETING: October 5, 2021 STAFF REPORT AGENDA TITLE: APPROVE AMENDMENT NO. 4 AND RELATED DOCUMENTS TO PURCHASE, SALE, AND DEVELOPMENT AGREEMENT WITH SILVERROCK DEVELOPMENT COMPANY, LLC. FOR SILVERROCK RESORT, AND REQUIRE DEVELOPER TO PRESENT MONTHLY PROGRESS UPDATES AT COUNCIL MEETINGS UNTIL FRAMING OF LUXURY HOTEL GUEST ROOMS IS COMPLETE RECOMMENDATION Approve Amendment No. 4 and related documents to the Purchase, Sale, and Development Agreement with SilverRock Development Company, LLC. for SilverRock Resort; authorize the City Manager and City Attorney to (i) make minor revisions and additions as necessary that do not substantively change the business terms, and (ii) execute and implement said agreements and other documents necessary; and require developer to present monthly progress updates at council meetings until framing of luxury hotel guest rooms is complete. EXECUTIVE SUMMARY  In November 2014, Council approved a Purchase, Sale, and Development Agreement (PSDA) with SilverRock Development Company (SDC).  In May 2017, SDC initiated the work to realign golf course holes to accommodate the luxury hotel and improve the golf experience; this work was completed in November 2017.  Amendment No. 3 was executed in November 2018 primarily to update schedule and project phasing to enable closing of the $212 million construction financing with Mosaic Real Estate (Mosaic).  In April 2019, SDC commenced mass grading of the site in preparation for vertical development; this work was completed in November 2019.  In March 2020, just after the COVID-19 pandemic started, SDC provided the first of several updates to Council including notification that they would be delaying the start of vertical construction as a result of the BUSINESS SESSION ITEM NO. 4 147 pandemic but that both SDC and their financing partner Mosaic are committed to the successful completion of SilverRock Resort.  On April 15, 2020, SDC provided the City with a Force Majeure notice related to impacts to the development schedule associated with the COVID-19 pandemic.  In April 2021, the City issued a notice of default to SDC, per the terms of the Agreement which identified completion of the two hotels, spa, conference facility, and permanent golf clubhouse by December 31, 2020.  September 2021, SDC provided verification of revised capitalization.  Amendment No. 4 would modify the development schedule; decrease the amount of Transient Occupancy Tax (TOT) receipts available by 5% for the 15-year term when calculating any rebate for continuous operation of the hotels, once opened, under TOT Covenant Agreements; identify additional project milestones; increase the purchase price on “Future Resort Property“ (Option Property) for missing milestones; and require hotel operator to manage all resort residential short-term vacation rentals.  The Robert Green Company must personally guaranty to the City the completion of 100% of the Master Site Infrastructure Improvements for which SDC is responsible for completing. FISCAL IMPACT The development of SilverRock Resort will generate revenue for the City and the greater community. As the project is developed, the City will receive an estimated $7 million of Developer Impact Fees (DIF); annual property tax revenue that will continue to increase as the property is improved and sold (estimated to be over $640,000 annually within 10 years); sales tax generated through food, beverage and retail sales (estimated to exceed $580,000 annually within 10 years); and net TOT revenue from hotels and resort residences (estimated to exceed $2 million annually within 10 years). Furthermore, it is estimated that the project will generate 1,750 temporary construction jobs and 465 full time permanent operational jobs at the resort. The average Montage/Pendry employee is among the highest paid in the hospitality industry and earns on average $41,000 annually. This equates to just over $19,000,000 of employment opportunity introduced to the community. Finally, the City will be relieved from funding operational deficits associated with the golf course, dust control and parkway maintenance costs averaging approximately $600,000 annually. 148 BACKGROUND/ANALYSIS It has been nearly three years since Amendment No. 3 with SDC was executed. In this timeframe, SDC has mass graded the site, finalized construction documents, acquired construction estimates, and paused construction as a result of the COVID-19 pandemic and cost escalations. Material and supply chain shortages, increased demand, and rising material and labor costs created a nearly $80 million dollar financing gap to fully capitalize the project. On April 7, 2021, the City issued a notice of default to SDC outlining that Council would need to approve revised financing, schedule and an amendment to the PSDA, as amended, in order for the default to be cured. Since this default notice was issued, SDC has worked diligently and in good faith to move the project forward and into vertical construction. Grading is complete on many of the project areas and building permits and construction has commenced for the luxury hotel, spa, shared conference facility, clubhouse and model luxury branded residences. Staff has concluded negotiations with SDC on the revised schedule that includes additional project milestones, updated start and completion dates of project components as well as new and revised terms and conditions as outlined below. Additionally, SDC has provided evidence of executed revised capitalization documents for the nearly $80 million funding gap mentioned above, along with a letter from Mosaic investors, the projects primary lender expressing their continued $212 million lending commitment to the project, and support for revisions to the capital structure. Updated Schedule of Performance Adjustments to dates for master site infrastructure construction and start/completion of the hotels are as follows:  Golf club and practice range shall start on or before 8/30/21 and shall be finished before 11/1/22 to precede the luxury hotel opening.  Golf bungalows shall start on or before 7/31/26 and shall be finished before 7/31/28  Construction of luxury hotel, the conference and shared services facility and permanent clubhouse shall start on or before 8/30/21 and shall be finished before 9/30/23  Construction of the lifestyle hotel shall start on or before 9/30/22 and shall be finished before 7/31/24 149 The chart below details Amendment No. 3 and proposed Amendment No. 4 schedule of performance dates. The Amendment No. 4 changes provide time extensions to complete major milestones, most notably a three and a half year extension to complete the lifestyle hotel. This is 10 months after the completion of the luxury hotel which was previously scheduled to finish concurrently. The staggering of completion is logistically necessary given the tremendous amount of work occurring onsite, and the current industry demand for labor and materials. Project Component Amendment No. 3 Amendment No. 4 Start Finish Start Finish Luxury Hotel vertical construction 8/26/19 12/31/20 8/30/21 9/30/23 Lifestyle Hotel Vertical construction 8/1/19 12/31/20 9/30/22 7/31/24 Conference & Shared Services 8/1/19 12/31/20 8/30/21 9/30/23 Golf Clubhouse & Practice Range 10/31/19 12/31/20 8/30/21 11/1/22 Revised Business Terms Amendment No. 4 includes the following business terms:  Decrease the amount of TOT receipts available by 5% for the 15- year term when calculating any rebate for continuous operation of the hotels, once opened, under TOT Covenant Agreements.  Increase the purchase price on “Future Resort Property“ (Option Property) for missing any of the six (6) project milestones. There is the potential to miss six (6) project milestones at $500,000 each, resulting in a purchase price increase of up to $3 million.  Require hotel operator to manage short-term vacation rentals that could occur in the luxury and lifestyle branded residences and golf villas.  SDC would have the ability to close escrow on the sale or transfer of any resort residential dwelling unit within the luxury and/or lifestyle branded residential developments after vertical construction of the luxury hotel has commenced (i.e., foundations complete and framing is underway). 150  SDC requirement to provide written quarterly reports detailing all changes to schedule, delays or other circumstances that could impact developer’s ability to achieve project milestones. Approving Amendment No. 4 will enable SDC to continue project funding and construction of all project components as outlined in the revised schedule of performance. SDC will continue to provide project updates at council meetings that will include recent milestones achieved, schedule updates and project highlights. These updates will occur monthly until framing of the luxury hotel is complete. ALTERNATIVES Council could direct staff to further modify the terms of Amendment No.4; this option would delay development and impact development financing. Prepared by: Jon McMillen, City Manager Attachment: 1. Amendment No. 4 to Purchase, Sale and Development Agreement 151 152 12711468.4 4827-5243-0055.12 AMENDMENT NO. 4 TO PURCHASE, SALE, AND DEVELOPMENT AGREEMENT THIS AMENDMENT NO. 4 TO PURCHASE, SALE, AND DEVELOPMENT AGREEMENT (“Amendment No. 4” or “Agreement”) is dated as of October ___, 2021 (“Agreement Date”), by and between the CITY OF LA QUINTA, a California municipal corporation and charter city (the “City”), SILVERROCK DEVELOPMENT COMPANY, LLC, a Delaware limited liability company (“Developer”), SILVERROCK PHASE I, LLC, a Delaware limited liability company (“SRPI”), and SILVERROCK LAND, LLC, a Delaware limited liability company (“SRL”). R E C I T A L S: A. The SilverRock Resort Area and Original PSDA. Except for portions of land transferred to Developer, SRPI, and SRL, as described in the Recitals E and F of this Amendment No. 4, City owns fee title to that certain real property of approximately 525 acres located at the southwest intersection of Jefferson Street and Avenue 52, in the City of La Quinta, California, a general depiction of which is the Site Map attached as Exhibit ”A” to Amendment No. 3 (as defined below) and defined in the Original PSDA as the “SilverRock Resort Area.” City and Developer entered into that certain Purchase, Sale, and Development Agreement dated November 19, 2014 (the “Original PSDA”), pursuant to which City agreed to sell to Developer specified “Planning Areas” that are part of approximately 145 acres comprising what was then defined as the “Phase 1 Property” (approximately 125 acres) and the “Phase 2 Property” (approximately 20 acres) and collectively defined as the “Property” (as those terms are defined in the PSDA) in the SilverRock Resort Area, and Developer agreed to purchase from City specified “Planning Areas (PAs)” 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 temporary and 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 Original PSDA as the “Project Components.” As provided in the Original PSDA, the Phase 1 Property included the Planning Areas (among other PAs) for the “Luxury Hotel” and “Luxury Branded Residential Development,” and the Phase 2 Property included the Planning Areas for the “Lifestyle Hotel” and “Lifestyle Branded Residential Development” (as defined in the Original PSDA). Additionally, pursuant to the Original PSDA, the “Parcel Map” was to be recorded (and has been recorded) against the Property, and applicable Parcel Map is attached as Exhibit ”B” to Amendment No. 3 (as defined below). Additionally, the Original PSDA set forth a “Schedule of Performance” under which Developer was required to commence and complete the development of the Project Components on the Property, as more particularly described therein. B. Amendment No. 1. City and Developer entered into that certain Amendment No. 1 to Purchase, Sale, and Development Agreement dated October 29, 2015 (“Amendment No. 1”) to, among other things, to reflect the assignment of SDC to the Robert Green Company and remove the Meriwether Companies, and to update the Site Map and various timeframes within the Original PSDA, including certain timeframes within the Schedule of Performance. C. Amendment No. 2. City and Developer entered into that certain Amendment No. 2 to Purchase, Sale, and Development Agreement dated April 18, 2017 (“Amendment No. 2”) to, among other things: (i) Modify the Phase 1 Property and Phase 2 Property in the Original PSDA and corresponding phased development obligations to the “Phase 1A Property” and “Phase 1B Property” (as defined in Amendment No. 2), with corresponding phased development obligations for the Project Components, Planning Areas (PAs), and Parcels (as defined in the Original PSDA and Amendment No. 2), including but not limited to the modification of the development phasing for the Luxury Hotel, Luxury Branded Residential Development, Lifestyle Hotel, and Lifestyle Branded ATTACHMENT 1 153 2 12711468.4 4827-5243-0055.12 Residential Development; (ii) Establish the “Phase 1C (Golf Course) Property,” “Phase 1D (Ahmanson Ranch House) Property,” and “Phase 1E (Perimeter Landscaping and Trails) Property” (as defined in Amendment No. 2) with corresponding phased development obligations for certain Project Components, Planning Areas, and Parcels identified therein; (iii) Modify the Schedule of Performance; (iv) Specify the terms and conditions for the “Golf Course Realignment” (as defined in the Original PSDA); and (v) Grant to Developer a contingent option to purchase the “Future Resort Property” according to “Developer’s Future Resort Option” (as defined in Amendment No. 2) upon Developer meeting certain terms and conditions, as more particularly described therein. D. The Phase 1A Property. Pursuant to the PSDA, Developer acquired from the City the Phase 1A Property (approximately 44.6 acres of the SilverRock Resort Area) by Grant Deed dated May 3, 2017 and recorded on November 6, 2017 as Instrument No. 2017-0463950 in the Official Records of the County of Riverside, California (“Recorder’s Office”), as amended by that certain Amendment to Grant Deed (Phase – 1A Property – PSDA Amendment No. 2), recorded on November 28, 2018 as Instrument No. 2018-0464670 in the Recorder’s Office. Thereafter, Developer assigned to SRPI (a Developer entity and permitted transferee pursuant to Section 603.1(d) of the Original PSDA), and SRPI assumed from Developer, all of Developer’s right, title, and interest in the Phase 1A Property and the “Project Agreements” (which include the PSDA) as they pertain to the Phase 1A Property by that certain Assignment and Assumption Agreement, recorded on November 28, 2018 as Instrument No. 2018-0465379 in the Recorder’s Office, and Developer transferred to SRPI the Phase 1A Property by Grant Deed recorded on November 28, 2018 as Instrument No. 2018-0464673 in the Recorder’s Office. E. Amendment No. 3. City and Developer entered into that certain Amendment No. 3 to Purchase, Sale, and Development Agreement dated November 28, 2018 (“Amendment No. 3”) to, among other things: (i) Set forth amended and restated modifications for the development of the Phase 1A Property and set forth the terms and conditions for the purchase and sale of the Phase 1B Property; (ii) Modify the “Master Site Infrastructure Improvements (MSII)” (as defined in the Original PSDA) Phasing Plan; (iii) Modify the Schedule of Performance; (iv) Specify assignment and assumptions of interests from Developer; and (v) Incorporate provisions allowing for the closing of the construction loan for the Phase 1A Property and Phase 1B Property, as more particularly described therein. The Original PSDA, as modified by Amendment No. 1, Amendment No. 2 and Amendment No. 3, is hereinafter referred to as the “PSDA.” F. The Phase 1B Property. Pursuant to the PSDA, SRPI acquired from the City the Phase 1B Property (approximately 84 acres of the SilverRock Resort Area) by Grant Deed dated November 7 and November 28, 2018 and recorded on November 28, 2018 as Instrument No. 2018- 0464674 in the Recorder’s Office. Thereafter, SRPI assigned to SRL (a Developer entity and permitted transferee pursuant to Section 603.1(f) as provided in Amendment No. 3), and SRL assumed from SRPI, all of Developer’s right, title, and interest in a portion of the Phase 1B Property—and specifically Parcels 10 and 11 identified in Amendment No. 3 for the Project Component known as the “Promenade Mixed-Use Village”—and the “Project Agreements” (which include the PSDA) as they pertain to Parcels 10 and 11/Promenade Mixed-Use Village by that certain Assignment and Assumption Agreement, recorded on April 10, 2019 as Instrument No. 2019- 0120800 in the Recorder’s Office, and SRPI transferred to SRL these Parcels 10 and 11/Promenade Mixed-Use Village by Quitclaim Deed recorded on April 10, 2019 as Instrument N o. 2019-0120799 in the Recorder’s Office. G. Hotel Operations and TOT Sharing Agreements. Pursuant to the Original PSDA and Amendment No. 2, Developer as “Participant” and City executed that certain Agreement to Share Transient Occupancy Tax Revenue (Luxury Hotel) dated on or about November 19, 2014 (“Luxury Hotel TOT Sharing Agreement”) to, among other things, require the Participant to enter into a 154 3 12711468.4 4827-5243-0055.12 “Hotel Management Agreement” with a City-approved “Hotel Manager” (as defined in the Luxury Hotel TOT Sharing Agreement) for continuous operation as the Luxury Hotel, and in exchange the City would make periodic payments to the Participant in specified amounts based on amounts of transient occupancy tax (“TOT”) collected from the Luxury Hotel as set forth in that certain Agreement Containing Covenants, Conditions, and Restrictions Affecting Real Property (Luxury Hotel) dated May 3, 2017 and recorded on November 6, 2017 as Instrument No. 2017-0463952, as amended by that certain Amended and Restated Agreement Containing Covenants, Conditions, and Restrictions Affecting Real Property (Luxury Hotel) dated November 28, 2018 and recorded on even date as Instrument No. 2018-0464671 (collectively, the “Luxury Hotel TOT Covenant Agreement”) in the Recorder’s Office. Similarly, pursuant to the Original PSDA and Amendment No. 2, Developer (as “Participant”) and City executed that certain Agreement to Share Transient Occupancy Tax Revenue (Lifestyle Hotel) dated on or about November 28, 2018 (“Lifestyle Hotel TOT Sharing Agreement”) to, among other things, require the Participant to enter into a “Hotel Management Agreement” with a City-approved “Hotel Manager” (as defined in the Lifestyle Hotel TOT Sharing Agreement) for continuous operation as the Lifestyle Hotel, and in exchange the City would make periodic payments to the Participant in specified amounts based on amounts of TOT collected from the Lifestyle Hotel as set forth in that certain Agreement Containing Covenants, Conditions, and Restrictions Affecting Real Property (Lifestyle Hotel), dated November 28, 2018 and recorded on even date as Instrument No. 2018-0464678 (the “Lifestyle Hotel TOT Covenant Agreement”) in the Recorder’s Office. The Luxury Hotel TOT Sharing Agreement and Lifestyle Hotel TOT Sharing Agreement are collectively referred to as the “TOT Sharing Agreements” (and track that definition in the Original PSDA), and the Luxury Hotel TOT Covenant Agreement and Lifestyle Hotel TOT Covenant Agreement are collectively referred to as the “TOT Covenant Agreements” (and track that definition in the Original PSDA). H. Covenants, Easements, and Reservations for the Benefit of City. Pursuant to the PSDA, the City declared and retained for public utility purposes an easement in and over portions for the Phase 1B Property defined as the “Easement Area” in that certain Declaration of Conditions and Reservation of Easements recorded on November 28, 2018 as Instrument No. 2018-0464669 in the Recorder’s Office. Additionally pursuant to the PSDA, SRPI granted to City for public utility purposes an easement in and over portions of the Phase 1A Property defined as the “Easement Area” in that certain Grant of Easement and Agreement recorded on November 28, 2018 as Instrument No. 2018-0464680 in the Recorder’s Office. Additionally pursuant to the PSDA (and specifically Amendment No. 2), the City retains in perpetuity benefits for the public by requiring and designating specific uses for the Phase 1C (Golf Course) Property, Phase 1D (Ahmanson Ranch House) Property, and Phase 1E (Perimeter Landscaping and Trails) Property, pursuant to (respectively) that certain Covenant Affecting Real Property (Golf Course Use) by and between City and Developer, recorded May 11, 2017 as Instrument No. 2017-0189004 in the Recorder’s Office, that certain Covenant Affecting Real Property (Ahmanson Ranch House) by and between City and Developer, recorded May 11, 2017 as Instrument No. 2017-189769, and that certain Covenant Affecting Real Property (Perimeter Landscaping and Trails) by and between City and Developer, recorded May 11, 2017 as Instrument No. 2017-089266. I. Options for the City to Re-Purchase Phase 1A and Phase 1B Properties. Pursuant to the PSDA, the City has an option to re-purchase and right of first refusal to re-purchase, all or portions of the Phase 1A Property and Phase 1B Property in the event Developer (or its assignees) are in default of the PSDA and fail to cure within the allowed cure period, pursuant to (respectively) that certain Option Agreement Phase 1A Property and Phase 1B Property (Excluding Planning Areas 7, 8, and 9) And Termination Of Prior Phase 1A Option Agreement dated November 28, 2018 and recorded on even date as Instrument No. 2018-0464676 in the Recorder’s Office (the “Phases 1A and 1B Properties Repurchase Option Agreement”), and that certain Option Agreement (Phase 1B Property – PA 7, 8, and 9) dated November 28, 2018 and recorded on even date as Instrument No. 2018-0464677 in the Recorder’s Office (the “PA 7-9 Repurchase Option Agreement”). The 155 4 12711468.4 4827-5243-0055.12 Phases 1A and 1B Properties Repurchase Option Agreement and PA 7-9 Repurchase Option Agreement are collectively referred to as the “City’s Repurchase Option Agreements.” As set forth in Amendment No. 3 and the City’s Repurchase Option Agreements, Planning Areas 7, 8, and 9 are Parcels 10, 11, and 12 on the Parcel Map constitute the Project Components identified as the Promenade Mixed-Use Village and “Resort Residential Village.” Among other terms and conditions, the City’s Repurchase Option Agreements set forth the calculation of a purchase price if the City decides to exercise an option or right of first refusal to repurchase all or any portions of the Phase 1A Property and/or Phase 1B Property for an uncured default and breach of the PSDA. J. Summary of Reasons for Amendment. On April 7, 2021, the City delivered to Developer a Notice of Default, and subsequently delivered to Developer progress report(s) to document efforts taken by Developer to commence cure of the items listed in the Notice of Default. To reflect the cure of the Notice of Default and to further the coordination of the development of the various phases with financing obtained by Developer, and to reflect the current status of the Project, City and Developer now wish to amend the PSDA to, among other things: (i) Update the Schedule of Performance and phasing of development; (ii) Amend various terms of the PSDA required to facilitate the Revised Capitalization (as defined below); (iii) Memorialize modifications to the TOT Sharing Agreements and the TOT Covenant Agreements as consideration for the City’s agreement to enter into this Amendment No. 4; (iv) Amend the terms and conditions of Developer’s Future Resort Option, including but not limited to the potential purchase price for the Future Resort Property, if milestones are not met under the revised Schedule of Performance; and (v) Make other clarifications to the PSDA, all as more particularly set forth herein. K. Same Capitalized Words and Terms. Unless otherwise specifically defined herein, all capitalized words and terms used in this Amendment No. 4 shall have the meanings ascribed to such words and terms in the PSDA, and all Section references below refer to Sections of the PSDA (or, if applicable, Amendment to the PSDA). A G R E E M E N T NOW, THEREFORE, in consideration of the foregoing Recitals, which are incorporated herein by this reference and a substantive part of this Agreement, and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Effectiveness. This Agreement shall be effective as of the Agreement Date. 2. Revised Capitalization. Developer and SRPI are in the process of negotiating with Lender (as defined in Amendment No. 3) and other sources of financing to provide the additional funds required to cover the projected remaining costs to develop the Phase 1A Property and Phase 1B Property and all Project Components thereon (excluding the Promenade Mixed-Use Village and Resort Residential Village) (such additional funds being referred to herein as the “Additional Funding”). Developer, SRPI, and SRL (as applicable) shall obtain contractual commitments, and enter into contracts for such Additional Funding (collectively, the “Commitments”), for the Additional Funding on terms customary for such funding and documented in form(s) reasonably approved by the City Manager and City Attorney (the “Revised Capitalization”). Developer, SRPI and SRL (as applicable) shall update the City Manager, no later than seven (7) days after the City Manager’s written request, on the progress of obtaining such Commitments and distributions of the Additional Funding pursuant thereto. Developer, SRPI, and SRL (as applicable) shall deliver to the City no later than the anticipated closing date for the Revised Capitalization, the final form of financing documents relating to the Revised Capitalization, consistent with the commitments provided to the City. 156 5 12711468.4 4827-5243-0055.12 3. Ongoing Work Prior To Closing of Revised Capitalization. Prior to the closing of the Revised Capitalization, site preparation work consisting of pre-watering, precise grading and underground utilities and vertical construction shall be commenced and completed as set forth in the Revised Schedule of Performance (as defined below). 4. Schedule of Performance. The PSDA is amended by replacing the Schedule of Performance with the schedule attached hereto as Exhibit “A” and incorporated herein, which shall then be deemed the “Schedule of Performance” for purposes of the PSDA and referred to in this Agreement as the “Revised Schedule of Performance”. For the purpose of this Agreement and Revised Schedule of Performance, the commencement of slab/foundation work (which shall include under slab utility work) constitutes “commencement of vertical construction.” 5. Master Site Infrastructure Improvements Phasing Plan. The Master Site Infrastructure Improvements, and requirements relating thereto, referred to in the PSDA, including Sections 205.1 and 304.2, shall be interpreted and, to the extent necessary, shall be deemed amended to give effect to and be consistent with the revised “Master Site Infrastructure Improvements Phasing Plan” attached to this Amendment No. 4 as Exhibit ”B” and incorporated herein. 6. Section 603 -Transfers of Interests in Property or Agreement or in Developer. 6.1 Section 603.1(d) in Amendment No. 3 is hereby replaced with the following: (d) A Transfer to a duly formed legal entity, provided the entity owning the subject Project Component or portion thereof after the Transfer is an entity (i) whose managing member, manager, or managing general partner is RGC or is directly or indirectly controlled by RGC, and (ii) which engages as the project/development manager for the Project Component or subject portion thereof an entity which is at least fifty-one percent (51%) owned and controlled by RGC. 7. Section 305 - Phasing of Development. 7.1 Section 305.1(a) from the Original PSDA is hereby replaced with the following: “Until such time as Developer has obtained a building permit for the Luxury Hotel, Developer may not obtain building permits for any other Project Component other than building permits for the Luxury Branded Residential Development and/or Lifestyle Branded Residential Development, which may be obtained prior to the time Developer has obtained a building permit for the Luxury Hotel.” 7.2 Section 305.1(b) from the Original PSDA is hereby replaced with the following: “Developer may obtain building permits for the Luxury Branded Residential Development and/or the Lifestyle Branded Residential Development prior to obtaining a building permit for the Luxury Hotel and/or the Lifestyle Hotel. Developer may obtain building permits for the Conference and Shared Service Facility, Promenade Mixed-Use Village, and Resort Residential Village after vertical construction of the Luxury Hotel has commenced (as defined in this Amendment No. 4 and the Schedule of Performance).” 157 6 12711468.4 4827-5243-0055.12 7.3 Section 305.1(c) from the Original PSDA is hereby replaced with the following: “Developer may not close escrow on a sale or any Transfer of any Resort Residential Dwelling Unit within the Luxury Branded Residential Development and/or Lifestyle Branded Residential Development unless Developer has commenced the vertical construction of the Luxury Hotel (as defined in the Schedule of Performance) and completed the pouring of slab/foundation for the Luxury Hotel main building and spa and has commenced framing for the Luxury Hotel main building and spa. Any disputes among the parties as to whether vertical construction has commenced and/or whether the pouring of such slab/foundation and commencement of such framing, shall be finally determined in the reasonably discretion of the City Manager.” 7.4 Section 305.2(a) from the Original PSDA is hereby replaced with the following: “Developer’s failure to timely commence the vertical construction of either the Luxury Hotel or Lifestyle Hotel (as defined in this Amendment No. 4 and the Schedule of Performance) shall be grounds for the imposition of a Financial Incentive Reduction(s) for missing a Project Milestone (as these terms are defined in Section 8 of this Amendment No. 4).” 7.5 Section 305.3(b) from the Original PSDA is hereby deleted. 8. Management of Short-Term Vacation Rentals and TOT Rebate Reductions. 8.1 Section 401 - Operation of the Project. In order to ensure the proper collection of TOT from the Resort Residential Dwelling Units and compliance with applicable vacation rental laws and regulations, including but not limited to the City’s Short -Term Vacation Rental Regulations in Chapter 3.25 (or successor chapter(s)) in the La Quinta Municipal Code, the City requires that the Hotel Operator(s) be the exclusive manager(s) of any and all short-term vacation rental (as defined in Section 3.25.030 (or successor provision) of the La Quinta Municipal Code) of all Resort Residential Dwelling Units. Accordingly, Section 401 of the Original PSDA is hereby replaced with the following: “The Hotel Operator for the Luxury Hotel (the “Luxury Hotel Operator”) shall be the exclusive rental operator for any “transient(s)” (as defined in Sections 3.24.020 and 3.25.030 (or successor provisions) of the La Quinta Municipal Code) renting, using, and/or occupying any Resort Residential Dwelling Unit (which includes any residence branded or marketed as “Golf Villas” or similar name) in the Luxury Branded Residential Development as a “short-term vacation rental unit” (as defined in Section 3.25. 030 (or successor provision) of the La Quinta Municipal Code). The Luxury Hotel Operator shall retain full management and operational control over all components of the Luxury Hotel and any rental, use, and/or occupancy of Resort Residential Dwelling Units in the Luxury Branded Residential Development on behalf of owners of said Resort Residential Dwelling Units who permit their use as short-term vacation rental units. Any and all rentals, use, and/or occupancy shall be undertaken by the Luxury Hotel Operator through the front desk of the Luxury Hotel. Rental, use, and/or occupancy of Resort Residential Dwelling Units within the Luxury Branded Residential Development through third party rental operators shall be prohibited. Developer shall execute and record or cause to be recorded against the Parcels that comprise the Luxury Branded Residential Development a declaration of covenants, conditions, and restrictions (in a form approved by the City Manager and City Attorney prior to its recording), which shall run with the land, and shall be binding upon, and place on notice, any and all owners of the Resort Residential Dwelling Units of the requirements set forth in this section. Nothing in this section shall relieve the “owner” (as defined in Section 3.25.030 (or successor provision) of the La 158 7 12711468.4 4827-5243-0055.12 Quinta Municipal Code) from any and all application, permitting, and licensing requirements of an owner to use and/or operate a Resort Residential Dwelling Unit within the Luxury Branded Residential Development as a short-term vacation rental unit; provided, however, that the owner may look to the Luxury Hotel Operator to administer those requirements on behalf of the owner. The Hotel Operator for the Lifestyle Hotel (the “Lifestyle Hotel Operator”) shall be the exclusive rental operator for any “transient(s)” (as defined in Sections 3.24.020 and 3.25.030 (or successor provisions) of the La Quinta Municipal Code) renting, using, and/or occupying any Resort Residential Dwelling Unit (which includes any residence branded or marketed as “Golf Villas” or similar name) in the Lifestyle Branded Residential Development as a “short- term vacation rental unit” (as defined in Section 3.25. 030 (or successor provision) of the La Quinta Municipal Code). The Lifestyle Hotel Operator shall retain full management and operational control over all components of the Lifestyle Hotel and any rental, use, and/or occupancy of Resort Residential Dwelling Units in the Lifestyle Branded Residential Development on behalf of owners of said Resort Residential Dwelling Units who permit their use as short-term vacation rental units. Any and all rentals, use, and/or occupancy shall be undertaken by the Lifestyle Hotel Operator through the front desk of the Lifestyle Hotel. Rental, use, and/or occupancy of Resort Residential Dwelling Units within the Lifestyle Branded Residential Development through third party rental operators shall be prohibited. Developer shall execute and record or cause to be recorded against the Parcels that comprise the Lifestyle Branded Residential Development a declaration of covenants, conditions, and restrictions (in a form approved by the City Manager and City Attorney prior to its recording), which shall run with the land, and shall be binding upon, and place on notice, any and all owners of the Resort Residential Dwelling Units of the requirements set forth in this section. Nothing in this section shall relieve the “owner” (as defined in Section 3.25.030 (or successor provision) of the La Quinta Municipal Code) from any and all application, permitting, and licensing requirements of an owner to use and/or operate a Resort Residential Dwelling Unit within the Lifestyle Branded Residential Development as a short-term vacation rental unit; provided, however, that the owner may look to the Lifestyle Hotel Operator to administer those requirements on behalf of the owner.” 8.2 Percentage Reduction to Rebate Based on TOT Receipts. In consideration of City’s agreeing to this Amendment No. 4 and the Revised Schedule of Performance set forth herein, the percentage used to determine the “amount available for Rebate” by the City in Section 4.1.2(a)(vi) of the Luxury Hotel TOT Covenant Agreement and Section 4.1.2(a)(vi) of the Lifestyle Hotel TOT Covenant Agreement shall be reduced by five percentage points (i.e., reduced by subtracting 5%) from the total adjusted percentage to be applied upon the “Commencement Date” and throughout the “Operating Period” and “Term” as those terms are defined in the Luxury Hotel TOT Covenant Agreement and Lifestyle Hotel TOT Covenant Agreement. In explanation of the foregoing, the percentage used to determine the “amount available for Rebate” by the City shall be reduced by five percentage points (.e., by subtracting 5%) so that the percentage applied within the first ten (10) years of the Operating Period shall be ninety percent (90%) instead of ninety-five percent (95% - 5% = 90%), and the percentage applied within in the last five (5) years of the Operating Period shall be seventy percent (70%) instead of seventy-five percent (75% - 5% = 70%). Developer and City shall execute (concurrently with this Amendment No. 4) in a recordable form the First Amendment to the Luxury Hotel TOT Covenant Agreement substantially the form attached hereto as Exhibit ”C” and incorporated herein by this reference (the “Luxury Hotel TOT First Amendment”), and First Amendment to the Lifestyle Hotel TOT Covenant Agreement substantially the form attached hereto as Exhibit ”D” and incorporated herein by this reference (the “Lifestyle Hotel TOT First Amendment”). Developer shall record or cause to be recorded in the Recorder’s Office the Luxury Hotel TOT First Amendment and Lifestyle Hotel TOT First Amendment prior to or concurrently with 159 8 12711468.4 4827-5243-0055.12 the closing of the Revised Capitalization as set forth in this Amendment No. 4. Developer and City shall cooperate to execute (and record, if applicable) any other documents or amendments (including but not limited to amendments to the Luxury Hotel TOT Sharing Agreement and/or Lifestyle Hotel TOT Sharing Agreement) if necessary or convenient to memorialize the terms and conditions of this section and this Amendment No. 4 relating to the adjusted percentages to be applied to the Luxury Hotel TOT Covenant Agreement and Lifestyle Hotel TOT Covenant Agreement. 9. Project Milestones and Financial Incentive Reductions. 9.1 List of Project Milestones. The following items of performance are defined as “Project Milestones,” and the failure to timely perform the Project Milestone may be subject to the Financial Incentive Reductions as provided in Section 9.2(ii): Luxury Hotel: (a) Commencement of the Luxury Hotel vertical construction; (b) Completion of Luxury Hotel guest room framing; (c) Substantial completion of the Luxury Hotel has been achieved, and “substantial completion” means the Luxury Hotel as determined by the general contractor is completed to a point sufficient for a Temporary Certificate of Occupancy (TCO) to allow for a “soft opening” that includes a limited roll-out of guestroom occupancy and other operations; Lifestyle Hotel: (d) Commencement of the Lifestyle Hotel vertical construction; (e) Completion of Lifestyle Hotel guest room framing; (f) Substantial completion of the Lifestyle Hotel has been achieved, and “substantial completion” means the Lifestyle Hotel as determined by the general contractor is completed to a point sufficient for a Temporary Certificate of Occupancy (TCO) to allow for a “soft opening” that includes a limited roll-out of guestroom occupancy and other operations. 9.2 Adjustments to Future Resort Property Terms and Conditions. 9.2.1 Revised Section 9.2 of The Second Amendment. Section 9.2 of the Second Amendment is amended and restated as set forth below: “9.2 Purchase and Sale Provisions. (i) Process After Timely and Effective Exercise of Option. If Developer timely and effectively exercises Developer's Future Resort Option pursuant to Amendment No. 2 as modified by this Amendment No. 4, then City shall convey to Developer, and Developer shall purchase from City, the Future Resort Property pursuant to all of the terms, conditions, and covenants in Article 200 [Conveyance of the Property] in the Original PSDA, and subject to the following additional provisions: (a) the disposition of the Future Resort Property will be treated as a new “Phase,” referred to as the “Future Resort Property Phase” and the corresponding new “Project Component” to be integrated for the Future Resort Property shall be referred to herein as the “Future Resort” (as that term is defined in Section 9.3 of 160 9 12711468.4 4827-5243-0055.12 Amendment No. 2 as modified by this Amendment No. 4); (b) subject to the terms and conditions in clause (ii) of the paragraph below, the “Purchase Price” for the Future Resort Property shall be Two Million Five Hundred Thousand Dollars ($2,500,000), plus, to the extent an active recreational use or uses open to the public are made a part of the Future Resort Property in lieu of a 9-hole golf course, a dollar amount reflecting the market value of any additional developable acreage in the Future Resort Property by reason of the substitution of an active recreational use or uses open to the public in lieu of a nine-hole golf course. Such market value shall be based on an appraisal from an independent, state- certified appraiser, and shall reflect the value of such additional developable acreage considering its intended use and its then condition, including the status of entitlements and any applicable use and development restrictions. City Manager and Developer shall use their good faith efforts to agree on such market value, based on the independent, state-certified appraiser’s appraisal, within thirty (30) days of determining that such additional developable acreage will exist and the approximate amount of such acreage has been identified. If the City Manager and Developer are unable to reach agreement on the market value of any such additional developable acreage within such time, then at the election of either party, such market value shall be determined by an appraiser mutually selected by Developer and City Manager but if Developer and City Manager are unable to mutually select an appraiser within thirty days of the election of either party to obtain an appraisal, then each party shall select an MAI appraiser with at least 10 years’ experience to make a determination of the market value and the two appraisers shall select a third MAI appraiser with at least 10 years’ experience to also determine the market value. The appraised value as determined by Developer’s or the City’s appraiser, whichever is closest to the market value determined by the third appraiser, shall be the market value of the additional developable acreage for the purpose of determining the Purchase Price. Each appraiser shall make its determination of the market value considering the factors described above. Notwithstanding the foregoing, the Purchase Price shall not be increased to the extent additional developable acreage occurs within the Future Resort Property due to the inclusion of all or a portion of a 9-hole golf course or, in lieu thereof, active recreational use or uses open to the public within Planning Areas 7, 8 and/or 9; (c) the closing shall be contingent upon City Council’s discretionary review and approval of the “Concept Plan for the Future Resort” (as defined at the end of this paragraph) which City Council review and approval process will be similar to the concept plan review and approval process relating to the Project at the time of Amendment No. 2 and the closing date for the Escrow shall be no later than sixty (60) days after such approval; (d) the development of Planning Areas 7, 8 and 9, (Parcels 10, 11 and 12) shall have commenced or alternatively, the planned development thereof will occur in connection with the development of the Future Resort Property, and (e) Developer is not in then in default of the PSDA and all amendments thereto in effect at the time of the disposition of the Future Resort Property (which includes but is not limited to no default by failing to complete an item of performance in the Revised Schedule of Performance but for the sake of clarity does not include any such failure that results in a Financial Incentive Reduction as defined in this Amendment No. 4). For purposes of the PSDA as amended by this Amendment No. 4, the “Concept Plan for the Future Resort” means a site plan, a detailed list of proposed uses corresponding to the site plan, proposed land uses, a proposed schedule of performance for development (including any proposed phasing), and any other information that the City Manager, in the City Manager’s reasonable discretion, may request to be submitted for City Council review and approval, but expressly shall not be a “preliminary application” as defined in Government Code sections 65941.1 or 65589.5(h)(2) (or successor provisions), it being expressly agreed by the Parties that the Concept Plan for the Future Resort may consist of site plans, land use plans, and schedules and not a submittal of an application for any permit or entitlement that ultimately may need to be obtained for the planning, development, and use of the Future Resort Property. 161 10 12711468.4 4827-5243-0055.12 (ii) Purchase Price Modifications/Potential Financial Incentive Reductions for Failing to Meet Project Milestones. If any Project Milestone is not timely completed pursuant to the Revised Schedule of Performance (per this Amendment No. 4), the City shall have the right to adjust the Purchase Price for the Future Property, and Developer (or SRPI or SRL or other Developer affiliate, as applicable) shall be subject to said adjustments, without affecting Developer’s (or SRPI’s or SRL’s or other Developer affiliate, as applicable) obligations to perform any and all obligations set forth in the PSDA as amended by this Amendment No. 4, pursuant to the following: (A) If any Project Milestone is not timely completed pursuant to the Revised Schedule of Performance, the Purchase Price for the Future Resort Property shall be increased by Five Hundred Thousand Dollars ($500,000) for each missed Project Milestone (i.e., there is the potential to miss up to six (6) Project Milestones, resulting in a Purchase Price increase for the Future Resort Property of Three Million Dollars ($3,000,000) and each adjustment is individually a “Financial Incentive Reduction” and collectively “Financial Incentive Reductions”); (B) If the Project Milestone under Section 9.1(a) and/or 9.1(b) of Amendment No. 4 is missed, but the Project Milestone under Section 9.1(c) of Amendment No. 4 is satisfied (as all such dates may be extended pursuant to paragraph (D) below), then the Financial Incentive Reduction (as defined below) with respect to the misse d Section 9.1(a) and/or Section 9.1(b) Project Milestone shall not apply; and, similarly, if the Project Milestone under Section 9.1(d) and/or under Section 9.1(e) of Amendment No. 4 is missed, but the Project Milestone under Section 9.2(f) of Amendment No. 4 is satisfied (as all such dates may be extended pursuant to paragraph (D) below), then the Financial Incentive Reduction (as defined below) with respect to the missed Section 9.1(d) and/or Section 9.1(e) Project Milestone shall not apply; (C) If the Project Milestone under Section 9.1(a) of Amendment No. 4 is missed and Financial Incentive Reduction occurs for the same, then the new date for completion of the Project Milestone under Section 9.1(b) and Section 9.1(c) of Amendment No. 4 shall be extended as provided in Subsection D below. If the Project Milestone under Section 9.1(b) of Amendment No. 4 is missed and Financial Incentive Reduction occurs for the same, then the new date for completion of the Project Milestone under Section 9.1(c) of Amendment No. 4 shall be extended as provided in Subsection (D) below. Similarly, if the Project Milestone under Section 9.1(d) of Amendment No. 4 is missed and Financial Incentive Reduction occurs for the same, then the new date for completion of the Project Milestone under Section 9.1(e) and Section 9.1(f) of Amendment No. 4 shall be extended from the date in the Revised Schedule of Performance to the extension date for the same pursuant to the Approved General Contractor Extension as defined below. If the Project Milestone under Section 9.1(e) of Amendment No. 4 is missed and Financial Incentive Reduction occurs for the same, then the new date for completion of the Project Milestone under Section 9.1(f) of Amendment No. 4 shall be extended as provided in Subsection (D) below; (D) Extension of Project Milestones may occur in two ways: (1) by virtue of missing an earlier Project Milestone and suffering a Financial Incentive Reduction, and (2) by means of an Approved General Contractor Extension (as defined below): 1. If the Project Milestone under Section 9.1(a) is missed and Financial Incentive Reduction occurs for the same, then the new date for completion of the 162 11 12711468.4 4827-5243-0055.12 Project Milestone under Section 9.1(b) and Section 9.1(c) shall be extended by the number of days by which the Project Milestone under Section 9.1(a) was missed and if the Project Milestone under Section 9.1(b) is missed and Financial Incentive Reduction occurs for the same, then the new date for completion of the Project Milestone under Section 9.1(c) shall be extended by the number of days by which the Project Milestone under Section 9.1(b) was missed; provided, however, in no event shall the Project Milestone under Section 9.1(c) be extended by more than ninety (90) days in total by reason of the extensions under this paragraph (D)(1). Similarly, if the Project Milestone under Section 9.1(d) is missed and Financial Incentive Reduction occurs for the same, then the new date for completion of the Project Milestone under Section 9.1(e) and Section 9.1(f) shall be extended by the number of days by which the Project Milestone under Section 9.1(d) was missed and if the Project Milestone under Section 9.1(e) is missed and Financial Incentive Reduction occurs for the same, then the new date for completion of the Project Milestone under Section 9.1(f) shall be extended by the number of days by which the Project Milestone under Section 9.1(e) was missed; provided, however, in no event shall the Project Milestone under Section 9.1(f) be extended by more than ninety (90) days in total by reason of the extensions under this paragraph (D)(1). For the sake of clarity, the foregoing extensions only occur when an earlier Project Milestone date is missed whether or not the earlier Project Milestone date was previously extended pursuant to paragraph (D)(2) below and whether or not the subsequent Project Milestone date is extended pursuant to paragraph (D)(2) below. 2. The Parties acknowledge and agree that the general contractor(s) retained by Developer for the Project Components may request or be compelled to extend completions dates under the applicable general contract which dates correspond to dates set forth in the Revised Schedule of Performance, including extending the dates of completion for the Project Milestones. If Developer seeks an extension of Project Milestones based upon any request or compelled extension identified by the general contractor for a Project Component(s), Developer (or SRPI or SRL or other Developer affiliate, as applicable) shall deliver the general contractor’s proposed extension dates and proposed new schedule of performance to the City Manager; within ten (10) days of receipt of said proposed extension dates and proposed new schedule of performance, the City Manager shall review and determine, in the City Manager’s reasonable discretion, whether the reasons provided for the extension are valid, verifiable, and justified (meaning the extension is attributable to a condition or circumstance outside of the contractor’s and Developer’s control); if the City Manager approves said proposed extension dates and proposed new schedule of performance as related to the Project Milestones (each of which is an “Approved General Contractor Extension”), that Approved General Contractor Extension date shall then govern for the Project Milestones and the application of any corresponding Financial Incentive Reduction. If the City Manager determines the general contractor proposed extension is not valid, verifiable, and justified (meaning the extension is not attributable to a condition or circumstance outside of the contractor’s and Developer’s control) and therefore denies the proposed extension dates and proposed new schedule of performance Project Milestone dates, the City Manager and Developer (and any of their respective representatives and agents) shall engage in an informal meet and confer process for no more than four (4) hours per proposed extension dates/proposed new schedule of performance to attempt to reach in good faith a resolution of the new extended dates, if any, of the specific item of performance; provided, however, that the informal meet and confer process shall be the exclusive means for the Parties to resolve any dispute over any general 163 12 12711468.4 4827-5243-0055.12 contractor proposed extension dates and proposed new schedule of performance provided by Developer; (E) For avoidance of doubt, the Revised Schedule of Performance attached to this Amendment No. 4, and Project Milestones included herein, are subject to the terms and conditions of Section 602 [enforced delay] of the Original PSDA; and (F) If Developer acquires the Future Resort Property in accordance with the PSDA (including this Amendment No. 4), then: (I) Developer shall submit to the City an application(s) for permits and entitlement for the development of the Future Resort Property based on the City Council-approved Concept Plan for the Future Resort, within six (6) months of Developer’s acquisition thereof, and (II) if any discretionary approval subject to CEQA will be required based on the application(s) submitted by Developer based on the City Council-approved Concept Plan for the Future Resort, the Developer shall commence the processing of the same within one (1) year of acquiring the Future Resort Property; provided, however, that nothing in this section or Amendment No. 4 is intended to, or does, limit the City’s discretionary authority to review and approve any and all applications for permits and entitlements relating to the planning, development, and use of the Future Resort Property pursuant to the Municipal Code, Specific Plan, and any other applicable federal, state, or local laws and regulations.” 9.3 Future Resort Use. 9.3.1 Revised Section 9.3 of The Second Amendment. Section 9.3 of the Second Amendment is amended and restated as set forth below: “9.3 Future Resort Development and Land Use Covenant. The Future Resort Property shall be developed to include green open space allowing active recreation and/or for a golf course of no less than nine (9) holes and of the same or better caliber as the Golf Course pursuant to any and all permits and entitlements reviewed and approved by the City (the “Future Resort”). For any golf course use, the Covenant Affecting Real Property (Golf Course Use) for the Future Resort will be recorded against the Future Resort Property, and will bind the Future Resort Property until such time as the “Future Golf Covenant” (as that term is defined below in this Section 9.3) has been recorded in the Recorder’s Office. Notwithstanding any provisions in Amendment No. 2 or this Amendment No. 4 to the contrary, prior to or concurrently with any conveyance of any right, title, or interest in the Future Resort Property by the City to Developer or any other person or entity, an amendment to the Covenant Affecting Real Property (Golf Course Use) or similar document (the “Future Golf Covenant”) shall be executed and recorded in the Recorder’s Office, with priority over any secured interest in property (such as a deed of trust or mortgage), and such land use covenant shall, in addition to other provisions mutually agreed to by City and Developer, (i) release from the Covenant Affecting Real Property (Golf Course Use) the portions of the Future Resort Property that will not be developed with any of the future golf course, driving range, or other ancillary golf course operations, and (ii) grants the same or similar privileges to holders of “Resident Access Cards” (as that term is defined in the Covenant Affecting Real Property (Golf Course Use)) for the future golf course. Developer and City shall negotiate in good faith to effectuate the requirements of this section.” 9.4 Progress Reports. Until the completion of a Project Component, Developer at its own cost and expense shall deliver to the City Manager a report on a quarterly basis that includes: (a) A description of the status of construction for the Project Component, (b) A description of any planned changes to the Revised Schedule of Performance or Master Site Infrastructure Improvements 164 13 12711468.4 4827-5243-0055.12 Phasing Plan since the previously delivered report, (c) A bar chart schedule showing progress to achieving the remaining Project Milestones with respect to the Project, (d) A chart showing the critical path schedule of major items and activities, (e) A summary of activities at the Project Component during the previous quarter, (f) A forecast of activities during the then-current and upcoming quarters, (g) A list of any significant circumstances or delays or other issues that could impact Developer’s achievement of the Project Milestones by the applicable performance date, and (h) Pictures, in sufficient quantity and of appropriate detail, documenting construction and progress with respect to the Project Component. 9.5 Reasonable Compensation to City for Failure to Timely Perform Project Milestones. The Parties agree that the damages that the City has incurred and would incur due to Developer’s failure to timely perform under the PSDA and the Project Milestones herein would be difficult or impossible to predict with certainty, and it is impractical or difficult to assess actual damages in those circumstances, but the Financial Incentive Reductions are a fair and reasonable calculation of such damages for Developer’s failure to achieve any Project Milestone by the performance date in the Revised Schedule of Performance. The payment of Financial Incentive Reductions as provided in Section 9 of this Amendment No. 4 shall not limit the City’s right to (a) exercise any right or remedy available under this Amendment No. 4 and the PSDA or at law or in equity for any other breach or default occurring concurrently with or before such Project Milestone default, or, except as provided in this Fourth Amendment, a breach or default after Developer’s delay in achieving the applicable Project Milestone by the performance date in the Revised Schedule of Performance, (b) recover any damages for default or breach of any terms or conditions that are not the date of performance for a Project Milestone or to pursue any indemnity claims in accordance with this Amendment No. 4 and the PSDA, or (c) other than as a result of the Project Milestone default, terminate the PSDA (and any other agreements between Developer and City relating to the Project) in accordance with the PSDA (and any other agreements between Developer and City relating to the Project). 10. Miscellaneous. 10.1 PSDA in Full Force and Effect. Except as otherwise expressly provided in this Amendment No. 4, all of the covenants, terms and conditions of the PSDA (including the GENERAL PROVISIONS in Article 600, as modified in Amendment No. 1) shall remain in full force and effect. 10.2 Governing Law. This Amendment No. 4 and the PSDA shall be governed by the internal laws of the State of California, without regard to conflict of law principles, and any question arising hereunder shall be construed or determined according to such law. The Superior Court of the State of California in and for the County of Riverside, or such other appropriate court in such county, shall have exclusive jurisdiction of any litigation between the parties concerning this Amendment No. 4 or PSDA. Service of process on City shall be made in accordance with California law. Service of process on Developer shall be made in any manner permitted by California law and shall be effective whether served inside or outside California. 10.3 Interpretation. The PSDA, as amended by this Amendment No. 4, shall be read and interpreted in a comprehensive, integrated manner, and in a manner that best implements the provisions of this Amendment No. 4. However, in the event the terms of this Amendment No. 4 result in ambiguity, the parties will meet and confer to attempt to resolve the ambiguity, each in their reasonable discretion. But if the terms of this Amendment No. 4 directly conflict with the terms of the PSDA, then the terms of this Amendment No. 4 will be controlling and the PSDA, as amended, shall be interpreted to implement the intent of this Amendment No. 4 10.4 Time is of Essence. Time is of the essence of this Amendment No. 4 and of each and every term and provision hereof. 165 14 12711468.4 4827-5243-0055.12 10.5 City Approvals and Actions. City shall maintain authority over and implementation of this Amendment No. 4 pursuant to Section 605 of the PSDA. 10.6 Representations. The person(s) executing this Amendment No. 4 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 Amendment No. 4 on behalf of said party, (iii) by so executing this Amendment No. 4 such party is formally bound to the provisions of this Amendment No. 4, and (iv) the entering into this Amendment No. 4 does not violate any provision of any other agreement to which such party is bound. 10.7 Counterparts. This Amendment No. 4 may be executed in counterparts, each of which, when this Amendment No. 4 has been signed by all of the parties hereto, shall be deemed an original, and each such counterpart shall constitute one and the same instrument. 10.8 Estoppel Statement. City and Developer certify to one another that as of the Agreement Date: (i) except as modified by this Amendment No. 4, the PSDA and the “PSDA Covenant Documents” (as defined in Amendment No. 3) are unmodified and in full force and effect; and (ii) there are no defaults by Developer identified by the City under the Original PSDA, Amendment No. 1, Amendment No. 2, Amendment No. 3, or the PSDA Covenant Documents and there is no condition or circumstances which with the giving of notice and/or the passage of time would become a default hereunder. [End of Amendment No. 4 – Signature page follows] 166 15 12711468.4 4827-5243-0055.12 IN WITNESS WHEREOF, City, Developer and SRPI have executed this Amendment No. 4 as of the date set forth above. Date: ____________, 2021 “DEVELOPER” SILVERROCK DEVELOPMENT COMPANY, LLC, a Delaware limited liability company By: The Robert Green Company, a California corporation Its: Manager By: Name: Robert S. Green, Jr. Its: President and Chief Executive Officer “SRPI” SILVERROCK PHASE I, LLC, a Delaware limited liability company By: The Robert Green Company, a California corporation Its: Manager By: Name: Robert S. Green, Jr. Its: President and Chief Executive Officer [Signatures continued to next page] 167 16 12711468.4 4827-5243-0055.12 Date: ____________, 2021 “CITY” CITY OF LA QUINTA, a California municipal corporation and charter city By: Jon McMillen Its: City Manager ATTEST: Monika Radeva, City Clerk APPROVED AS TO FORM: RUTAN & TUCKER, LLP By: William H. Ihrke, City Attorney 168 EXHIBIT “A” -1- 12711468.4 4827-5243-0055.12 EXHIBIT “A” SCHEDULE OF PERFORMANCE [See following pages] 169 EXHIBIT “A” -2- 12711468.4 4827-5243-0055.12 SCHEDULE OF PERFORMANCE Item of Performance Start Completion* TRANSACTIONAL AGREEMENTS Execution of PSDA, TOT Sharing Agreements, and TOT Covenant Agreements N/A COMPLETE Open Phase 1 Escrow and Phase 2 Escrow N/A COMPLETE PRE-DEVELOPMENT Land & Site Planning - Prepare, submit to City for approval, and obtain City’s approval of, plans for Golf Course Realignment N/A COMPLETE - Master site design N/A COMPLETE Planning & Entitlements - Preliminary Engineering & Mapping N/A COMPLETE - Site development plans N/A PA (2, 3, 4, 5, 6, and 10A): COMPLETE. PA (7, 8 and 9): within six months of Luxury Hotel opening. - Prepare, submit to City for approval, and obtain City’s approval of, Master Site Infrastructure Improvements Design/Construction Development Drawings (relevant to particular phase) N/A COMPLETE Conditions to Closing - All of Developer’s Conditions Precedent to the Closing and City’s Conditions Precedent to the Closing have been satisfied, or waived by the appropriate party N/A COMPLETE CONSTRUCTION AND INSTALLATION OF MASTER SITE IMPROVEMENTS Construct Golf Course Realignment 5/1/17 COMPLETE 170 EXHIBIT “A” -3- 12711468.4 4827-5243-0055.12 Item of Performance Start Completion* Install construction fencing around Luxury Hotel site as required to separate golf play N/A COMPLETE All other MSII N/A Prior to issuance of any certificate of occupancy for the vertical improvements served by those Master Site Infrastructure Improvements necessary for the subject phase of development. See MSII Phasing Plan as well. CONSTRUCTION OF PROJECT COMPONENTS Prepare and submit to City for approval, and obtain City’s approval of, Project Component (or portion thereof) Design/Construction Development Drawings 3 months prior to anticipated start of construction of applicable Project Component or portion thereof. Prior to start of construction of applicable Project Component or portion thereof. Developer satisfies all conditions to develop set forth in Section 304 of Agreement N/A Prior to start of construction of applicable Project Component Luxury Hotel Site Preparation1 (PA 2) 6/30/21 8/30/21 Completion of Luxury Hotel Guest Room Framing n/a 8/27/22 Luxury Hotel Vertical Construction2 (PA 2) 8/30/21 September 30, 2023 1 For all purposes of this Schedule, site preparation work consists of pre-watering, underground utilities and precise grading. 2 For all purposes of this Schedule, “commencement of vertical construction” refers to the construction of 171 EXHIBIT “A” -4- 12711468.4 4827-5243-0055.12 Item of Performance Start Completion* Luxury Branded Residential Development Site Preparation (PA 3) 6/31/21 8/30/21 Luxury Branded Residential Development Vertical Construction (PA 3) 8/30/21 4 years after start. Project Component** considered complete when 70% of units are complete. Conference and Shared Services Facility Site Preparation (PA 4) 6/30/21 8/30/21 Conference and Shared Services Facility Vertical Construction (PA 4) 8/30/21 4/26/23 Lifestyle Hotel Site Preparation (PA 5) 6/30/21 8/30/21 Completion of Lifestyle Hotel Framing of Guest Rooms n/a 12/21/23 *Except for any Guest Room wing(s) that are purposefully delayed in order to allow construction access to the Pool Deck area Lifestyle Hotel Vertical Construction (PA 5) 9/30/22 July 31, 2024 Lifestyle Branded Residential Development Site Preparation (PA 6) 7/30/2021 1/31/22 Lifestyle Branded Residential Development Vertical Construction (PA 6) 1/31/22 4 years after start. Project Component** considered complete when 70% of units are complete. Promenade Mixed-Use Village (PA 7 and PA 9) 7/1/23 5 years after start. Project Component** considered complete when 70% of units are complete. foundations/slabs (including the under slab utility work) and “vertical improvements” means such work and all improvements that follow. 172 EXHIBIT “A” -5- 12711468.4 4827-5243-0055.12 Item of Performance Start Completion* Resort Residential Village (PA 8) 7/1/23 5 years after start. Project Component** considered complete when 70% of units are complete. Permanent Golf Clubhouse Site Preparation (PA 10A) 5/30/21 8/30/21 Permanent Golf Clubhouse Vertical Construction (PA 10A) 8/30/21 8/30/22 Golf Bungalows Site Preparation (PA 10A) 5/30/21 8/30/21 Golf Bungalows Vertical Construction (PA 10A) 7/31/26 7/31/28 *Completion dates or timeframes listed in this table are the outside dates permissible under this Agreement and are subject to the terms of the Agreement which includes Section 602 of the Agreement. ** However, if Developer provides evidence reasonably satisfactory to the City that then existing market conditions do not allow for the development on economically feasible terms and orderly absorption of such product type to the point of completion within said initial 5-year period, then such period shall be extended for 3 years. 173 EXHIBIT “B” -1- 12711468.4 4827-5243-0055.12 EXHIBIT B MASTER SITE INFRASTRUCTURE PHASING PLAN 174 EXHIBIT “B” -2- 12711468.4 4827-5243-0055.12 175 EXHIBIT “C” -1- 12711468.4 4827-5243-0055.12 EXHIBIT “C” LUXURY HOTEL TOT FIRST AMENDMENT [See following pages] 176 698/015610-0065 16996899.3 a09/30/21 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 AMENDMENT NO. 1 to AMENDED AND RESTATED AGREEMENT CONTAINING COVENANTS, CONDITIONS, AND RESTRICTIONS AFFECTING REAL PROPERTY (Luxury Hotel) This AMENDMENT NO. 1 to AMENDED AND RESTATED AGREEMENT CONTAINING COVENANTS, CONDITIONS, AND RESTRICTIONS AFFECTING REAL PROPERTY (Luxury Hotel) (referred to herein as the "Luxury Hotel TOT Covenant First Amendment" or “Covenant First Amendment”) is entered into as of this ____ day of ____________, 20__ ("Covenant First Amendment Effective Date"), by and between the CITY OF LA QUINTA, a California municipal corporation and charter city ("City"), and SILVERROCK PHASE I, LLC, a Delaware limited liability company ("Owner") (individually a "Party" and collectively the "Parties"). RECITALS A. Pursuant to that certain Agreement to Share Transient Occupancy Tax Revenue (Luxury Hotel) dated on or about November 19, 2014 (“Luxury Hotel TOT Sharing Agreement”) by and between City and Owner (defined therein as “Participant”), Owner, among other things, was required to enter into a “Hotel Management Agreement” with a City-approved “Hotel Manager” (as defined in the Luxury Hotel TOT Sharing Agreement) for continuous operation as the Luxury Hotel, and in exchange the City would make periodic payments to the Owner (as Participant) in specified amounts based on amounts of TOT collected from the Luxury Hotel, as set forth in that certain Agreement Containing Covenants, Conditions, and Restrictions Affecting Real Property (Luxury Hotel) dated May 3, 2017 and recorded on November 6, 2017 as Instrument No. 2017-0463952, as amended by that certain Amended and Restated Agreement Containing Covenants, Conditions, and Restrictions Affecting Real Property (Luxury Hotel) dated November 28, 2018 and recorded on even date as Instrument No. 2018-0464671 (collectively, the “Luxury Hotel TOT Covenant Agreement”) in the Recorder’s Office. That certain real property subject to the Luxury Hotel TOT Covenant Agreement is 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 agreed to sell to Owner (or Owner’s affiliated predecessor-in-interest) the Site pursuant to that certain 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"), Amendment No. 2 to Purchase, Sale, and Development Agreement dated April 18, 2017 ("Amendment No. 2"), Amendment No. 3 to Purchase, Sale, and Development Agreement dated November, 28, 2018 ("Amendment No. 3"), and Amendment No. 4 to Purchase, Sale and Development Agreement dated ______________, 2021 (“Amendment No. 4” and collectively and as may be further amended, the "PSDA"). The PSDA sets forth the terms and conditions for City to sell to Owner the Site and certain adjacent EXHIBIT "C" - 2 - 177 698/015610-0065 16996899.3 a09/30/21 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 (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 Operator"), who shall be responsible for the management and operation of the Hotel pursuant to the terms of the Hotel Management Agreement. E.Owner is required to enter into and authorize for recording this Luxury Hotel TOT Covenant First Amendment as part of the City’s consideration for entering into Amendment No. 4, which, among other terms and conditions, modified the amounts for each rebate payment by City to Owner based on modifications to the percentages of receipts from the "Transient Occupancy Tax" (as that term is defined in the Luxury Hotel TOT Covenant Agreement) generated by the operation of the Hotel on the Site. 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: 1.DEFINED TERMS. Except as expressly defined in this Covenant First Amendment, all capitalized words and terms shall have the same meaning ascribed to them in the Luxury Hotel TOT Covenant Agreement. 2.MODIFICATION TO PERCENTAGE USED TO CALCULATE REBATE PAYMENT. The percentage used to determine the “amount available for Rebate” by the City in Section 4.1.2(a)(vi) of the Luxury Hotel TOT Covenant Agreement (specifically, the Amended and Restated Agreement Containing Covenants, Conditions, and Restrictions Affecting Real Property (Luxury Hotel) dated November 28, 2018 and recorded on even date as Instrument No. 2018-0464671) shall be reduced by five percentage points (i.e., reduced by subtracting 5%) from the total adjusted percentage to be applied upon the “Commencement Date” and throughout the “Operating Period” and “Term” as those terms are defined in the Luxury Hotel TOT Covenant Agreement. In explanation of the foregoing, the percentage used to determine the “amount available for Rebate” by the City shall be reduced by five percentage points (i.e., by subtracting 5%) so that the percentage applied within the first ten (10) years of the Operating Period shall be ninety percent (90%) instead of ninety-five percent (95% - 5% = 90%), and the percentage applied within in the last five (5) years of the Operating Period shall be seventy percent (70%) instead of seventy-five percent (75% - 5% = 70%). 3.RECORDING OF THIS COVENANT FIRST AMENDMENT. Developer shall record or cause to be recorded in the Recorder’s Office this Covenant First Amendment prior to or concurrently with the closing of the Revised Capitalization (as defined and as set forth in Amendment No. 4 to the PSDA). EXHIBIT "C" - 3 - 178 698/015610-0065 16996899.3 a09/30/21 4.COOPERATION OF THE PARTIES. Developer and City shall cooperate to execute (and record, if applicable) any other documents or amendments (including but not limited to amendments to the Luxury Hotel TOT Sharing Agreement) if necessary or convenient to memorialize the terms and conditions in Section 8.2 of Amendment No. 4 to the PSDA relating to the adjusted percentages to be applied to the Luxury Hotel TOT Covenant Agreement. 5.REMAINING PROVISIONS IN FULL FORCE AND EFFECT. Except as modified by this Covenant First Amendment, the terms and conditions set forth the Luxury Hotel TOT Covenant Agreement shall remain in full force and effect. 6.COUNTERPARTS. This Covenant First Amendment may be executed in counterparts, each of which, when this Covenant First Amendment has been signed by all of the parties hereto, shall be deemed an original, and each such counterpart shall constitute one and the same instrument. IN WITNESS WHEREOF, the Parties have executed this Covenant First Amendment to be effective as of the Covenant First Amendment Effective Date. "CITY" CITY OF LA QUINTA, a California municipal corporation and charter city Date:________________, 20__ By:_______________________________ Jon McMillen, City Manager ATTEST: By:_____________________________ Monika Radeva, City Clerk APPROVED AS TO FORM: RUTAN & TUCKER, LLP _______________________________ William H. Ihrke, City Attorney [continued on next page] EXHIBIT "C" - 4 - 179 698/015610-0065 16996899.3 a09/30/21 "Owner" SILVERROCK PHASE I, LLC, a Delaware limited liability company By: The Robert Green Company, a California corporation Its: Manager Date:________________, 20__ By:_________________________________ Name: Robert S. Green, Jr. Its: President and Chief Executive Officer EXHIBIT "C" - 5 - 180 698/015610-0065 16996899.3 a09/30/21 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) 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) EXHIBIT "C" - 6 - 181 698/015610-0065 16996899.3 a09/30/21 EXHIBIT NO. 1 LEGAL DESCRIPTION OF SITE [SUBSTITUTE PAGE FOR CORRECT LEGAL DESCRIPTION IF MODIFIED BY MAPS] Those portions of Sections 5, 6 and 8 Township 6 South, Range 7 East, San Bernardino Meridian, in the City of La Quinta, County of Riverside, State of California, described as follows: Parcels 3 and 4 of Parcel Map 37207 per map filed in Book 242, Pages 72 through 87 inclusive, of Parcel Maps, in the office of the County Recorder of Riverside County, State of California. EXHIBIT "C" - 7 - 182 EXHIBIT “D” -1- 12711468.4 4827-5243-0055.12 EXHIBIT “D” LIFESTYLE HOTEL TOT FIRST AMENDMENT [See following pages] 183 698/015610-0065 16996359.3 a09/30/21 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 AMENDMENT NO. 1 to AGREEMENT CONTAINING COVENANTS, CONDITIONS, AND RESTRICTIONS AFFECTING REAL PROPERTY (Lifestyle Hotel) This AMENDMENT NO. 1 to AGREEMENT CONTAINING COVENANTS, CONDITIONS, AND RESTRICTIONS AFFECTING REAL PROPERTY (Lifestyle Hotel) (referred to herein as the "Lifestyle Hotel TOT Covenant First Amendment" or “Covenant First Amendment”) is entered into as of this ____ day of ____________, 20__ ("Covenant First Amendment Effective Date"), by and between the CITY OF LA QUINTA, a California municipal corporation and charter city ("City"), and SILVERROCK PHASE I, LLC, a Delaware limited liability company ("Owner") (individually a "Party" and collectively the "Parties"). RECITALS A.Pursuant to that certain Agreement to Share Transient Occupancy Tax Revenue (Lifestyle Hotel) dated on or about November 28, 2018 (“Lifestyle Hotel TOT Sharing Agreement”) by and between City and Owner (defined therein as “Participant”), Owner, among other things, was required to enter into a “Hotel Management Agreement” with a City-approved “Hotel Manager” (as defined in the Lifestyle Hotel TOT Sharing Agreement) for continuous operation as the Lifestyle Hotel, and in exchange the City would make periodic payments to the Owner (as Participant) in specified amounts based on amounts of TOT collected from the “Lifestyle Hotel,” as set forth in that certain Agreement Containing Covenants, Conditions, and Restrictions Affecting Real Property (Lifestyle Hotel), dated November 28, 2018 and recorded on even date as Instrument No. 2018-0464678 (the “Lifestyle Hotel TOT Covenant Agreement”) in the Recorder’s Office. That certain real property subject to the Lifestyle Hotel TOT Covenant Agreement is 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 agreed to sell to Owner (or Owner’s affiliated predecessor-in-interest) the Site pursuant to that certain 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"), Amendment No. 2 to Purchase, Sale, and Development Agreement dated April 18, 2017 ("Amendment No. 2"), Amendment No. 3 to Purchase, Sale, and Development Agreement dated November, 28, 2018 ("Amendment No. 3"), and Amendment No. 4 to Purchase, Sale and Development Agreement dated ______________, 2021 (“Amendment No. 4” and collectively and as may be further amended, 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 EXHIBIT "D" - 2 - 184 698/015610-0065 16996359.3 a09/30/21 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 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 Operator"), who shall be responsible for the management and operation of the Hotel pursuant to the terms of the Hotel Management Agreement. E.Owner is required to enter into and authorize for recording this Lifestyle Hotel TOT Covenant First Amendment as part of the City’s consideration for entering into Amendment No. 4, which, among other terms and conditions, modified the amounts for each rebate payment by City to Owner based on modifications to the percentages of receipts from the "Transient Occupancy Tax" (as that term is defined in the Lifestyle Hotel TOT Covenant Agreement) generated by the operation of the Hotel on the Site. 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: 1.DEFINED TERMS. Except as expressly defined in this Covenant First Amendment, all capitalized words and terms shall have the same meaning ascribed to them in the Lifestyle Hotel TOT Covenant Agreement. 2.MODIFICATION TO PERCENTAGE USED TO CALCULATE REBATE PAYMENT. The percentage used to determine the “amount available for Rebate” by the City in Section 4.1.2(a)(vi) of the Lifestyle Hotel TOT Covenant Agreement shall be reduced by five percentage points (i.e., reduced by subtracting 5%) from the total adjusted percentage to be applied upon the “Commencement Date” and throughout the “Operating Period” and “Term” as those terms are defined in the Lifestyle Hotel TOT Covenant Agreement. In explanation of the foregoing, the percentage used to determine the “amount available for Rebate” by the City shall be reduced by five percentage points (i.e., by subtracting 5%) so that the percentage applied within the first ten (10) years of the Operating Period shall be ninety percent (90%) instead of ninety-five percent (95% - 5% = 90%), and the percentage applied within in the last five (5) years of the Operating Period shall be seventy percent (70%) instead of seventy-five percent (75% - 5% = 70%). 3.RECORDING OF THIS COVENANT FIRST AMENDMENT. Developer shall record or cause to be recorded in the Recorder’s Office this Covenant First Amendment prior to or concurrently with the closing of the Revised Capitalization (as defined and as set forth in Amendment No. 4 to the PSDA). 4.COOPERATION OF THE PARTIES. Developer and City shall cooperate to execute (and record, if applicable) any other documents or amendments (including but not limited to amendments to the Lifestyle Hotel TOT Sharing Agreement) if necessary or convenient to EXHIBIT "D" - 3 - 185 698/015610-0065 16996359.3 a09/30/21 memorialize the terms and conditions in Section 8.2 of Amendment No. 4 to the PSDA relating to the adjusted percentages to be applied to the Lifestyle Hotel TOT Covenant Agreement. 5.REMAINING PROVISIONS IN FULL FORCE AND EFFECT. Except as modified by this Covenant First Amendment, the terms and conditions set forth the Lifestyle Hotel TOT Covenant Agreement shall remain in full force and effect. 6.COUNTERPARTS. This Covenant First Amendment may be executed in counterparts, each of which, when this Covenant First Amendment has been signed by all of the parties hereto, shall be deemed an original, and each such counterpart shall constitute one and the same instrument. IN WITNESS WHEREOF, the Parties have executed this Covenant First Amendment to be effective as of the Covenant First Amendment Effective Date. "CITY" CITY OF LA QUINTA, a California municipal corporation and charter city Date:________________, 20__ By:_______________________________ Jon McMillen, City Manager ATTEST: By:_____________________________ Monika Radeva, City Clerk APPROVED AS TO FORM: RUTAN & TUCKER, LLP _______________________________ William H. Ihrke, City Attorney [continued on next page] EXHIBIT "D" - 4 - 186 698/015610-0065 16996359.3 a09/30/21 "Owner" SILVERROCK PHASE I, LLC, a Delaware limited liability company By: The Robert Green Company, a California corporation Its: Manager Date:________________, 20__ By:_________________________________ Name: Robert S. Green, Jr. Its: President and Chief Executive Officer EXHIBIT "D" - 5 - 187 698/015610-0065 16996359.3 a09/30/21 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) 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) EXHIBIT "D" - 6 - 188 698/015610-0065 16996359.3 a09/30/21 EXHIBIT NO. 1 LEGAL DESCRIPTION OF SITE [SUBSTITUTE PAGE FOR CORRECT LEGAL DESCRIPTION IF MODIFIED BY MAPS] Those portions of Sections 5, 6 and 8 Township 6 South, Range 7 East, San Bernardino Meridian, in the City of La Quinta, County of Riverside, State of California, described as follows: Parcel 7 of Parcel Map 37207 per map filed in Book 242, Pages 72 through 87 inclusive, of Parcel Maps, in the office of the County Recorder of Riverside County, State of California. EXHIBIT "D" - 7 - 189 190