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2023-10-13 SilverRock - PAs 7-9 Financing (Keillor) City Subordination Agrmt PSDA DOC # 2023-0302972Recording Requested By: Fidelity National Title Builder Services RECORDING REQUES IBD BY AND WHEN RECORDED MAIL TO: RAF Pacifica Loan Opportunity Fund I, LLC Arnold Fishman, as Trustee of The Arnold Fishman Revocable Trust dated July 15, 1999 c/o Keillor Capital, Inc. 2429 W. Coast Hwy., Suite 210 Newport Beach, CA 92663 Attn: Eric Keillor DOC # 2023-0302972 10/13/2023 04:28 PM Fees: $86.00 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: MARIA VICTORIA #411 (Space Above For Recorder's Use) SUBORDINATION AGREEMENT THIS SUBORDINATION AGREEMENT ("Agreement" or "Subordination Agreement") is dated as of October 13 , 2023, by and between CITY OF LA QUINTA, a California municipal corporation and charter city (the "City"), and RAF Pacifica Loan Opportunity Fund I, LLC, a Delaware limited liability company and Arnold Fishman, as Trustee of The Arnold Fishman Revocable Trust dated July 15, 1999 (each individually and collectively, the "Lender") City and Lender may hereinafter be referred to as a "Party" or the "Parties." This Agreement is made with reference to the following facts and circumstances: RECITALS: A. On or about the date of this Agreement, RGC PA 789, LLC, a Delaware limited liability company, SilverRock Land II, LLC, a Delaware limited liability company (each individually and collectively, the "Borrower") and Lender have entered into that certain Loan and Security Agreement (as amended from time to time, the "Loan Agreement") pursuant to which Lender is making or has made available to Borrower funds in the original maximum principal amount of Twenty -Five Million and No/100 Dollars ($25,000,000.00)) (the "Loan"). B. The Loan is evidenced by that certain Secured Note of even date with the Loan Agreement (as may be amended, extended, renewed, supplemented, restated or otherwise modified from time to time, the "Note") executed by Borrower and made payable to the order of Lender, with interest and other charges thereon. The Note is secured by that certain Deed of Trust, Assignment of Leases and Rents, Fixture Filings, and Security Agreement of even date with the Loan Agreement (the "Deed of Trust"), executed by Borrower, as trustor, for the benefit of Lender, as beneficiary, creating a first lien on Borrower's fee interest in the real property more particularly described on Exhibit A attached hereto (the "PA 7, 8, & 9 Property"). The Loan Agreement, Note and Deed of Trust and all other documents relating to the Loan are referred to herein as the "Loan Documents." Deed of Trust being recorded concurrently herewith. C. City and SilverRock Development Company, LLC, a Delaware limited liability company ("SDC"), entered into that certain, Purchase, Sale, and Development Agreement dated unrecorded Exempt from fee per GC 27388.1 (a) (1); fee cap of $225.00 reached. Subordination Agreement DOC #2023-0302972 Page 2 of 25 November 19, 2014 (the "Original PSDA"), as amended by that certain Amendment No. 1 to Purchase, Sale, and Development Agreement dated October 29, 2015 ("Amendment No. 1"), that certain Amendment No. 2 to Purchase, Sale, and Development Agreement dated April 18, 2017 ("Amendment No. 2"), that certain Amendment No. 3 to Purchase, Sale, and Development Agreement dated November 28, 2018 ("Amendment No. 3"), and that certain Amendment No. 4 to Purchase, Sale, and Development Agreement dated October 12, 2021 ("Amendment No. 4"), which generally provide for the development by SDC of the SilverRock Resort Area for various project components on identified "Planning Areas" with corresponding legal parcels for those project components, as more specifically detailed therein (collectively, the Original PSDA, Amendment No. 1, Amendment No. 2, Amendment No, 3, and Amendment No. 4 are referred to as the "PSDA" and are public records available for review and inspection during regular business hours at La Quinta City Hall located at 78495 Calle Tampico, La Quinta, CA 92253). SDC has represented to City that Borrower is a permitted transferee and an entity that meets requirements in accordance with Section 603.1(b) as amended in Paragraph 5 of Amendment No. 3 of the PSDA. The PA 7,8, & 9 Property subject to this Subordination Agreement is only a portion of the property and project that comprise the entire SilverRock Resort Area, as the PA 7,8, & 9 Property subject to this Subordination Agreement is referred to in the PSDA a "Planning Areas 7, 8, and 9" that serve as the sites for the "Project Components" described as the "Prominade Mixed -Use Village" and "Resort Residential Village" as defined in Section 100 of the Original PSDA and depicted in Exhibit "A" [Site Map] and referenced in Exhibit "D" [Schedule of Acreage] of Amendment No. 3 of the PSDA. D. The Loan as referenced in Recital A of this Subordination Agreement will be used to (i) pay the standard closing costs associated with the Loan transaction, (ii) create a holdback (the "Holdback") in the approximate amount of $700,000.00 for the purpose of funding the costs to complete the planning, application, and City -processing for approval of the development plan and site development permit(s) for the PA 7,8, & 9 Property, (iii) create a restricted reserve in the amount of $458,000, (iv) create a real estate tax fund in the amount of $143,304.39, and (v) the balance of the Loan first will be used to pay off and remove all mechanic's liens (other than those of the two general contractors) recorded against the Phase lA Property and Phase 11i Property (as defined in Amendment No. 2 of the PSDA). E. The PA 7,8, & 9 Property is subject to that certain Option Agreement (Phase 113 Property — PA 7, 8 and 9) by and between City and SilverRock Phase 1, LLC, a Delaware limited liability company, and permitted transferee and successor in interest to SDC (the "Option Agreement"), recorded in the official records of the Riverside County Recorder's Office as Document # 2018-0464677, under which the City has certain rights to repurchase the PA 7,8, & 9 Property and certain rights of first offer if the City had the right to repurchase the PA 7,8, & 9 Property but elected not to do so (collectively referred to herein as the "Repurchase Rights"). F. The PA 7,8, & 9 Property is subject to that certain Acknowledgement Letter dated as of September , 2023 and executed and acknowledged by the City of La Quinta ("Acknowledgement Letter"), to acknowledge those certain terms of the PSDA which relate to the loan and the secured interest affecting the PA 7,8, & 9 Property and such Acknowledgement Letter is attached hereto as Exhibit B and incorporated herein to this Agreement by this reference. -2- Subordination Agreement DOC #2023-0302972 Page 3 of 25 G. As a condition to making the Loan, Lender requires that the Repurchase Rights be made subordinate to the lien of the Deed of Trust. H. Lender and City desire to enter into this Agreement to set forth their agreement regarding (i) the subordination of the Repurchase Rights to the Deed of Trust, (ii) the rights of City in the event Borrower defaults under the any Loan Document, and (iii) the rights of Lender in the event Borrower defaults under the PSDA. NOW, THEREFORE, in consideration of the foregoing recitals and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, City and Lender hereby agree as follows: AGREMENT: 1. Effective Date of Agreement; Subordination of Repurchase Rights. This Subordination Agreement shall be binding and effective only upon satisfaction of the conditions set forth in Paragraph 2 of the Acknowledgement Letter and upon the recording of this Agreement, which date shall be the "Effective Date" of this Agreement. From the Effective Date and thereafter, City agrees that the Repurchase Rights are hereby made subordinate to the lien of the Deed of Trust and that the Deed of Trust shall be and remain at all times a lien on the PA 7,8, & 9 Property prior and superior to the lien or charge of the Repurchase Rights on the PA 7,8, & 9 Property until the Loan evidenced by the Note and secured by the Deed of Trust is paid in full and the Deed of Trust has been fully reconveyed. Upon the full reconveyance of the Deed of Trust, this Subordination Agreement shall be terminated, and City, Borrower and Lender shall have the mutual obligation to execute, in a recordable form, an instrument terminating this Subordination Agreement and record said instrument to memorialize this Agreement is no longer a lien encumbering the PA 7,8, & 9 Property. City acknowledges that, from the Effective Date until the termination of this Subordination Agreement, Lender is the holder of a "Valid Lien" as such term is defined in the Option Agreement. 2. Lender Covenants. In connection with any Event of Default (as defined in the Loan Agreement) under any Loan Document, City shall have the following rights (but not obligations) ("City Cure Rights"): (a) Lender will notify City in writing concurrently with any notice given to Borrower of any Event of Default (each, a "Loan Default Notice"); (b) Lender will also provide City with a copy of any Notice of Trustee Sale recorded against the title to the PA 7,8, & 9 Property concurrently with its delivery of such Notice of Trustee Sale to Borrower; (c) at any time prior to a Trustee's sale (or recording of a deed in lieu thereof) under the Deed of Trust, City shall have the right to cure any default under any Loan Document within the same cure period afforded Borrower under the Loan Documents and to negotiate with the Lender regarding Borrower's Event of Default; and (d) 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 -3- Subordination Agreement DOC #2023-0302972 Page 4 of 25 vesting of title in the name of Lender or its assignee or designee) prior to observing the above City Cure Rights and prior to the date that is at least six (6) months after the Lender delivers a written copy of the Loan Default Notice to City. 3. City Covenants. In connection with any Default (as defined in the PSDA) under the PSDA or any exercise of its Repurchase Rights, Lender shall have the following rights (but not obligations) ("Lender Cure Rights"): (a) City will notify Lender in writing concurrently with any notice given to Borrower of any Default (each, a "PSDA Default Notice"); (b) City will also provide Lender with a copy of any notice of exercise of any Repurchase Rights; (c) at any time prior to the exercise by City of any Repurchase Rights, Lender shall have the right to cure any default under the PSDA within the same cure period afforded Borrower thereunder (or as otherwise afforded the Lender under Sections 311 and 603 of the PSDA) and to negotiate with the City regarding Borrower's Default thereunder; and (d) City shall not exercise its Repurchase Rights or take any similar action that would result in the ownership and vesting of title in the name of City (or its assignee or designee) prior to observing the above Lender Cure Rights and affording to Lender, within the cure period to cure the identified default under the PSDA, an opportunity to propose to City alternatives to such action by City which address the interests of the Lender relative to the PA 7,8, & 9 Property. 4. Notices. All notices, demands, requests, consents, approvals or other communications required, permitted, or desired to be given hereunder shall be in writing and shall be delivered in person or by commercial overnight courier or mailed certified mail, postage prepaid, return receipt requested, addressed to the party to be so notified at its address set forth below, or to such other address as such party may hereafter specify in accordance with the provisions of this Section 4. Any such notice or other communication shall be deemed received and effective upon the earlier of (i) if personally delivered, the date of delivery to the address of the person to receive such notice; (ii) if delivered by commercial overnight carrier, one (1) day following the receipt of such communication by such carrier from the sender, as shown on the sender's delivery invoice from such carrier; or (iii) if mailed, forty-eight (48) hours after the date of posting by the United States Post Office as shown by the sender's registry or certification receipt, as the case may be. Any reference herein to the date of receipt, delivery, or giving, as the case may be, of any notice or other communication shall refer to the date such communication becomes effective under the terms of this Section 4. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to constitute receipt of the notice or other communication sent. The address of each party is as follows: City: City of La Quinta 78-495 Calle Tampico La Quinta, California 92253 Attn: City Manager -4- Subordination Agreement DOC #2023-0302972 Page 5 of 25 5. Estoppel Statement. City certifies to Lender that as of the date of this Agreement: (1) the PSDA and the "PSDA Covenant Documents" (as defined in PSDA Amendment No. 3) are in full force and effect; and (ii) there is currently no Notice of Default issued or delivered to Developer under the PSDA. Subject to the terms and conditions in this Subordination Agreement, City consents to the collateral assignment vis-a-vis the Deed of Trust by the Borrower to Lender. 6. No Third Party Beneficiaries; No Modification. The parties hereto do not intend the benefits of this Agreement to inure to Borrower or any other person or entity not a party to this Agreement (including, without limitation, any third -party beneficiary). This Agreement may not be changed or terminated orally, but only by an agreement in writing signed by each of City and Lender. 7. Successors and Assigns. This Agreement shall bind all successors and permitted assigns of each Party and shall inure to the benefit of all successors and permitted assigns of each Party. 8. Counterpart Originals. This Agreement may be executed in counterpart originals, each of which shall constitute an original, and all of which together shall constitute one (1) and the same agreement. Counterparts executed and/or transmitted via electronic means shall be valid and binding as if they are hand -signed and hand -delivered counterparts. 9. Legal Construction. In all respects, including, without limitation, matters of construction and performance of this Agreement and the obligations arising hereunder, this Agreement shall be governed by, and construed in accordance with, the internal laws of the State of California applicable to agreements intended to be wholly performed within the State of California (without regard to conflict of laws). [Signatures on Following Page] -5- Subordination Agreement with copy to: Rutan & Tucker, LLP 18575 Jamboree Road, 9th Floor Irvine, California 92612 Attn: William H. Ihrke, Esq. Lender: RAF Pacifica Loan Opportunity Fund 1, LLC Arnold Fishman, as Trustee of The Arnold Fishman Revocable Trust dated July 15, 1999 c/o Keillor Capital, Inc. 2429 W. Coast Hwy., Suite 210 Newport Beach, CA 92663 Attn: Erik Keillor 5. Estoppel Statement. City certifies to Lender that as of the date of this Agreement: (1) the PSDA and the "PSDA Covenant Documents" (as defined in PSDA Amendment No. 3) are in full force and effect; and (ii) there is currently no Notice of Default issued or delivered to Developer under the PSDA. Subject to the terms and conditions in this Subordination Agreement, City consents to the collateral assignment vis-a-vis the Deed of Trust by the Borrower to Lender. 6. No Third Party Beneficiaries; No Modification. The parties hereto do not intend the benefits of this Agreement to inure to Borrower or any other person or entity not a party to this Agreement (including, without limitation, any third -party beneficiary). This Agreement may not be changed or terminated orally, but only by an agreement in writing signed by each of City and Lender. 7. Successors and Assigns. This Agreement shall bind all successors and permitted assigns of each Party and shall inure to the benefit of all successors and permitted assigns of each Party. 8. Counterpart Originals. This Agreement may be executed in counterpart originals, each of which shall constitute an original, and all of which together shall constitute one (1) and the same agreement. Counterparts executed and/or transmitted via electronic means shall be valid and binding as if they are hand -signed and hand -delivered counterparts. 9. Legal Construction. In all respects, including, without limitation, matters of construction and performance of this Agreement and the obligations arising hereunder, this Agreement shall be governed by, and construed in accordance with, the internal laws of the State of California applicable to agreements intended to be wholly performed within the State of California (without regard to conflict of laws). [Signatures on Following Page] -5- Subordination Agreement DOC #2023-0302972 Page 6 of 25 IN WITNESS WHEREOF, Parties have executed this Agreement as of the date and year first set forth above. CITY: ATTEST: CITY OF LA QUINTA, a California municipal corporation and charter city By: on McMillen Its: City Manager Monika Radeva, C APPROVED AS TO FORM: RUTAN & TUCKER, LLP By: William H. Ihrke, City Attorney LENDER: RAF Pacifica Loan Opportunity Fund 1, LLC, a Delaware limited liability company By: Name: Title: SIGNED IN COUNTERPART Arnold Fishman, as Trustee of The Arnold Fishman Revocable Trust dated July 15, 1999 By: SIGNED IN COUNTERPART Arnold Fishman, Trustee -Sig. 1 - Subordination Agreement DOC #2023-0302972 Page 7 of 25 IN WITNESS WHEREOF, Parties have executed this Agreement as of the date and year first set forth above. CITY: ATTEST: SIGNED IN COUNTERPART Monika Radeva, City Clerk APPROVED AS TO FORM: RUTAN & TUCKER, LLP By: William H. Ihrke, City Attorney LENDER: CITY OF LA QUINTA, a California municipal corporation and charter city SIGNED IN COUNTERPART By: Jon McMillen Its: City Manager RAF Pacifica Loan Opportunity Fund 1, LLC, a Delaware ligfiited liability company, By: Name: <,_.(4-e v pct r Title: Arnold Fishman, as Trustee of The Arnold Fishman Revocable Trust dated July 15, 1999 By: SIGNED IN COUNTERPART Arnold Fishman, Trustee -Sig. 1 - Subordination Agreement DOC #2023-0302972 Page 8 of 25 IN WITNESS WHEREOF, Parties have executed this Agreement as of the date and year first set forth above, CITY: CITY OF LA QUINTA, a California municipal corporation and charter city SIGNED IN COUNTERPART By: Jon McMillen Its: City Manager ATTEST: SIGNED IN COUNTERPART Monika Radeva, City Clerk APPROVED AS TO FORM: RUTAN & TUCKER, LLP By: SIGNED IN COUNTERPART William H. Ihrke, City Attorney LENDER: RAF Pacifica Loan Opportunity Fund I, LLC, a Delaware limited liability company By: SIGNED IN COUNTERPART Name: Title: Arnold Fishman, as Trustee of The Arnold Fishman Revocable Trust dated July 15, 1999 By. Arnold Fishman, Trustee -Sig. 1 - Subordination Agreement Acknowledged as of the date first written above: RGC PA 789, LLC, a Delaware limited liability company By: The Robert Green Company, a California corporation Its: Ma(nwr--- By: Robert Gree , President Silverrock Land II, LLC, a Delaware limited liability company By: The Robert Green Company, a California corporation Its: anage By: Robert Gr7 President -2- DOC #2023-0302972 Page 9 of 25 Subordination Agreement DOC #2023-0302972 Page 10 of 25 NOTARY ACKNOWLEDGMENT 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 September 20, 2023 before me, MONIKA RADEVA, Notary Public, personally appeared JON McMILLEN who proved to me on the basis of satisfactory evidence to be -the person fs3 whose name(s) islare subscribed to the within instrument, and acknowledged to me that he/chc/they executed the same in his/he ei,* authorized capacity(ies), and that by his/her/their signatures) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature: DOCUMENT: MOMIKA RADEVA Notary Public - California rI Riverside County Commission # 2334260 My Comm, Expires Oct 22, 2024 (notary seal) SilverRock PA 7-9 Financing — Subordination Agreement: RAF Pacifica Loan Opportunity Fund I, LLC; Arnold Fishman, as Trustee of the Arnold Fishman Revocable Trust dated July 15, 1999 DOC #2023-0302972 Page 11 of 25 ACKNOWLEDGMENT 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 ofAex,j--ri ) On QC T • o7-3 , before me, Alec IV * eite.*e-roer (insert name of notary) Notary Public, personally appeared Sven , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signatures) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature , L.fLO �� (Seal) Acknowledgment ALEXAN, ELLENBERGER Notary Public • California Santa Barbara County Commission ; 2390041 My Comm, Expires Jan 10, 2026 Subordination Agreement DOC #2023-0302972 Page 12 of 25 ILLEGIBLE NOTARY SEAL DECLARATION GOVERNMENT CODE SECTION 27361.7 I CERTIFY UNDER PENALTY OF PERJURY THAT THE NOTARY SEAL ON THE DOCUMENT TO WHICH THIS STATEMENT IS ATTACHED READS AS FOLLOWS: NAME OF NOTARY NAME OF COUNTY ! t -e x a N. i l I nbe it er Santa Barbara DATE COMMISSION EXPIRES COMMISSION NUMBER VENDOR NUMBER SIGNED I-- 10- 762‘ 23c10041 NINPit PLACE OF EXECUTION DATE RIVERSIDE, CA 10/13/23 Notary Seal Affidavit (notarysealaff)(04-06) DOC #2023-0302972 Page 13 of 25 ACKNOWLEDGMENT 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 4OS� On 6'440 belt 61k 17413 , before me, Eil`" " �, Ss'evt 00415 (insert name of notary) Notary Public, personally appeared '°`°t , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. 1 certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS m hand and official seal. Signature ' (Seal) Acknowledgment ELLtOT JAMISON NICHOLS Notary Public - California Los Angeles County Commission # 2417594 My Comm. Expires Sep 22, 2026 Subordination Agreement DOC #2023-0302972 Page 14 of 25 TRUE COPY CERTIFICATION (Government Code 27361.7) Ri Ve S [ dt , California Place of Execution (City and State) I certify under penalty of perjury that this material is a true copy of the original material contained in this document. 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 COI 1I'drnic& County of L a S A n9t.t4.-s On 10—(a" 2623 before me, ELL I04- Jgmr s on Alf Ch UIS , Notary Public personally appeared Arno id Fishman who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. 1 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) eRecording Partners Network I6-13 -203 By: � Date Signature of Declarant Mgn.tcG Medi -d(6\ Type or Print Name Acknowledged as of the date first written above: RGC PA 789, LLC, a Delaware limited liability company By: The Robert Green Company, a California corporation Its: Man By: Robert Green, President Silverrock Land II, LLC, a Delaware limited liability company By: The Robert Green Company, a California corporation Its: Mana e Robert Gre President -2- DOC #2023-0302972 Page 15 of 25 Subordination Agreement DOC #2023-0302972 Page 16 of 25 ACKNOWLEDGMENT 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 Safk ) On (b (- , before me, C- ':. td.e.. (insert name of notary) Notary Public, personally appeared '1 , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) Acknowledgment CARI HATFIELD I NOTARY PUBLIC -CALIFORNIA COMM. #2435456 t SAN DIEG0 COUNTY ,,, My Commission Expires JANUARY 22, 2027 Subordination Agreement DOC #2023-0302972 Page 17 of 25 ILLEGIBLE NOTARY SEAL DECLARATION GOVERNMENT CODE SECTION 27361.7 I CERTIFY UNDER PENALTY OF PERJURY THAT THE NOTARY SEAL ON THE DOCUMENT TO WHICH THIS STATEMENT IS ATTACHED READS AS FOLLOWS: NAME OF NOTARY NAME OF COUNTY Ca( kkk+Fretd DATE COMMISSION EXPIRES COMMISSION NUMBER VENDOR NUMBER SIGNED PLACE OF EXECUTION DATE San Ding© i -L2 -202 -- CSC._ RIVERSIDE, CA Notary Seal Affidavit (notarysealaff)(04-06) 10/13/23 DOC #2023-0302972 Page 18 of 25 ACKNOWLEDGMENT 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 �,_ On Go —Eta - 3 , before me, Notary Public, personally appeared the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. i N (insert name of notary) 9e, yam'- , who proved to me on WITNESS my hand and official seal. Signature ate€ ; (Seal) Acknowledgment CAR HATFIELD COMM. #2435456 NOTARY PUBLIC -CALIFORNIA SAN MEG° COUNTY My Commission Expires JANUARY :Yit,_AAi17 Subordination Agreement DOC #2023-0302972 Page 1'9 of 25 EXHIBIT A LEGAL DESCRIPTION THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS: PARCEL 1: THAT PORTION OF PARCEL 10 OF PARCEL MAP NO. 37207, IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY A MAP FILED IN BOOK 242, PAGES 72 THROUGH 87, INCLUSIVE OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: PARCEL "B" OF LOT LINE ADJUSTMENT NO. 2020-0007, RECORDED AUGUST 20, 2021 AS INSTRUMENT NO. 2021-0499856 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, STATE OF CALIFORNIA, AS DESCRIBED THEREIN. APN 777-060-083 PARCEL 2: THAT PORTION OF PARCEL 11 OF PARCEL MAP NO. 37207, IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY A MAP FILED IN BOOK 242, PAGES 72 THROUGH 87„ INCLUSIVE OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: PARCEL "C" OF LOT LINE ADJUSTMENT NO. 2020-0007, RECORDED AUGUST 20, 2021 AS INSTRUMENT NO. 2021-0499856 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, STATE OF CALIFORNIA, AS DESCRIBED THEREIN. APN 777-060-085 PARCEL 3: PARCEL 12 OF PARCEL MAP NO. 37207, AS SHOWN BY A MAP FILED IN BOOK 242, PAGES 72 THROUGH 87, INCLUSIVE OF PARCEL MAPS, IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPTING THEREFROM ALL OIL, GAS, HYDROCARBON SUBSTANCES, AND MINERALS OF EVERY KIND AND CHARACTER LYING MORE THAN FIVE HUNDRED (500) FEET BELOW THE SURFACE, TOGETHER WITH THE RIGHT TO DRILL INTO, THROUGH, AND TO USE AND OCCUPY ALL PARTS OF THE PHASE IA AND 1B PROPERTY LYING MORE THAN FIVE HUNDRED (500) FEET BELOW THE SURFACE THEREOF FOR ANY AND ALL PURPOSES INCIDENTAL TO THE EXPLORATION FOR AND PRODUCTION OF OIL, GAS, HYDROCARBON SUBSTANCES OR MINERALS FROM SAID PHASE 1A AND 1B PROPERTY OR OTHER LANDS, BUT WITHOUT, HOWEVER, ANY RIGHT TO USE EITHER THE SURFACE FROM SAID PHASE 1A AND 1B PROPERTY OR ANY PORTION THEREOF WITHIN FIVE HUNDRED (500) FEET OF THE SURFACE FOR ANY PURPOSE OR PURPOSES WHATSOEVER, OR TO USE THE PHASE 1A AND 1B PROPERTY IN SUCH A MANNER AS TO CREATE A DISTURBANCE TO THE USE OR ENJOYMENT OF THE PHASE IA AND 1B PROPERTY, AS RESERVED BY THE CITY OF LA QUINTA, A CALIFORNIA MUNICIPAL CORPORATION AND CHARTER CITY, IN THE GRANT DEED RECORDED NOVEMBER 28, 2018, AS INSTRUMENT NO. 2018-0464674 AND RECORDED NOVEMBER 6, 2017, AS INSTRUMENT NO. 2017-0463950, BOTH OF OFFICIAL RECORDS. APN 777-060-075 AND APN 777-060-078 DOC #2023-0302972 Page 20 of 25 EXHIBIT B City of La Quinta Acknowledgement Letter [attached] EXHIBIT B -1- Subordination Agreement DOC #2023-0302972 Page 21 of 25 EXHIBIT B SILVERROCK DEVELOPMENT COMPANY, LLC September 19, 2023 Mr. Jon McMillen City Manager City of La Quinta 78495 Calle Tampico La Quinta, CA 92253 Re: Purchase, Sale and Development Agreement (as amended, "PSDA") 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") Dear Jon: Preliminarily, please note that terms used in this letter and not otherwise defined have the definitions given in the PSDA, as amended by Amendment Nos. 1, 2, 3, and 4. As you know from our recent discussions, Developer's finance plan for the overall Silver Rock Resort Area has several components. One component is an approximately up to $25 million loan with initial gross loan amount of $12.5 million (the "$25 million loan" or "loan") secured by deed of trust (as described in Section 311, and specifically Sections 311.1-311.6, of the original PSDA) recorded against Planning Areas 7, 8 and 9 (Parcels 10, 11 and 12 of Parcel Map No. 37202, Filed in Book 242, Pages 72 through 87 of Marcel Maps, in the Office of the County Recorder of Riverside County, California (the "PA 7,8,9 Property"). This loan will be used to (i) pay the standard closing costs associated with the loan transaction, (ii) create a holdback (the "Completion Holdback") in the approximate amount of $700,000.00 for the purpose of funding the costs to complete the planning, application, and City -processing for approval of the development plan and site development permit(s) for the PA 7,8,9 Property, (111) create a restricted reserve in the amount of $458,000.00 (the "Restricted Reserve"), (iv) create a real estate tax fund in the amount of $143,304.39 (the "Tax Fund" and together with the Completion Holdback and the Restricted Reserves, the "Lender Holdbacks"), and (v) the balance of this loan, in an amount to be determined but not to be less than $10,000,000, first will be used to pay off and remove all mechanic's liens (other than those of the two general contractors) recorded against the Phase 1A Property and the Phase 1B Property (as defined in PSDA Amend. No. 2) (the "Mechanic's Liens Payoffs"). The deed of trust shall secure only the amount of the loan described in this letter and shall not secure any other financing previously obtained or to be obtained by Developer for the Project. At the request of the prospective lender of the $25 million loan, I am seeking your acknowledgement of certain terms of the PSDA which will relate to the loan and the secured interest affecting the PA 7,8,9 Property. 343 Fourth Avenue, San Diego, CA 92101, (760) 634-6543 EXHIBIT B Mr. Jon McMillen September 19, 2023 Page 2 DOC #2023-0302972 Page 22 of 25 First, the lender will require that the borrower under the loan be a new entity. Therefore, the PA 7,8,9 Property will be transferred to such new entity in accordance with Section 603.1(b) as amended in Paragraph 5 of Amend. No. 3 of the PSDA. The lender is seeking acknowledgment that such a transfer is permitted. To accommodate this, the PA 7,8,9 Property will be transferred to a new entity directly or indirectly owned or controlled by the Developer and which will satisfy the requirements set forth in Section 603.1(d) as amended in Paragraph 6.1 of Amend. No. 4 of the PSDA. Second, the lender will want to obtain from the City the Subordination Agreement called for in Section 7(g) of the Option Agreement affecting the PA 7,8,9 Property, recorded in the Riverside County Recorder's Office on November 11, 2018 as Instrument No. 2018-0464677 (the "PA 7,8,9 Property Option Agreement") but also will want the Subordination Agreement to contain terms referring to the cure rights of lender under Sections 311.3 and 311.6 of the original PSDA and terms addressing Lender's and its successor's rights to complete the development and/or transfer the subject property after obtaining title through enforcement of the lender's rights. The lender seeks the City's acknowledgement that the City will provide such Subordination and by signing below, the City hereby acknowledges and agrees it will provide such Subordination, subject to the terms hereof and the Subordination Agreement being in form and substance satisfactory to the City. It is understood, and the City requires, that such Subordination Agreement would be delivered into a closing escrow and would be effective only upon recording and would be recorded only upon the condition that the balance of the loan, after payment of closing costs, the Lender Holdbacks described above, and the Mechanic's Liens Payoffs described above (whether such Mechanic's Liens Payoffs are made available for immediate disbursement or are deposited into said escrow and either used at closing to pay the above-described mechanic's liens and/or are held in said escrow or sub -escrow for such payment when an unresolved lien amount is resolved and ready for payment). The Developer shall deliver to the City, and the City shall have the right to review and comment on, the escrow instructions for said escrow or sub -escrow that would facilitate the distribution of the balance of the loan for the above-described Mechanic's Liens Payoff. Third, Paragraph 2 of PSDA Amendment No. 4 and Section 311.1 of the PSDA call for Developer to provide to the City Manager evidence of Developer's financing. Developer has provided the City Manager a term sheet dated August 3, 2023 from Kelllor Capital and a sources and uses spreadsheet for the above described loan and the City Manager (a copy of the proposed sources and uses are attached hereto as Exhibit A). The lender is seeking your acknowledgement that such information is, for purposes of this million loan only, adequate evidence of the subject loan for the purpose of proceeding with the full documentation and closing of such $25 million loan, and that no further approval of the subject loan by the City is required at this time; and by signing below, the City hereby approves the subject loan; provided that upon closing of escrow of the $25 million loan, a complete set of executed loan documents (including the recorded deed 343 Fourth Avenue, San Diego, CA 92101, (760) 634-6543 , EXHIBIT B Mr, Jon McMillen September 19, 2023 Page 3 DOC #2023-0302972 Page 23 of 25 of trust) shall be delivered to the City Manager and/or City Attorney, if requested by the City Manager or City Attorney, for the purpose of confirming the provisions in this letter are adequately documented and binding contractual obligations of the parties in said loan documents. To facilitate the further engagement of the lender in the loan process, Developer is requesting your acknowledgement on behalf of the City of the above three items. Thank you very much for your consideration of this request. Please let us know if you would like to discuss this further. Most Sincerely, SILVERROCK DEVELOPMENT COMPANY, LLC a Delaware limited liability company By: The Robert Green Company, a California corporation, its manager By. Robert S. Greer J President Acknowledged as to third, fourth and fifth paragraph above on behalf of City of La Quinta: Jon McMillen, City Manager cc. Bill Ihrke, City Attorney 343 Fourth Avenue, San Diego, CA 92101, (760) 634-6543 EXHIBIT B Mr. Jon McMillen September 19, 2023 Page 3 DOC #2023-0302972 Page 24 of 25 of trust) shall be delivered to the City Manager and/or City Attorney, if requested by the City Manager or City Attorney, for the purpose of confirming the provisions in this letter are adequately documented and binding contractual obligations of the parties in said loan documents, To facilitate the further engagement of the lender in the loan process, Developer is requesting your acknowledgement on behalf of the City of the above three items. Thank you very much for your consideration of this request. Please let us know if you would like to discuss this further. Most Sincerely, SILVERROCK DEVELOPMENT COMPANY, LLC a Delaware limited liability company By: The Robert Green Company, a California corporation, its manager By: Robert S. Green. Jr. President Acknowledged as to third, fourth and fifth paragraph above on behalf of City of La Quinta: ~---- 9/20/2023 Jon McMillen, City Manager cc. Bill Ihrke, City Attorney 343 Fourth Avenue, San Diego, CA 92101, (760) 634-6543 ;The Robert Green Company Talus La Quinta PA7,8&9 Financing with Keillor Capital !Sources & Uses Loan funding EXHIBIT B Exhibit A Sources and Uses Sources 12,500,000 DOC #2023-0302972 Page 25 of 25 Uses Closing costs TBD Holdback for 7,8 & 9 SDP 700,000 1 Other lender holdback 457,924 Property tax impound 143,304 Contingency for closing costs 100,000 Total 12,500,000 TBD Funds to pay mechanics liens TBD* *Not to be less than $10,000,000 .The estimate set forth above with regard to "closing costs" is a rough estimate of such costs .as of the date of this letter from SilverRock Development Company to the City Manager of the City of La Quinta, The aggregate amount of such closing costs, and components thereof, are subject to change, shall not be final until the loan has closed, and are not limited by this sources and uses estimate. 343 Fourth Avenue, San Diego, CA 92101, (760) 634-6543