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2024-06-07 SDC - from City Status Update on NOTICE of DEFAULT & Demand for Additional DocumentsJune 7, 2024 VIA E-MAIL AND REGISTERED FIRST CLASS MAIL RETURN RECEIPT REQUESTED SilverRock Development Company, LLC c/o The Robert Green Company 3551 Fortuna Ranch Road Encinitas, CA 92024 Attention: Robert Green Re: Status Update and Demand for Additional Documents Purchase, Sale, and Development Agreement Dear Mr. Green: CALIFORNIA This letter serves to memorialize that, as of the date of this letter (above), SilverRock Development Company, LLC ("Developer" or "SDC") has not delivered or otherwise made available for review by the City of La Quinta ("City") documents known or assumed to exist in light of SDC's contractual obligation pursuant to Sections 2 and 7.9 of Amendment No. 5 to the Purchase, Sale, and Development Agreement, as amended (generally referred to as the "PSDA"). As you are aware, Developer is obligated prior to closing of escrow, which shall not be later than June 30, 2024, to deliver to the City Manager and City Attorney a copy of all loan documents relating to the Recapitalization Loans, as identified in Amendment No. 5. The City Manager and City Attorney were aware that alternative recapitalization funding sources were undergoing due diligence review, and they are aware that information has been shared in furtherance of due diligence review pursuant to that certain multi-party Memorandum of Understanding and Agreement Relating to Default and Developer Requirements (Purchase, Sale, and Development Agreement) dated May 24, 2024. The City Manager and City Attorney have received documents, several of which are in the form of spreadsheets without agreements or other supporting documentation, but are nonetheless appreciated. Inclusive in these spreadsheets, SDC has provided schedules that reference SDC's (including SDC's affiliates') costs incurred and payments made, and schedules that reference sources and uses of funds. 78495 Calle Tampico I La Quints, California 92253 1160.717.7000 I www.laquintaca.gov • CALIFORNIA As referenced in the City's April 17, 2024 Notice of Default delivered to SDC, the City sought the following: 1. Schedule(s) that true -up and reconcile SDC's (including SDC's affiliates') costs incurred and payments made, to date. These amounts would be based on invoices from contractors, subcontractors, consultants, and other third -party vendors, and remittances (or other documentation evidencing payments) by SDC. 2. Copy(ies) of the prospectus/financial details presented to Oppenheimer and Counterpointe with respect to amounts needed to re -start and complete the "Core Project Components" as defined in Amendment No. 5 at a minimum, and likely cover all property currently encumbered by deeds of trust at the project site. 3. Detail of the current and proposed capital stack, including terms, and balances for all debt and equity. SDC has not delivered sufficient detail of the current and proposed capital stack relating to current and proposed debt and equity. Given the imminent June 30, 2024 deadline, referenced above, the City demands immediate delivery of all documents, including but not limited to current and anticipated accounts payable detail, preferred and common equity detail including amount and date of initial investment, interest rate, and current value, ledger of all project expenses broken out by vendor, operating agreements, guaranties, promissory notes, and other evidences of indebtedness with applicable interest rates, that show the following details: • $5,000,000 Debt from SRDC via private investor; • $3,816,000 Debt from SRDC via PA 9 1031 Exchange; • $1,200,000 Debt from SRDC via Robert Green; • $590,000 Debt from SRDC via Robert Green; • $64,100,001 - GP Land Equity; • $4,000,000 — GP Equity; • $9,500,000 — LP Equity; • $40,000,000 — New LP Equity; • $33,944,868 — Existing Preferred Equity; • $14,856,887 — New Preferred Equity; • Relating to Cost to Complete the commercial components ("Core Project Components" as defined in Amendment No. 5): o $54,856,000 Equity (Common and Preferred ("New" equity) o $179,620,079 Senior Loan 78495 Calle Tampico I La Quints, California 92253 1160.717.7000 I www.laquintaca.gov • CALIFORNIA Please plan to deliver documents with this detail no later than seven (7) days of the date of this letter so that the City may review them by the June 30, 2024 deadline for closing of escrow under Amendment No. 5. Additionally, please be advised that the conditions in Amendment No. 3 of the PSDA, authorizing a sale of Planning Areas 7, 8, and 9 ("PAs 7, 8, 9), have not been met, nor have any other conditions been met that would allow a sale of any Parcel or Planning Area, or any Project Component (as all are defined in the PSDA). The City reminds SDC that any unauthorized sale or transfer would be a separate, actionable default and breach of the PSDA. The City hereby retains and reserves any and all rights and remedies available at law or in equity, including those available under any and all provisions in the PSDA, and, specifically pursuant to Sections 508 and 509 of the Original PSDA and Section 7.1 of Amendment No. 5, the City retains and reserves all of its rights cumulatively, and does not waive any other default(s) that Developer may otherwise now or in the future have by delivery of this Notice of Default. Should you have any questions and to schedule a meeting, please contact me at (760) 777- 7100. Sincerely, Jon McMillen City Manager cc: Bill Ihrke, City Attorney (via email) 78495 Calle Tampico I La Quints, California 92253 1160.717.7000 I www.laquintaca.gov 461dd-a CALIFORNIA — City of La Quinta 78495 Calle Tampico La Quinta CA 92253 11 CERTIFIED MAILTM USPS CERTIFIED MAIL 1 NI II 9214 8901 8804 0800 0597 21 SILVERROCK DEVELOPMENT COMPANY LLC C/O: THE ROBERT GREEN COMPANY ATTN: ROBERT GREEN 3551 FORTUNA RANCH RD ENCINITAS CA 92024-7214 Tracking Number: 9214890188040800059721 a Copy tj. Add to Informed Delivery Latest Update Your item has been delivered to an agent for final delivery in ENCINITAS, CA 92024 on June 10, 2024 at 12:49 pm. Get More Out of USPS Tracking: . USPS Tracking Plus@ III quadient w r FIRST-CLASS MAIL ri1 $008.35° 06/07/2024 ZIP 92253 043M31244460 Delivered to Agent Delivered to Agent for Final Delivery ENCINITAS, CA 92024 June 10, 2024, 12:49 pm See All Tracking History What Do USPS Tracking Statuses Mean?