2024-07-01 SDC - NOTICE of DEFAULT by City Under PSDA Amend 5 - SDC Failure to Close Recapitalization FinancingaCai Clad&
c:ALIFORNIA
July 1, 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: Notice of Default of Purchase, Sale, and Development Agreement
Amendment No. 5
Robert:
As public records reflect, the City of La Quinta ("City") and SilverRock Development Company,
LLC ("Developer" or "SDC"), entered into a Purchase, Sale, and Development Agreement on or
about November 19, 2014 ("Original PSDA"), as amended by that certain Amendment No. 1 to
PSDA dated on or about October 29, 2015 ("Amendment No. 1 "), that certain Amendment No. 2
to PSDA dated on or about April 18, 2017 ("Amendment No. 2"), that certain Amendment No. 3
to PSDA dated on or about November 28, 2018 ("Amendment No. 3"), that certain Amendment
No. 4 dated on or about October 12, 2021 ("Amendment No. 4") and that certain Amendment
No. 5 dated on or about November 16, 2023 ("Amendment No. 5" and collectively referred to as
the "PSDA") for the SilverRock Resort Project, renamed Talus project (the "Project"). Under
Amendments Nos. 4 and 5, the Developer and City memorialized the City -approved Revised
Capitalization that was then presented to the City by Developer.
Revised Capitalization & Schedule of Performance
Recital K, Sections 2 and 3, and the revised Schedule of Performance of Amendment No. 5
address Developer's obligations with respect to the "Bridge Loans," "Recapitalization Lenders,"
and "Recapitalization Loans" (all as defined therein). Additionally, pursuant to Sections 2 and
7.9 of Amendment No. 5, Developer had the obligations to deliver to the City Attorney and City
Manager for review a copy of all loan documents in a sufficiently final draft form relating to the
Bridge Loans and Recapitalization Loans.
78495 Calle larnpico I La brig, California 92253 1760.777.7000 I www.laquinfaca.gov
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CALIFORNIA -
Pursuant to the revised Schedule of Performance in Amendment No. 5, Developer was to use
diligent efforts to complete the closing of the Recapitalization Loans by January 1, 2024;
provided, however, that, pursuant to Section 3 of Amendment No. 5 and Footnote 1 of the
revised Schedule of Performance, Developer had until June 30, 2024, as the outside date to
close on the Recapitalization Loans.
Default and Cure
YOU ARE HEREBY ON NOTICE that, pursuant to Section 501 of the Original PSDA, which
remains binding and operative pursuant to Section 7.1 of Amendment No. 5, the City hereby
declares the Developer in "Default" of its obligations under the PSDA. This letter serves as
written Notice of the Default and cure of the Default is governed by Article 500, and specifically
Section 501, of the Original PSDA. In accordance with Section 501, Developer shall have thirty
(30) days from receipt of this Notice of Default to cure the Defaults referenced herein: (a) failure
to deliver a copy to the City Attorney and City Manager of all loan documents in a sufficiently
final draft form for the Bridge Loans and Recapitalization Loans, and (b) failure to close on the
Recapitalization Loans with the Recapitalization Lenders.
Provided that Developer and Developer's affiliated entities perform, and perform to completion,
under that certain MEMORANDUM OF UNDERSTANDING AND AGREEMENT RELATING TO
DEFAULT AND DEVELOPER REQUIREMENTS ("MOU") dated May 24, 2024 ("MOU"), by and
among the City, Developer (and Developer's affiliated entities), Poppy Bank ("Poppy"); Cypress
Point Holdings, LLC ("Cypress"), RD Olson Construction, Inc. ("Olson"), Granite Construction
Company ("Granite"), Montage North America, LLC ("Montage"), and Christopher M. George
("CMG," and collectively, all parties to the MOU are referred to as the "MOU Parties"), Developer
shall be deemed by the City to be taking actions to cure the Defaults identified in the Notice of
Default.
Additionally, 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 of the MOU, that certain
AGREEMENT TO WAIVE AND MODIFY NOTICE AND CURE PERIOD (PURCHASE, SALE,
AND DEVELOPMENT AGREEMENT) (Cypress Point Holdings LLC Trustee Notice), dated
February 7, 2024, between City and Developer (the "Waiver And Modification Agreement"), and
the PSDA (including Amendment No. 5), due to Developer's Default and any and all anticipatory
default(s). Additionally, 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
18495 Calle Tampico 1 la 9ci ta, California 92253 1388.TIT .72501 www.laquintaoa.gov
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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.
Jo + illen
City Manager
cc: Bill Ihrke, City Attorney (via email)
Clinton L. Blain, Attorney at Law
3990 Old Town Avenue,
Suite B-101
San Diego, CA 92110
Attention: Clinton Blain, Esq.
Crosbie Gliner Schiffman et al.
12750 High Bluff Drive, Suite 250
San Diego, California 92130
Attention: Dana Schiffman
Attention: Thomas Crosbey
dschiffman@cgs3.com
tcrosbie@cgs3.com
Caldarelli Hejmanowski Page & Leer
3398 Carmel Mountain Road
Suite 250
San Diego, CA 92121
Attention: William Caldarelli, Esq.
wlc@chpllaw.com
Michelman & Robinson, LLP
Abbey, Weitzenberg, Warren
10880 Wilshire Blvd.
& Emery
19th Floor
100 Stony Point Rd, Ste. 200
Los Angeles, CA 90024
Santa Rosa, CA 95401
Attn: Edward D. Vaisbort, Esq.
Attn: Mitchell B. Greenberg, Esq.
Attn: Eric Rans, Esq.
evaisbort@mrllp.com
mgreenberg@abbeylaw.com
ERans( rnrllp.com
19495 Calle Tampico I la Quiota, Califania 92253 1100,1770001 wwvrlaqulntaca.guv
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First Pathway Partners
Keillor Capital
Attn: Dan Wycklendt
Attn: Eric Keillor
311 E. Chicago Street, Suite 510
2429 W. Coast Hwy, suite 210
Milwaukee, WI 53202
Newport Beach, CA 92663
Silver Arch Capital
Ziegler Investment Banking
Attn: Jeff Wolfer
Attn: Aaron Gadouas
411 Hackensack Ave,
One North Wacker Drive,
Suite 803
Suite 2000
Hackensack, NJ 07601
Chicago, Illinois 60606
78495 Calle Tampico I la (koala, California 922531 750.777.70091 wwwlaquvacagrA
- CALIFORNIA -
City of La Quinta
78495 Calle Tampico
La Quinta CA 92253
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SILVERROCK DEVELOPMENT COMPANY LLC C/O TF
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ENCINITAS CA 92024-7214
Tracking Number:
9214890188040800060222
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FIRST PATHWAY PARTNERS
ATTN: DAN WYCKLENDT
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311 E CHICAGO ST
MILWAUKEE WI 53202-5896
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78495 Calle Tampico
La Quinta CA 92253
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ABIBEY WEITZIENIBIERG 'WAIRR:EIN .& EMERY
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SANTA RO:SA CA '95401-4150
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MICHEILMAN & IROBINSON LLP
ATTN: IEIDWARD O VAISBOIRT IESQ & IEIRII'C IRANS (ESC
10880 WILSHIIIRE BLVD FL 19
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CALDARELLI HEJMANOWSKI PAGE & LEER
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