2025-10-23 1st Amend DIP Credit Facility Loan AgmtDocusign Envelope ID: 395D2A90-6ED8-81 DC-82244MD313829DE4
FIRST AMENDMENT TO
DEBTOR -IN -POSSESSION CREDIT FACILITY
LOAN AND SECURITY AGREEMENT
dated as of October 23, 2025
between
SILVERROCK DEVELOPMENT COMPANY, LLC, RGC PA 789, LLC, SILVERROCK
LIFESTYLE RESIDENCES, LLC, SILVERROCK LODGING, LLC, SILVERROCK
LUXURY RESIDENCES, LLC AND SILVERROCK PHASE 1, LLC, as Borrowers,
and
CITY OF LA QUINTA, as Lender
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FIRST AMENDMENT TO DEBTOR -IN -POSSESSION
CREDIT FACILITY LOAN AGREEMENT
This FIRST AMENDMENT TO DEBTOR -IN -POSSESSION CREDIT FACILITY
LOAN AGREEMENT (as further amended, amended and restated, supplemented or otherwise
modified from time to time, this "Amendment"), dated as of October 23, 2025, between
SILVERROCK DEVELOPMENT COMPANY, LLC, a Delaware limited liability company, RGC
PA 789, LLC, a Delaware limited liability company, SILVERROCK LIFESTYLE
RESIDENCES, LLC, a Delaware limited liability company, SILVERROCK LODGING, LLC, a
Delaware limited liability company, SILVERROCK LUXURY RESIDENCES, LLC a Delaware
limited liability company AND SILVERROCK PHASE 1, LLC, a Delaware limited liability
company (each, a "Borrower" or a "Debtor" and collectively, the "Borrowers" or the "Debtors"),
and CITY OF LA QUINTA, a California municipal corporation, as Lender (the "City" or the
"Lender'), with reference to the following recitals:
RECITALS
WHEREAS, on August 5, 2024 (the "Petition Date"), the Borrowers (as debtors each, a
"Debtor" and collectively, the "Debtors") commenced chapter 11 cases, which have been
administratively consolidated for procedural purposes only under Chapter 11 Case No. 24-11647
MFW (each case, a "Chapter 11 Case" and collectively, the "Chapter 11 Cases") in the United
States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). The Borrowers
continue to operate their businesses and manage their properties as debtors -in -possession pursuant
to sections I I07(a) and 1108 of the Bankruptcy Code;
WHEREAS, on September 20, 2024, Debtors filed their Motion of Debtors Pursuant to
Sections 105, 361, 362, 363, 364, and 507 of the Bankruptcy Code, Bankruptcy Rule 4001, and
Local Rule 4001-2, for Interim and Final Orders (I) Authorizing Debtors to Obtain Postpetition
Financing from the City of La Quinta; (II) Granting Non -Priming DIP Lender Liens and Super -
Priority Claims; (III) Scheduling a Final Hearing; and (IV) Granting Related Relief [Docket No.
125] (the "Original DIP Financing Motion"), which included the Term Sheet, proposed order, and
other terms and conditions for the proposed alternative DIP Financing to be provided by the
Lender;
WHEREAS, on October 1, 2024, the Bankruptcy Court entered the Interim Order
(I) Authorizing the Debtors to Obtain Interim Postpetition Secured Financing, (II) Granting Non -
Priming Liens and Superpriority Administrative Expense Status, and (III) Scheduling a Final
Hearing [Docket No. 162] the ("First Interim DIP Order") granting the Original DIP Financing
Motion, on an interim basis;
WHEREAS, on October 18, 2024, the Bankruptcy Court entered the Second Interim Order
(I) Authorizing the Debtors to Obtain Additional Interim Postpetition Secured Financing, (II)
Granting Non -Priming Liens and Superpriority Administrative Expense Status, and (III)
Scheduling a Final Hearing [Docket No. 188] (the "Second Interim DIP Order") granting the
Original DIP Financing Motion, on an interim basis;
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WHEREAS, on October 31, 2024, the Bankruptcy Court entered the Third Interim Order
(I) Authorizing the Debtors to Obtain Additional Interim Postpetition Secured Financing, (II)
Granting Non -Priming Liens and Superpriority Administrative Expense Status, and (III)
Scheduling a Final Hearing [Docket No. 208] (the "Third Interim DIP Order"), granting the
Original DIP Financing Motion, on an interim basis;
WHEREAS, on December 6, 2024, the Bankruptcy Court entered the Fourth Interim Order
(I) Authorizing the Debtors to Obtain Additional Interim Postpetition Secured Financing, (II)
Granting Non -Priming Liens and Superpriority Administrative Expense Status, and (III)
Scheduling a Final Hearing [Docket No. 243] (the "Fourth Interim DIP Order" and, together with
the First Interim DIP Order, the Second Interim DIP Order, and the Third Interim DIP Order, the
"Interim DIP Orders"), granting the Original DIP Financing Motion, on an interim basis;
WHEREAS, pursuant to the Interim DIP Orders, the Borrowers obtained interim funding
from the City on a non -priming basis in the aggregate principal amount of $2,690,965.00 pursuant
to the Original Term Sheet (the "Interim DIP Financing");
WHEREAS, the Interim DIP Financing did not provide the necessary funding to complete
a fulsome sale process for the Project (as defined herein), and the Borrowers then requested DIP
Financing in the estimated principal amount of $11 million, inclusive of the Interim DIP Financing,
to fund their intended sale process and propose a chapter 11 plan;
WHEREAS, the Borrowers and Lender then negotiated a multiple draw secured
superpriority debtor -in -possession term loan facility (the "DIP Facility"), in the maximum
principal amount of $11,000,000.00, including principal amounts previously funded by the City
on an interim basis in connection with the Interim DIP Financing;
WHEREAS, on or about December 10, 2024, the Borrowers and the City negotiated and
agreed to that certain Term Sheet for Debtor -In -Possession Financing Facility (the "Term Sheet")
and Memorandum of Understanding (the "MOU");
WHEREAS, on December 12, 2024, the Borrowers filed their Motion of Debtors Pursuant
to Sections 105, 361, 362, 363, 364, and 507 of the Bankruptcy Code, Bankruptcy Rule 4001, and
Local Rule 4001-2 for an Order (I) Authorizing Debtors to Obtain Postpetition Financing; (II)
Granting DIP Lender Priming Liens and Super -Priority Claims; and (III) Granting Related Relief
[Docket Nol. 246] (the "Final DIP Financing Motion");
WHEREAS, on January 23, 2025, the Bankruptcy Court entered the Final Order (I)
Authorizing the Debtors to Obtain Postpetition Secured Financing, (II) Granting Priming Liens
and Superpriority Administrative Expense Status, and (III) Granting Related Relief [Docket No.
330] (the "Priming DIP Order");
WHEREAS, effective as of January 23, 2025, the Lender and the Borrowers executed and
entered into that certain Debtor -In -Possession Credit Facility Loan Agreement (the "Agreement");
WHEREAS, on April 15, 2025, the Bankruptcy Court entered the Amended Final Order
(I) Authorizing the Debtors to Obtain Postpetition Secured Financing, (II) Granting Priming Liens
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and Superpriority Administrative Expense Status, and (III) Granting Related Relief [Docket No.
437] (the "Amended Priming DIP Order");
WHEREAS, on May 14, 2025, the Deed of Trust and Assignment of Rents Securing
Debtor -In -Possession Credit Facility Loan and Security Agreement, executed by Debtor
SilverRock Development Company LLC (the "SilverRock DIP Deed of Trust") was recorded in
the Official Records of the County of Riverside, California as document #2025-0144695;
WHEREAS, on May 15, 2025, the Deed of Trust and Assignment of Rents Securing
Debtor -In -Possession Credit Facility Loan and Security Agreement, executed by Debtor RGC PA
789, LLC (the "RGC 789 DIP Deed of Trust" and together with the SilverRock DIP Deed of Trust,
the "DIP Deeds of Trust") was recorded in the Official Records of the County of Riverside,
California as document #2025-0146770;
WHEREAS, subsequent to the execution and recordation of the DIP Deeds of Trust, the
Parties identified certain parcels of real property owned by the Debtors that secure the DIP Facility
pursuant to the Amended Priming DIP Order, but which were not identified or included in the
SilverRock DIP Deed of Trust, such parcels being identified and described in the Supplemental
Deed of Trust (the "Additional Parcels");
WHEREAS, Lender has conditionally agreed to provide an additional tranche of financing
to the Borrowers and to waive certain indebtedness of the Borrowers under the DIP Facility on the
terms, and subject to the conditions, set forth herein;
WHEREAS, pursuant to the DIP Amendment Order and the further assurances clause of
the Agreement, the Parties desire to confirm and clarify of record the existence and efficacy of the
Liens of the Lender with respect to the Additional Parcels;
WHEREAS, on October 23, 2025, the Bankruptcy Court entered the Order (I) Authorizing
the Debtors to Amend the DIP Credit Agreement, (II) Authorizing the Debtors to Executed, Deliver
and Record a Supplemental Deed of Trust in Favor of the DIP Lender, and (III) Granting Related
Relief [Docket No. 760] (the "DIP Amendment Order"), which, among other things, authorized
the Debtors to execute and enter into this Amendment; and
WHEREAS, this Amendment constitutes an amendment to the Agreement, which remains
in full force and effect except to the extent expressly modified herein.
AMENDED TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the foregoing, and the conditions set forth below,
the parties hereto, intending to be legally bound, hereby agree as follows:
Section 1. Definitions. Except as set forth in this Amendment, the capitalized words and
phrases used in the Agreement shall have the meanings given such terms in the Agreement and the
DIP Orders. The following terms shall have the meanings set forth below for all purposes in the
Agreement and this Amendment:
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"Closing" means the closing on the sale of the Debtors' real property and improvements
thereon to Turnbridge.
"Commitment" means the Original Commitment and the Wind Down Funding
Commitment together.
"Commitment Termination Date" means the first to occur of (a) the occurrence of an Event
of Default; (b) the Original Maturity Date with respect to the Original Commitment; and (c) the
Wind Down Maturity Date with respect to the Wind Down Funding Commitment.
"DIP Orders" means the Interim DIP Orders, the Priming DIP Order, the Amended Priming
DIP Order and the DIP Amendment Order.
"DIP Obli atg ions" means all obligations of every nature of the Borrowers to Lender under
the Loan Documents, including, without limitation, any liability of the Borrowers on any claim of
Lender, whether or not the right to payment in respect of such claim is reduced to judgment,
liquidated, unliquidated, fixed or contingent, matured, disputed, undisputed, legal, equitable,
secured or unsecured, and whether or not such claim is discharged, stayed or otherwise affected
by any bankruptcy, insolvency, reorganization or other similar proceeding. Without limiting the
generality of the foregoing, the obligations of the Borrowers to Lender under this the Loan
Documents include: (a) the obligation to pay principal, interest, charges, expenses, fees, attorneys'
fees and disbursements, indemnities and other amounts payable by the Borrowers under any Loan
Document; (b) the obligation to reimburse any amount in respect of any of the foregoing that the
Lender, in its sole discretion, may elect to pay or advance on behalf of the Borrowers; and (c)
obligations of the Borrowers to indemnify Lender with respect to the Poppy Bank Backstop
Indemnity, as set forth in Section 10(1) of the Priming DIP Order and the Amended Priming DIP
Order.
"Milestones" has the meaning provided in Section 6(a).
"Original Commitment" means the principal amount of $11,000,000 committed under
and as set forth in the Agreement.
"Original Maturity Date" means the first to occur of:
a. The effective date of a chapter 11 plan for any of the Borrowers in the
Chapter 11 Cases.
b. The closing of a sale and/or assignment of all or a substantial portion of any
of the Borrowers' assets.
C. The occurrence of an Event of Default with respect to the DIP Facility.
d. The dismissal or conversion of the Chapter 11 Cases (or the case of any of
the Borrowers), or appointment of a trustee with respect to any of the Borrowers.
e. The resignation or termination of Douglas Wilson as chief restructuring
officer without the advance written consent of the City.
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f. The resignation or termination of Christopher Sontchi as the sole manager
of any of the Borrowers without the advance written consent of the City.
g. December 31, 2025.
"Permitted Dispositions" means: (a) the granting of Permitted Liens, (b) a Sale Transaction
pursuant to a sale order approving the sale of the Debtors' real property and improvements thereon
to Turnbridge, and (c) de minimis asset sales pursuant to one or more orders of the Bankruptcy
Court.
"Permitted Liens" means (a) Liens created under the DIP Orders and Loan Documents,
(b) Liens securing the Existing Obligations, (c) Liens in respect of Permitted Indebtedness
described in clauses (a), (b), and (c) of the definition thereof, (d) Liens for unpaid taxes,
assessments, or other governmental charges or levies that are not yet overdue for more than 60
days or which constitute prepetition claims in the Chapter 11 Cases, (e) Liens securing judgments
for the payment of money not constituting an Event of Default hereunder, (f) Liens in favor of
warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, incurred in the ordinary
course of business and not in connection with the borrowing of money, and which Liens are for
sums not yet overdue for more than 60 days or which constitute prepetition claims in the Chapter
11 Cases, (g) Liens on amounts deposited to secure the Borrowers' and their Subsidiaries'
obligations in connection with worker's compensation or other unemployment insurance, (h) Liens
on amounts deposited to secure the Borrowers' and their Subsidiaries' reimbursement obligations
with respect to surety or appeal bonds obtained in the ordinary course of business, (i) with respect
to any real property, easements, rights of way, and zoning restrictions that do not materially
interfere with or impair the use or operation thereof, 0) rights of setoff or bankers' liens upon
deposits of cash in favor of banks or other depository institutions, solely to the extent incurred in
connection with the maintenance of such deposit accounts in the ordinary course of business, and
(k) a lien in favor of the Independent Manager to secure the payment of his allowed costs of defense
with respect to the Borrowers' indemnification obligations; provided that, in the case of clauses
(d), (e), (f), (g), (h), and 0), solely to the extent any such Liens are permitted by the Bankruptcy
Code and, as may be required by the Bankruptcy Code, or authorized by the Bankruptcy Court;
and further provided that nothing herein shall limit the Lender's priming rights under or pursuant
to the DIP Orders as such may be further amended with the consent of Lender.
"Poppy Bank Backstop Indemnity" means Lender's indemnity obligations under Section
10(1) of the Priming DIP Order and Amended Priming DIP Order.
"Proceeds" means "proceeds" as such term is defined in section 9-102 of the Uniform
Commercial Code and, in any event, shall include, without limitation, all dividends, distributions
or other income from the DIP Collateral, collections thereon or distributions with respect thereto.
"Sale Motion" means Debtors' Motion For Entry Of An Order (I) Approving The Sale Of
The Purchased Assets To The Successful Bidder Free And Clear Of All Claims, Liens, Interest,
And Encumbrances; (II) Approving the Consensual Termination Or Rejection Of Ground Leases,
Effective As Of The Closing Date; (III) Approving Form Of Grant Deed; And (IV) Granting
Related Relief, filed on August 15, 2025 [Docket No 621].
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"Sale Order" means the order of the Bankruptcy Court granting the Sale Motion and
approving the sale of the Borrowers' real property and improvements to Turnbridge.
"Sale Transaction" means a sale of all or substantially all of the Debtors' assets pursuant
to Section 363 of the Bankruptcy Code or pursuant to a Plan.
"Supplemental Deed of Trust" means that that certain First Amendment to Deed of Trust
and Assignment of Rents Securing Debtor -in -Possession Credit Facility Loan and Security
Agreement approved by the DIP Amendment Order.
"Supplemental Promissory Note" means the Supplemental Promissory Note Secured by
Deed of Trust, executed by Borrowers evidencing the Loan and Borrowers' obligation to repay the
same, substantially in the form as Exhibit A attached hereto and incorporated herein by reference.
"Turnbridize" means TBE RE Acquisition Co II, LLC or its permitted affiliated assignees.
"Wind Down Funding Commitment" means the sum of (a) $1,000,000.00 and (b) in the
sole and absolute discretion of the Lender, an additional amount of up to $1,000,000.00, the
availability of which is subject to the conditions set forth in this Amendment.
"Wind Down Maturity Date" means the first to occur of:
a. The effective date of a chapter 11 plan for any of the Borrowers in the
Chapter 11 Cases;
b. The occurrence of an Event of Default with respect to the DIP Facility.
C. The dismissal or conversion of the Chapter 11 Cases (or the case of any of
the Borrowers), or appointment of a trustee with respect to any of the Borrowers.
d. The resignation or termination of Douglas Wilson as chief restructuring
officer without the advance written consent of the City.
e. The resignation or termination of Christopher Sontchi as the sole manager
of any of the Borrowers without the advance written consent of the City.
f. March 31, 2026.
Section 2. The Commitment and Credit Extension.
(a) Commitment and Borrowing. Subject to and conditioned upon: (a) the
terms and conditions set forth herein (including without limitation the conditions set forth in
section 5, below and in the DIP Amendment Order); (b) Borrowers executing and delivering to
Lender the Supplemental Promissory Note; and (c) Borrowers executing and recording (or cause
the recording of) the Supplemental Deed of Trust in the Official Records of the Assessor -County
Clerk -Recorder for Riverside County, the Lender agrees to make during the Commitment Period
a term loan or term loans (each a "Loan" and, collectively, the "Loans") to the Borrowers in an
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aggregate principal amount not to exceed the sum of the Original Commitment and the Wind Down
Funding Commitment.
(b) Draw Procedures. Subject to Section 2(a) of this Amendment, and the
continued satisfaction of all conditions to borrowing under the Loan Documents, Borrowers shall
be entitled to submit multiple draws no more often than monthly. The maximum amount of each
Draw shall be the expenses reasonably projected by the Borrowers to be payable or incurred
pursuant to the Budget during the upcoming 30 days; provided, however, that the Borrower's may
draw the remaining available balance of the Original Commitment not more than five (5) Business
Days prior to Closing. Draws may be requested by providing written notice to the Lender at least
three (3) business days prior to each draw specifying the amount of the draw. The Borrowers may
hold and maintain up to $2,000,000 in their operating accounts. All funds in excess of $2,000,000
shall be maintained in a segregated account subject to a security interest in favor of the Lender (the
"Secured Account"), which shall be deemed to be a perfected security interest pursuant to the
terms of the Final DIP Order. Subject to the foregoing limitation, absent the pendency of a default
under the Loan Documents, the Borrowers may transfer funds from the Secured Account to the
Borrowers' operating account. During the pendency of a default under the Loan Documents, other
than with regard to the Carve -Out, the Borrowers shall be precluded from transferring the funds in
the Secured Account to the Borrowers' operating account, or otherwise disbursing or using such
funds without the advance written consent of the Lender. Upon the occurrence of an Event of
Default, the Borrowers shall transfer the funds in the Secured Account that, together with any
funds in the Borrowers' operating accounts, are more than the Carve -Out to the Lender, to be held
in a segregated account pending final determination of amounts needed for funding expenses
subject to the Carve -Out, with any excess remitted to the Lender as a payment of the Borrowers'
indebtedness under the DIP Facility.
(c) Maturity Dates. The aggregate principal amount of the Loans outstanding
on the Original Maturity Date, together with all accrued and unpaid interest and fees thereon, shall
become due and payable in full on the Original Maturity Date. The aggregate principal amount
of the Loans made pursuant to the Wind Down Funding Commitment, together with all accrued
and unpaid interest and fees thereon, shall become due and payable in full on the Wind Down
Maturity Date.
(d) Interest. Interest shall accrue on the outstanding principal advanced
hereunder at the rate of 4.71 % per annum. From and after an Event of Default, default interest
shall accrue and be payable on the outstanding principal under the DIP Facility at the rate of 5.0%
(which shall be in addition to the foregoing rate, or the maximum allowable interest rate pursuant
to California law, whichever is less).
(e) Mandatory Reduction of Commitments. The Original Commitment and
the Wind Down Funding Commitment shall automatically be permanently reduced on each date
such Loan is advanced by an amount equal to the aggregate principal amount of the Loans incurred
on such borrowing date.
(f) Termination of Commitments. The Original Commitment and the Wind
Down Funding Commitment shall each terminate respectively and in their entirety on the
applicable Commitment Termination Date. Subject to the Carve -Out, the Original Commitment
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and the Wind Down Funding Commitment shall be suspended upon the occurrence of a Default
until such time as such Default, to the extent such Default is susceptible of cure, is cured to the
Lender's reasonable satisfaction.
(g) Credit with Respect to Original Commitment. Subject to and conditioned
upon the full and complete satisfaction of all conditions set forth herein (including all conditions
set forth in section 5, below), Lender will, at Closing, provide a $2,250,000 waiver or credit (the
"Credit") with respect to its liens and claims arising under the Original Commitment. The Credit
will be a waiver or credit in the aggregate amount of $2,250,000 under the DIP Facility with respect
to: (a) the Lender's existing liens in the real property of the Debtors to be sold to Turnbridge; and
(b) the proceeds thereof. Such Credit shall not constitute a waiver, release or subordination of any
liens, claims, administrative expenses or rights of the Lender except as expressly set forth herein.
The Credit will be applied ratably among the priming caps set forth in Exhibit 3 to the Amended
Priming DIP Order; to wit: (1) the cap under paragraph I of Exhibit 3 shall be reduced from
$1,000,000 to $812,500; (2) the cap under paragraph 2 of Exhibit 3 shall be reduced from
$7,000,000; and (3) the cap under paragraph 5 of Exhibit 3 shall be reduced from $4,000,000 to
$3,250,000.
Section 3. Creation of Liens and Security Interests.
(a) Grant of Liens in Real Property. As more fully stated and provided in the
DIP Deeds of Trust, Supplemental Deed of Trust, and the DIP Orders, to secure the prompt
payment and performance of all DIP Obligations, the Borrowers hereby pledge and grant to the
Lender, and hereby create a continuing first priority lien in and to all of their respective interests
in real property, including without limitation: all accessions and additions thereto; all replacements
and substitutions therefor; all rents, profits, proceeds, products and distributions thereof; subject
only to: (a) the Carve -Out; (b) the limitations expressly stated in Exhibit 3 to the Amended Priming
DIP Order (as modified herein); and (c) as to the funds lent pursuant to the Wind Down Funding
Commitment, subordination to other valid and unavoidable liens or security interests and other
allowed and unpaid administrative, and priority expenses, but only to the extent that such
subordination is necessary to permit payments to the holders of such claims under section
1129(a)(9) of the Bankruptcy Code as part of a confirmed plan proposed by the Debtors.
(b) Grant of Security Interest in Personal Property. To secure the prompt
payment and performance of all DIP Obligations, the Borrowers hereby pledge and grant to the
Lender, and hereby create. a continuing lien and security interest in favor of the Lender in and to,
all of their right, title and interest in and to their respective right, title and interest of each such
Borrower wherever located, whether now existing or hereafter from time to time arising or
acquired in all of the following tangible and intangible personal property, including without
limitation all of the following (collectively, the "Pledged Collateral"):
(i) All Accounts;
(ii) All Receivables;
(iii) All Equipment, Goods, Inventory Furniture and Fixtures;
(iv) All Documents, Instruments and Chattel Paper;
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(v) All Contracts;
(vi) All Commercial Tort Claims and other claims and causes of action;
provided, however, that Lender's security interest in connection with Avoidance
Actions shall extend only to the Proceeds of Avoidance Actions, and not to the
Avoidance Actions themselves;
(vii) All Letters of Credit and Letter -of -Credit Rights;
(viii) All Securities Collateral;
(ix) All Investment Property;
(x) All Intellectual Property Collateral;
(xi) All General Intangibles;
(xii) All Money and all Deposit Accounts;
(xiii) all books and records, customer lists, credit files, computer files,
programs, printouts and other computer materials and records relating to the
Pledged Collateral and any General Intangibles at any time evidencing or relating
to any of the foregoing; and
(xiv) to the extent not covered by clauses (i) through (xi) of this Section
3(b), all other assets, personal property and rights of such Borrower, whether
tangible or intangible, all Proceeds and products of each of the foregoing and all
accessions of and to, substitutions and replacements for, and rents, profits and
products of, each of the foregoing, and any and all Proceeds of any insurance,
indemnity, warranty or guaranty payable to such Borrower from time to time with
respect to any of the foregoing.
(c) Priority of the DIP Liens and Security Interests. The liens and security
interests of the Lender in the DIP Collateral are, and shall at all times continue to be, first -priority
priming liens in all of the Debtors' real and personal property pursuant to Section 364(d)(1) of the
Bankruptcy Code, senior to all other liens and security interests in the Borrowers' real and personal
property (other than the prepetition property interests of the City), subject only to (a) the Carve -
Out (as defined herein), (b) with respect to liens in the Borrowers' real property and proceeds
thereof, the limitations expressly provided in Exhibit 3 to the Final DIP Order, as modified by this
Amendment and the Second Amended Priming DIP Order, and (c) as to the funds lent pursuant to
the Wind Down Funding Commitment, subordination to other valid and unavoidable liens or
security interests and other allowed and unpaid administrative, and priority expenses, but only to
the extent that such subordination is necessary to permit payments to the holders of such claims
under section 1129(a)(9) of the Bankruptcy Code as part of a confirmed plan proposed by the
Debtors.
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Section 4. Representations and Warranties. Each Borrower represents and warrants
that:
(a) The Borrowers are duly organized and validly existing and in good standing
under the laws of the jurisdiction(s) in which they are organized.
(b) The Borrowers' execution and delivery of this Amendment and all other
Loan Documents, and their performance of their obligations under this Amendment and all other
Loan Documents (i) are within the power of the Borrowers, (ii) have been duly authorized by all
necessary organizational approval by the Borrowers, and (iii) constitute legal, valid, and binding
obligations of the Borrowers.
(c) This Amendment and the other Loan Documents have been duly executed
and delivered by or on behalf of the Borrowers.
(d) This Amendment constitutes, and each other Loan Document when
delivered hereunder will constitute, a legal, valid and binding obligation of the Borrowers,
enforceable against each such Borrower in accordance with its terms.
(e) The Independent Manager has been duly appointed and elected as sole
manager of the Borrowers in accordance with the relevant operating agreements and order of the
Bankruptcy Court and is authorized to enter and perform this Amendment subject to Bankruptcy
Court approval; the execution and performance of this Amendment do not violate any applicable
laws or court orders to the best of Borrowers' or the independent manager's actual knowledge.
(f) The Independent Manager is signing this Amendment solely in his
representative capacity and shall not have any personal liability for any obligations or liabilities of
the Borrowers' estates.
(g) The Borrowers have the authority to enter into this Amendment pursuant
to the DIP Amendment Order.
(h) Neither the Borrowers nor the Independent Manager make any
representation or warranty, actual or implied, regarding the condition, quality, or otherwise of the
DIP Collateral or the Intellectual Property Collateral under this Amendment.
(i) The business operations of the Borrowers, however limited, have been and
will continue to be conducted in compliance with all laws of each jurisdiction in which each
business has been or is being carried on.
0) All proceeds of the Loans shall be used solely in accordance with the
Budget.
(k) No part of any Loan or the proceeds thereof will be used to purchase or
carry any Margin Stock or to extend credit for the purpose of purchasing or carrying any Margin
Stock. Neither the making of any Loan nor the use of the proceeds thereof will violate or be
inconsistent with the provisions of Regulation T, U or X of the Board of Governors of the Federal
Reserve System.
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(1) To the best of the Borrowers' actual knowledge, after their reasonable due
diligence, neither the execution, delivery, nor performance by the Borrowers of this Agreement or
any other Loan Document, nor compliance by it with the terms and provisions hereof or thereof,
(i) will contravene any provision of any Requirement of Law or any order, writ, injunction or
decree of any court or Governmental Authority, subject to entry of the Final DIP Order, or (ii) will
violate any provision of the certificate or articles of incorporation, certificate of formation, limited
liability company agreement or by-laws (or equivalent organizational documents), as applicable,
of the Borrowers or any of their Subsidiaries.
(m) To the best of the Borrowers' actual knowledge, the Borrowers are not,
nor are they, or any of them, required to be registered as, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
Section 5. Conditions Precedent. The continued funding of the Original
Commitment, the commencement and continuation of funding with respect to the Wind Down
Funding Commitment during the Commitment Period, and Lender's provision of the Credit at
Closing shall be subject to the satisfaction of the following conditions precedent (except to the
extent that Lender, in its sole and absolute discretion, may agree in writing):
(a) The DIP Amendment Order shall be in full force and effect, shall not have
been reversed, vacated or stayed and shall not have been amended, supplemented or otherwise
modified without the prior written consent of the Lender.
(b) The Lender shall have received a DIP Budget, in form and substance
reasonably satisfactory to the Lender.
(c) No Default or Event of Default shall exist at the time of, or immediately
after giving effect to, the making of the Loans.
(d) The representations and warranties of the Borrowers set forth in each
Loan Document shall be true and correct in all material respects (or, to the extent qualified by
materiality, in all respects) immediately prior to, and after giving effect to, the making of any
Loans, except to the extent that such representation or warranty expressly relates to an earlier
date (in which event such representations and warranties were true and correct in all material
respects (or, to the extent qualified by materiality, in all respects) as of such earlier date).
(e) The Lender shall have received all such agreements, instruments,
approvals, and other documents, each reasonably satisfactory to the Lender in form and
substance, as the Lender may reasonably request.
(f) The Borrowers shall have complied with the Draw Procedures outlined
in Section 2(b) hereof.
(g) The Borrowers shall be in compliance with the terms of the DIP Orders.
(h) The CRO Order shall be in full force and effect, shall not have been
reversed, vacated or stayed and shall not have been amended, supplemented or otherwise
modified without the prior written consent of the Lender.
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(i) Delivery of draw requests that conform to the terms of this Agreement to
the Lender at least three (3) Business Days prior to the requested draw.
0) The Independent Manager shall not have been terminated, removed,
replaced, or had his powers and authority materially limited without the prior written consent of
the Lender.
(k) Additionally, and solely as a condition precedent to the Wind Down
Funding Commitment and the Credit:
1. The Bankruptcy Court shall have entered the Sale Order;
2. The Sale Order shall have become a Final Order;
3. The Bankruptcy Court shall have entered the Second Amended Priming DIP
Order;
4. The Second Amended Priming DIP Order shall have become a Final Order;
5. The La Quinta Planning Commission and City Council have approved the
proposed development project and sale of the Borrowers' property to
Turnbridge in accordance with applicable law, including without limitation
the La Quinta Amended Development Documents;
6. The La Quinta Amended Development Documents and Option Documents
have been finalized, executed, delivered and become effective upon Closing
of the sale of Borrowers' property to Turnbridge;
7. The Closing shall have occurred on or before December 15, 2025;
8. The Borrowers shall have repaid all then -owing indebtedness to Lender
relating to the Original Commitment, taking into account the Credit;
9. The Borrowers shall fund the Lender Escrow (defined below) in an amount
equal to the net sale proceeds allocable to the Additional Parcels pursuant to
the methodology set forth in the DIP Amendment Order; and
10. There is no Default or Event of Default by Borrowers under the Loan
Documents (including this Amendment) or the DIP Orders.
Section 6. Affirmative Covenants. On and after the effective date of this Amendment
and until the date that each Commitment has terminated and the principal of, and interest on, each
Loan and all fees, expenses and other amounts payable under any Loan Document (other than
contingent indemnification obligations for which no claim or demand has been made) have been
paid in full in cash or to the Closing as specifically set forth below:
(a) Milestones. The Borrowers shall take commercially reasonable efforts to
implement the following milestones (the "Milestones") with respect to the sale of the Borrowers'
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real property (the "Property"), which may be pursuant to a chapter 11 plan, and approval and
consummation of a chapter 11 plan unless the City agrees in writing (which consent may be
confirmed via e-mail by counsel on behalf of the City) to extend or waive any Milestone, and
provided that the Milestones that require an action of the Bankruptcy Court are subject to the
availability of the Bankruptcy Court:
(i) on or before October 21, 2025, the Borrowers shall have obtained
an order approving a sale of all or substantially all of the Project to Turnbridge; and
(ii) on or before November 12, 2025, the Closing shall have occurred.
(b) Other Affirmative Covenants. The following terms, conditions and
covenants shall govern the Borrowers and the DIP Facility:
(i) Borrowers and the Lender shall negotiate in good faith with each
other regarding a possible consensual chapter 11 plan;
(ii) Subject to subparagraph (i), each of Borrowers and Lender agrees to
fairly consider and evaluate any restructuring, financing or plan regarding the
Debtors presented by the other parry;
(iii) Borrowers shall comply in all material respects with all Bankruptcy
Court orders, including without limitation the CRO Order;
(iv) Funds advanced under the DIP Facility shall be used solely for the
purposes set forth in the DIP Budget subject to permitted variances at a 10% level
determined on the basis of aggregate cash disbursements (the "Permitted
Variances"). Borrowers shall inform the City promptly of any disbursement made
based on Permitted Variances. Any adjustments to the DIP Budget (other than the
Permitted Variances) shall be approved by the City, for which approval shall not
be unreasonably withheld, provided that the adjustment does not cause the total DIP
Budget to exceed the maximum amount of the Commitment;
(v) Borrowers and Lender shall comply with the MOU;
(vi) Borrowers and CRO shall provide to the Lender, if reasonably
requested in writing and, subject to the MOU, to the extent such action is not in
conflict with the Borrowers' fiduciary duties or any confidentiality obligation, all
documents and written (which may be in electronic form) information in their
possession, custody or control that the Lender from time to time may request in
writing regarding: the condition or value of the Borrowers' assets; claims against
Borrowers; negotiations and communications with prospective purchasers and/or
financers of the Borrowers or their business; contracts between Borrowers and third
parties; transfers and payments made by Borrowers; and dealings between
Borrowers and their insiders;
(vii) The above notwithstanding, Borrowers are not required to provide
to the Lender any documents or information protected by attorney -client privilege
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or attorney -client confidentiality. Borrowers may request that the Lender execute
one or NDAs with respect to any documents or information designated by
Borrowers as confidential. All disputes pertaining to the designation of confidential
material or to the enforceability of relevant NDAs shall be resolved by the
Bankruptcy Court;
(viii) Until Closing, Borrowers shall maintain security for the Project
consistent with the disbursements provided for in DIP Budget with the manner it
has maintained the security since the Petition Date. Such security measures shall
include, consistent with the security measures provided since the Petition Date:
fenced and locked access to all areas of construction including construction staging
areas; security camera system to remain operational and to have sufficient storage
capacity for at least two weeks of video recordings; and roadways and pathways
adjacent to the Project site where the public has access must be maintained and
protected if impacted by conditions related to the Project, this can include
barricades or k-rail to protect slopes, and or repair and maintenance associated with
water, sand or debris from the Project site;
(ix) Until Closing, Borrowers shall maintain fencing on the property as
follows: fencing as described above for security where applicable shall include dust
screening; all gated access to construction areas shall be lockable; and fencing shall
be maintained to provide uninterrupted security of the site and reduce the spread of
blowing sand or dust;
(x) Borrowers and the CRO shall not enter into any binding contract,
agreement or term sheet (other than contracts for ordinary course goods or services,
including contracts necessary for Borrowers to comply with the security measures
provided for above) without Bankruptcy Court approval. Prior to entering into such
binding contracts, agreements or term sheets outside of the ordinary course of
business, Borrowers shall consult with the Lender;
(xi) Borrowers shall promptly notify the Lender of (and, in any event,
no later than 5 Business Days after) the occurrence of any Default or Event of
Default;
(xii) Borrowers shall maintain not less than the insurance in existence on
the date hereof, with respect to the Project (until Closing) and the other DIP
Collateral;
(xiii) Borrowers shall maintain D&O coverage for the Independent
Manager in an amount not less than $10,000,000, with a tail not less than five (5)
years.
(xiv) Borrowers shall comply in all material respects with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed by, all
Governmental Authorities in respect of the conduct of their business and the
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ownership of their property (including applicable statutes, regulations, orders and
restrictions relating to environmental standards and controls);
(xv) Borrowers shall do or cause to be done, and cause their Subsidiaries
to do or cause to be done to the extent commercially reasonable, all things necessary
to preserve and keep in full force and effect their existence and their rights,
franchises, licenses, permits, copyrights, trademarks and patents;
(xvi) Borrowers shall promptly execute and deliver all further instruments
and documents (including, without limitation, certificates, declarations, affidavits,
reports and opinions) and take all further action that the Lender may require, to give
effect to this Amendment, perfect and protect the DIP Liens or to enable the Lender
to exercise and enforce its rights and remedies with respect to the DIP Collateral,
subject to the terms and conditions set forth in the Final DIP Order;
(xvii) Borrowers shall maintain detailed and materially accurate
accounting and records of proceeds of the Loans;
(xviii) Each Borrower shall continue to operate their businesses as such
businesses were operated on the Petition Date (subject to the terms of the
Agreement and this Amendment and any limitations imposed as a result of
operation as debtors -in -possession under the Bankruptcy Code) including (A)
subject to entry of the cash management order, maintaining its existing bank
accounts and not closing any bank accounts or creating any new bank accounts
without the consent of the Lender, acting reasonably, (B) maintaining its registered
office in the jurisdiction indicated in the notice provisions of the Loan Documents
to which it is party and not changing its name, the name under or by which it
conducts its business, its organizational identification number, its jurisdiction of
formation or organization, its type of organization or other legal structure or its
chief executive office, and not permitting the documents and books in its possession
or under its control evidencing the DIP Collateral to be moved, (C) not changing
its accounting practices, policies, or treatment except to the extent required by
applicable law, changes in GAAP or requirements of its independent accounts, (D)
not becoming an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of
1940, as amended, by virtue of an exemption other than pursuant to Section 3(c)(1)
or Section 3(c)(7) thereof, and (E) not becoming a "covered fund" under Section
13 of the Bank Holding Company Act of 1956, as amended;
(xix) Prior to Closing, Borrowers shall establish and thereafter maintain
an escrow account (the "Lender Escrow") and shall deposit all receipts, revenues,
payments and proceeds that are on account of (a) net sale proceeds allocable to the
Additional Parcels pursuant to the methodology set forth in the DIP Amendment
Order; and (b) the sale, lease, use, lease, settlement or other disposition of
Borrowers' assets (including without limitation proceeds of Avoidance Actions
and/or other claims or causes of action) that are not subject to a lien or security
interest that has priority over the liens and security interests of Lender. The Lender
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Escrow shall identify Lender as the beneficiary of the Lender Escrow. No funds
deposited into the Lender Escrow shall be disbursed for any purpose without either
the written consent of Lender or order of the Bankruptcy Court. The Parties shall
enter into a customary form of escrow agreement governing the Lender Escrow.
(c) Negative Covenants. The Borrowers hereby covenant and agree, on and
after the effective date of this Amendment and until the date that each Commitment has terminated
and the principal of and interest on each Loan and all fees, expenses and other amounts payable
under any Loan Document (other than contingent indemnification obligations for which no claim
or demand has been made) have been paid in full in cash, the Borrowers will not, and will not
permit any of their Subsidiaries to, subject to any provisions in a confirmed Chapter 11 Plan:
(i) make any Disposition other than Permitted Dispositions approved
by order of the Bankruptcy Court;
(ii) make any payment, prepayment, purchase or defeasance (A) in
respect of any existing (i.e., prior to the Petition Date) Indebtedness of the
Borrowers, other than (x) the Existing Obligations under the Prepetition Debt
Documents (including as contemplated herein); and (y) the DIP Obligations in
accordance with the Agreement and this Amendment, or (B) otherwise prohibited
by any DIP Order or any other Loan Document (otherwise be consented to in
advance in writing by the Lender);
(iii) create, assume, incur or suffer to exist any Indebtedness other than
Permitted Indebtedness without the prior written consent of the Lender and, as may
be required by the Bankruptcy Code, or an order of the Bankruptcy Court;
(iv) create, incur, assume or suffer to exist any Liens on any of their
properties or assets other than Permitted Liens without the prior written consent of
the Lender and, as may be required by the Bankruptcy Code, an order of the
Bankruptcy Court;
(v) change their names, fiscal years, amalgamate, consolidate with or
merge into, dispose of all or substantially all of their assets, divide into two or more
Persons pursuant to a "plan of division" or similar method, create, or reorganize
into, one or more Persons or enter into any similar transaction with any other entity
without the prior written consent of the Lender;
(vi) make or hold any Investment without the prior written consent of
the Lender and, as may be required by the Bankruptcy Code, an order of the
Bankruptcy Court;
(vii) declare or make, directly or indirectly, any Restricted Payment,
except as set forth in the DIP Budget, without the prior written consent of the
Lender;
(viii) engage in any business other than the businesses engaged in by the
Borrowers on the date hereof without the written consent of the Lender;
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(ix) enter into or permit to exist any transaction (including the purchase,
sale, lease or exchange of any property or the rendering of any service) with any
Affiliate on terms that are less favorable to the Borrowers or their Subsidiaries, as
the case may be, without the prior written consent of the Lender;
(x) enter into after the date hereof or allow to exist any contractual
obligations (other than the Agreement or this Amendment) that limit the ability of
the Borrowers to create, incur, answer or suffer to exist Liens on property or assets
of such Person in favor of the Lender with respect to the DIP Facility and the
obligations hereunder;
(xi) at any time, seek or consent to any reversal, modification,
amendments, stay or vacation of the Final DIP Order, without the prior written
consent of the Lender (such consent not to be unreasonably withheld or delayed);
at any time, seek or consent to a priority for any administrative expense against any
of the Debtors (now existing or hereafter arising) of any kind or nature whatsoever
(including, without limitation, any administrative expenses of the kind specified in,
or ordered under, Bankruptcy Code Sections 105(a), 326, 328, 330, 331, 503(b),
506(c), 507, 546(c), 726, 1113 and 1114 of the Bankruptcy Code) equal to or
superior to the priority of the DIP Liens and claims in respect of the DIP Obligations
except as expressly permitted in the DIP Orders; or
(xii) use the proceeds of Loans, other than for purposes set forth in, and
the amounts stated in, the DIP Budget, without the prior written consent of the
Lender.
Section 7. Events of Default. Notwithstanding the provisions of Section 362 of the
Bankruptcy Code and without application or motion to, or order from, the Bankruptcy Court, the
occurrence of any one or more of the following events, regardless of the reason therefore, shall
constitute an "Event of Default" hereunder:
(a) any Borrower's failure to comply in any material respects with the Loan
Documents, this Amendment, the Term Sheet, the MOU, any DIP Order, the CRO Order, or any
other order of the Bankruptcy Court;
(b) Failure to achieve any Milestone by the date provided with respect to such
Milestone in each case, as then in effect after giving effect to any extensions, waivers or
amendments thereto made in accordance with the requirements of this Term Sheet (and without
regard to the Borrowers' reasonable efforts to achieve such Milestones);
(c) entry of an order (i) granting relief from the automatic stay on any portion
of Borrowers' real estate; (ii) granting relief from the automatic stay on any other Borrower asset
with a value in excess of $500,000; or (iii) converting or dismissing the Chapter 11 Cases, or
appointing a trustee;
(d) the failure of the Borrowers to pay any principal when due, whether at
stated maturity, by acceleration, by required prepayment or otherwise, or shall fail to pay any
installment of interest or other amount payable hereunder when due;
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(e) The Borrowers, or any of them, file a chapter 11 plan that is not reasonably
acceptable to the Lender;
(f) any representation, warranty or statement made or deemed made by the
Borrowers herein or in any other Loan Document or other document related hereto or thereto or in
any certificate delivered to the Lender pursuant hereto or thereto shall prove to be untrue in any
material respect (or, in the case of any representation, warranty or statement qualified by
materiality, in any respect) on the date as of which made or deemed made;
(g) the Borrowers or any of their Subsidiaries fail to perform or observe any
term, covenant or agreement contained in this Agreement in any material respect.
(h) any debtor -in -possession financing is entered into by the Borrowers, or
any of them, other than the DIP Facility or the Borrowers seek authorization from the Bankruptcy
Court to enter into such facility without the prior written consent of the Lender, unless the
financing provides for full and timely payment of the Loan;
(i) entry of any order by the Bankruptcy Court reversing, amending,
supplementing, staying for a period of fifteen (15) days or more, vacating or modifying the Final
DIP Order, the Disclosure Statement Order or the Confirmation Order without the prior written
consent of the Lender;
0) payment by the Borrowers of prepetition debt (other than as approved by
the Bankruptcy Court and as otherwise contemplated by the DIP Budget, the Agreement, this
Amendment, the DIP Amendment Order, or with the prior written consent of the Lender);
(k) other than as a result of action or inaction of Lender, the Final DIP Order
shall cease to provide valid, enforceable, and perfected Liens on the DIP Collateral in favor of the
Lender with the priority set forth therein or otherwise cease to be valid and binding and in full
force and effect;
(1) Any Lien on the DIP Collateral shall have priority that either is pari passu
with, or senior to, the DIP Liens, except to the extent expressly provided in the Final DIP Order;
(m) the filing of any motion by the Borrowers seeking relief from the automatic
stay which could reasonably be expected to result in a material impairment of the rights or interests
of the Lender without the prior written consent of the Lender;
(n) one or more judgments, orders or decrees for the payment of money
required to be satisfied as an administrative expense claim in the Chapter 11 Cases shall be allowed
by the Bankruptcy Court in an aggregate amount (to the extent not paid or covered by insurance)
in excess of $100,000.00;
(o) actual or asserted (by the Borrowers or any Affiliate thereof) invalidity or
impairment of this Amendment, the Agreement or any related Loan Document (including the
failure of any Lien to remain perfected);
Docusign Envelope ID: 395D2A90-6ED8-81 DC-82244MD313829DE4
(p) non-compliance by the Borrowers in any material respect with the terms
of the Final DIP Order or any other order entered in the Chapter I I Cases;
(q) the Bankruptcy Court enters an order or orders (i) avoiding or requiring
disgorgement by the Lender of any amounts received in respect of the DIP Obligations or
(ii) permitting the grant of a Lien on the DIP Collateral other than the Permitted Liens;
(r) the filing of any motion, pleading or proceeding by the Borrowers which
could reasonably be expected to result in a material nonconsensual impairment of the rights or
interests of the Lender or a determination by a court with respect to a motion, pleading or
proceeding brought by another party which results in such a material impairment.
Section 9. Application of Proceeds. Except to the extent that Lender, in its sole
discretion and in writing otherwise directs or as otherwise provide for herein and in the Final DIP
Order with respect to the Carve -Out, all or any part of proceeds, profits or other receipts or
payments from or constituting DIP Collateral and made in payment of the DIP Obligations shall
be applied in the following order:
First, to pay the incurred and unpaid fees, costs and expenses, indemnities and other
obligations to the Lender required under the Loan Documents;
Second, to pay accrued and unpaid interest on the Loans;
Third, to pay all outstanding principal amounts in respect of the Loans; and
Fourth, in payment to the Borrowers and their estates (as may be allocated among them
and their respective creditors by the Bankruptcy Court).
Section 10. Miscellaneous.
(a) Communications.
a. The parties shall maintain open and transparent communications regarding the sale
process, the preparation of a plan and disclosure statement, the commencement of
litigation, the Debtors' operations, conditions at the property and other material
matters as may arise from time to time with respect to the Chapter 11 Cases. To
the extent necessary or appropriate, the provision of information by one party to
another may be subject to a customary non -disclosure agreement ("NDA"). All
disputes pertaining to the designation of confidential material or to the
enforceability of relevant NDA's shall be resolved by the Bankruptcy Court. To
facilitate the orderly provision of information, the parties shall meet routinely with
each other.
b. Correspondence Regarding Pleadings. The Borrowers shall make a good faith
effort (but are not required) to provide to the Lender a draft of all material motions
and applications at least three (3) days prior to serving or filing such motion or
application. In the event that the Lender raises a concern regarding any proposed
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motion or application, the Borrowers shall attempt to address such concerns in good
faith.
c. Information Sharing. Upon a request by the Lender in writing (which may be by
email), the Borrowers and the CRO shall provide to the City all documents and
information in their possession, custody or control that the Lender from time to
time may request in writing regarding: the condition or value of the Debtors' assets;
claims against Borrowers; negotiations and communications with prospective
purchaser and/or financers of the Borrowers or their business; contracts between
Debtors and third parties; transfers and payments made by Debtors; and dealings
between Borrowers and their insiders; cost to complete the project; appraisal
reports; information regarding prospective purchasers (including without limitation
their financial wherewithal and experience); purchase proposals, letters of intent
and term sheets. Any request by the Lender shall be reasonable in scope, and shall
describe the type of documents or information requested. Notwithstanding the
foregoing, Borrowers are not required to provide to the Lender any documents or
information protected by the attorney -client privilege.
(b) Sale of Property.
a. Broker. The Borrowers shall consult with the Lender regarding their selection of a
broker, and the terms of employment of a broker, to be engaged with respect to the
Borrowers' proposed sale of the Borrowers' real property. The Borrowers shall, at
their sole discretion, include the Lender in communications with the selected
broker. The Lender is authorized to have direct communications with the selected
broker, but shall not communicate directly with the selected broker unless the
Borrowers are invited to attend calls or meetings, or copied on written
communications.
b. Lender Consent Rights. The Lender shall have the right to consent to or reject the
sale to any Developer/Purchaser as the Borrowers may propose. The Lender shall
exercise its consent rights in good faith, giving due consideration to the experience,
expertise and financial wherewithal of any proposed Developer/Purchaser, and the
development terms, conditions and concessions as a proposed Developer/Purchaser
may require. Absent the Lender's consent, the Borrowers shall not seek approval
of, or consummate, a sale to a proposed Developer/Purchaser. The parties
acknowledge and agree that the Lender has the right to negotiate all terms and
conditions related to the development of the Project, and to enter into development
agreements and related documents directly with the selected Developer/Purchaser;
and that the development terms and conditions to which the Lender may agree may
differ from terms and conditions as were in effect and/or under discussion
prepetition. The parties further acknowledge and agree that absent the Lender's
written consent, the Borrowers shall not seek to assume or assign the Purchase,
Sale, and Development Agreement dated November 19, 2014, by and between
SilverRock Development Company and City (the "Original PSDA"), as amended
by Amendment No. 1, dated October 29, 2015, Amendment No. 2, dated April 18,
2017, Amendment No. 3, dated November 28, 2018, Amendment No. 4, dated
Rol
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October 12, 2021, and Amendment No. 5, dated November 16, 2023 (the "PSDA")
or the Development Agreement, dated November 19, 2014, by and between
SilverRock Development Company and City, adopted pursuant to California
Government Code section 65864 et seq. and recorded in the Office of the Riverside
County Official Records on December 18, 2014, as Document No. 2014-0484106
(the "Development Agreement"), and that effective on Closing to which the Lender
consents in writing, the Lender shall not assert cure claims against the Borrowers'
estates under section 365 of the Bankruptcy Code with respect to the PSDA or
Development Agreement (without prejudice to the Lender's right to assert
prepetition claims or rejection damage claims in connection with the PSDA and
Development Agreement, and to enforce all rights and remedies with respect to the
DIP Facility).
c. Consultation. The parties agree to consult with each other in good faith regarding
the selection of a stalking horse purchaser and the ultimate Developer/Purchaser of
the Property; the terms and conditions of the sale and development of the Property;
the procedures for sale of the Property (including whether to sell pursuant to section
363 of the Bankruptcy Code or pursuant to a plan).
(c) Plan and Disclosure Statement.
a. Preparation of Plan and Disclosure Statement. If the Sale Transaction is
consummated through a plan, the Borrowers shall provide an initial draft of a plan
and disclosure statement to the Lender at least two (2) weeks prior to filing. If the
Sale Transaction is not consummated through a plan, the Borrowers shall provide
an initial draft plan and disclosure statement to the Lender at least five (5) business
days prior to the filing. The Borrowers shall attempt in good faith to provide drafts
of material amendments and supplements at least five (5) business days prior to
filing The Lender and the Borrowers shall negotiate in good faith with respect to
the Borrowers' plan, disclosure statement and amendments and supplements.
b. Contents of a Plan. Any plan filed by the Borrowers shall contain terms and
conditions consistent with the MOU and this Amendment, and the Agreement. Any
plan filed by the Borrowers shall include a general release of all estate claims and
causes of action (including derivative claims) against the Lender and its respective
affiliated boards, commissions, and committees, and the officials (elected and
appointed), members, advisors, officers, directors, employees and agents thereof,
and each of their lawyers, accountants and other professionals, and a bar order
enjoining all persons from asserting such claims.
c. Exclusivity. The parties reserve their respective rights with respect to further
extensions of exclusivity under section 1121 of the Bankruptcy Code.
(d) Indemnity. Whether or not the transactions contemplated hereby shall be
consummated, the Borrowers shall indemnify, pay and hold the Lender and its respective affiliated
boards, commissions, and committees, and the officials (elected and appointed), members,
advisors, officers, directors, employees and agents thereof, and each of their lawyers, accountants
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and other professionals (each, an "Indemnified Party"), harmless from and against any and all
claims, liabilities, losses, damages, costs and expenses (whether or not any of the foregoing
Persons is a party to any litigation), including, without limitation, attorneys' fees and costs (limited
in the case of legal fees and expenses to reasonable and documented legal fees of counsel for any
or all Indemnified Parties, taken as a whole, and, if necessary, one firm of counsel in each
appropriate jurisdiction (which may include a single special counsel acting in multiple
jurisdictions) for all Indemnified Parties taken as a whole (and, in the case of an actual or perceived
conflict of interest, where the Indemnified Parties affected by such conflict informs the Borrowers
of such conflict and thereafter retains their own counsel, of an additional counsel for each group
of affected Indemnified Parties similarly situated, taken as a whole)) and costs of investigation,
document production, attendance at a deposition, or other discovery, with respect to or arising out
of the Amendment, this Agreement or the other Loan Documents, or any use of proceeds hereunder
or the Chapter 11 Cases or any transactions contemplated hereby or thereby, or any claim, demand,
action or cause of action being asserted against the Borrowers (collectively, the "Indemnified
Liabilities"); provided, that the Borrowers shall have no obligation hereunder with respect to
Indemnified Liabilities with respect to a particular Indemnified Party (i) to the extent arising from
the gross negligence or intentional or willful misconduct of any such Indemnified Party;
(e) Taxes and Other Deductions. Unless an applicable exemption applies, on
the Original Maturity Date and thereafter, Borrowers shall pay all applicable transfer taxes,
recording fees and similar taxes, costs and charges that are required in connection with the DIP
Facility and the recordation of instruments in connection with securing the DIP Facility. Payments
by the Borrowers hereunder or under any other related Loan Documents shall be made free and
clear of and without reduction for or on account of any present or future taxes, levies, imposts,
duties, charges, fees, deductions or withholdings of any kind or nature whatsoever or any interest
or penalties payable with respect thereto now or in the future imposed, levied, collected, withheld
or assessed by any country or political subdivision of a country (collectively, "Taxes"); provided,
however, that if any Taxes are required by applicable law to be withheld ("Withholding Taxes")
from any amount payable to the Lender, the amounts so payable to the Lender shall be increased
to the extent necessary to yield to the Lender on a net basis after the payment of all Withholding
Taxes the amount payable under this Amendment, the Agreement or any other related Loan
Documents at the rate provided herein or therein and if requested by the Lender, the Borrowers
shall provide evidence reasonably satisfactory to the Lender that the applicable Taxes have been
withheld and remitted.
(f) Lender's Legal Fees and Costs. On the Maturity Date and thereafter,
Borrowers shall pay all reasonable and documented professional fees and costs incurred by the
Lender in connection with the Borrowers' Chapter 11 Cases; provided, however, that the
maximum amount of such fees and costs shall not exceed $600,000.00. Additionally, in the event
that Borrowers default with respect to the DIP Facility, the Lender shall be entitled to recover
reasonable and documented professional fees and costs, including without limitation attorneys'
fees and costs incurred in connection with any action or proceeding to enforce or construe the Loan
Documents, and/or to defend against any claims asserted by any person against the Lender in
connection with the DIP Facility or the Borrowers' Chapter 11 Cases. The Lender's professional
fees and costs subject shall not apply against the DIP Budget. The Lender's rights to recovery of
its professional fees as set forth in this paragraph shall survive the repayment of Borrowers'
indebtedness under the DIP Facility. Nothing in this paragraph shall limit the Lender's right to
22
Docusign Envelope ID: 395D2A90-6ED8-81 DC-82244MD313829DE4
seek or obtain reimbursement or other consideration from a purchaser or developer on account of
additional fees or expenses as may be incurred in connection with the negotiation, documentation
or implementation of development or related agreements.
(g) Amendments. Neither this Amendment nor any terms hereof may be
changed, waived, discharged or terminated unless such change, waiver, discharge or termination
is in writing signed by the Borrowers and the Lender.
(h) Conflict. To the extent that there is any inconsistency between this
Amendment and any of the other related Loan Documents once executed, this Amendment shall
govern unless such other document specifically states otherwise; provided that, for the avoidance
of doubt, to the extent that there is any inconsistency between this Amendment and the DIP
Amendment Order, the DIP Amendment Order shall govern.
(i) Effectiveness; Binding Effect; Governing. This Amendment shall
become effective when it shall have been executed by the Borrowers and the Lender and thereafter
shall be binding upon and inure to the benefit of the Borrowers, the Lender and their respective
permitted successors and assigns. THIS AMENDMENT, THE OTHER LOAN DOCUMENTS
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND
THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO CONFLICTS OF
LAW RULES.
0) Waiver of Jury Trial; Judicial Reference. TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAWS, EACH OF THE PARTIES TO THIS AMENDMENT
HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AMENDMENT
OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR
RELATIONSHIP THAT IS BEING ESTABLISHED HEREBY. TO THE EXTENT ANY
DISPUTE HEREUNDER IS BROUGHT IN A JURISDICTION WHERE THE FOREGOING
PREDISPUTE WAIVER IS INEFFECTIVE, THEN SUCH DISPUTE SHALL BE HEARD BY
A REFEREE AND RESOLVED BY JUDICIAL REFERENCE PURSUANT TO CALIFORNIA
CODE OF CIVIL PROCEDURE SECTIONS 638 ET SEQ.
(k) Consent to Jurisdiction; Venue. All judicial proceedings brought against
any party hereto with respect to this Amendment and the Loan Documents shall be brought in the
Bankruptcy Court or, upon the dismissal, abstention, or other resolution of the Chapter 11 Cases,
in any state or federal court of competent jurisdiction in Riverside County, California, and by
execution and delivery of this Amendment or the Agreement, each party hereto accepts for itself
and in connection with its properties, generally and unconditionally, the exclusive jurisdiction and
venue of the Bankruptcy Court, and irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Amendment. Each party hereto irrevocably waives any right it may
have to assert the doctrine of forum non conveniens or to object to venue to the extent any
proceeding is brought in accordance with this clause (1).
23
Docusign Envelope ID: 395D2A90-6ED8-81 DC-82244MD313829DE4
(1) Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken together shall constitute
one and the same agreement. Electronic delivery of an executed counterpart of this Amendment
by email shall be as effective as delivery of an original counterpart of this Amendment.
(m) Headings. Article and Section headings used herein are for convenience of
reference only, are not part of this Amendment and are not to affect the construction of, or to be
taken into consideration in interpreting, this Amendment or the Agreement.
(n) Interpretive Provisions. The words "hereof', "herein" and "hereunder" and
words of similar import when used in this Amendment shall refer to this Amendment as a whole
and not to any particular provision of this Amendment, and section, subsection, paragraph,
schedule, and exhibit references are sections, subsections, paragraphs, schedules, and exhibits to
this Amendment unless otherwise specified.
(o) Limitation on Liability. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, AND NOTWITHSTANDING ANY OTHER PROVISION OF THIS
AMENDMENT OR THE OTHER LOAN DOCUMENTS: (I) NONE OF THE LENDER NOR
ANY INDEMNIFIED PARTY SHALL BE LIABLE TO ANY PARTY FOR ANY INDIRECT,
SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH THEIR
RESPECTIVE ACTIVITIES RELATED TO THIS AMENDMENT, THE OTHER LOAN
DOCUMENTS, THE TRANSACTIONS CONTEMPLATED THEREBY, THE LOANS, OR
OTHERWISE IN CONNECTION WITH THE FOREGOING; (II) WITHOUT LIMITING THE
FOREGOING, EXCEPT IN CONNECTION WITH A BREACH OR THREATENED BRACH
OF THE NDAS OR OTHER CONFIDENTIALITY OBLIGATIONS, NONE OF THE LENDER
NOR ANY INDEMNIFIED PARTY SHALL BE SUBJECT TO ANY EQUITABLE REMEDY
OR RELIEF, INCLUDING SPECIFIC PERFORMANCE OR INJUNCTION ARISING OUT OF
OR RELATING TO THIS AMENDMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED THEREBY; AND (III) NONE OF THE LENDER NOR
ANY INDEMNIFIED PARTY SHALL HAVE ANY LIABILITY TO THE BORROWERS, FOR
DAMAGES OR OTHERWISE, ARISING OUT OF OR RELATING TO THIS AMENDMENT,
THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED
THEREBY FOR ANY ACT OR OMISSION.
(p) Notice. All notices, demands, and other communications to be given or
delivered under or by reason of the provisions of the Agreement or this Amendment shall be in
writing and shall be deemed to have been given (a) if personally delivered, when personally
delivered, (b) when transmitted via electronic mail to the e-mail address (provided no error
message or other message stating that such email was undeliverable), (c) when sent reputable
national overnight courier service, when delivery is confirmed by such reputable national
overnight courier service's online tracking tool, (d) when sent by certified or registered mail,
postage prepaid, when delivery is confirmed to have occurred by the United States Postal Service's
online tracking tool or return receipt. Unless another address has been previously, or hereafter is,
specified in writing, notices, demands, and communications:
To the Lender shall be sent to:
24
Docusign Envelope ID: 395D2A90-6ED8-81 DC-82244MD313829DE4
Jon McMillen, City Manager
City of La Quinta
78495 Calle Tampico
La Quinta, California 92253
j mcmillen(c�r�,laquintaca. gov
with a required copy to
William Ihrke, City Attorney
Rutan & Tucker, LLP
18575 Jamboree Road 9th Floor
Irvine, California 92612
bihrkekrutan.com
and to
Bradford F. Englander
Whiteford Taylor & Preston LLP
3190 Fairview Park Drive, Suite 800
Falls Church, Virginia 22042
ben lag nder(kwhitefordlaw.com
To the Borrowers shall be sent to:
Christopher Sontchi, Independent Manager
Sontchi, LLC
sontchi(a,sontchillc. com
and to
Douglas Wilson, Chief Restructuring Officer
Douglas Wilson Companies
1620 Fifth Ave, Suite 400
San Diego, CA 92101
dwilson(kdouglaswilson.com
with a required copy to:
Erin Fay
Wilson Sonsini Goodrich & Rosati
222 Delaware Avenue, Suite 800
Wilmington, Delaware 19801
efaykwsgr.com
25
Docusign Envelope ID: 395D2A90-6ED8-81 DC-82244MD313829DE4
(q) Preservation of Lenders' Rights. Except as expressly stated in this
Amendment, nothing in this Amendment, the Agreement or any other Loan Document supersedes,
waives, releases or otherwise alters the Borrowers' covenants, obligations or waivers, or the
Lender's rights and remedies, as set forth in the DIP Orders or the MOU, all of which shall remain
in full force and effect in accordance with their terms, despite payment and satisfaction of
Borrowers' obligations and indebtedness under the Agreement, this Amendment and other Loan
Documents.
[Signature page follows]
26
Docusign Envelope ID: 395D2A90-6ED8-81 DC-82244MD313829DE4
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed and
delivered as of the date and year first written above.
BORROWERS:
SilverRock Development Company, LLC,
RGC PA 789, LLC,
SilverRock Lifestyle Residences, LLC,
SilverRock Lodging, LLC,
SilverRock Luxury Residences, LLC, and
SilverRock Phase 1, LLC
Lyb+s
ocuSigned by:
By: wi�sbv'
Name: Douglas Wilson
Chief Restructuring Officer
Libp'r
ed by: __II
By: Sbin�'(�u
Name: Christopher Sontchi
Independent Manager
LENDER:
City QMj%ta
By: IN,, hCA4-i(,(,c,ti,
Jon McMillen, City Manager
Attest: Signed by:
By: FAUtAA'6 R'a"
Monika Radeva, City Clerk
Approved a§i9 odtyorm:
P
William H. Ihrke, City Attorney
Docusign Envelope ID: 395D2A90-6ED8-81DC-8224-4D6D3B829DE4
Exhibit A
[Intentionally Omitted]
0 docusign.
Certificate Of Completion
Envelope Id: 395D2A90-6ED8-81DC-8224-4D6D3B829DE4
Status: Completed
Subject: Complete with Docusign: SilverRock- First Amendment to DIP Credit Agreement
(Execution Version)...
Source Envelope:
Document Pages: 29 Signatures: 5
Envelope Originator:
Certificate Pages: 4 Initials: 0
Lynzy McGee
AutoNav: Enabled
Address Redacted
Envelopeld Stamping: Enabled
Imcgee@wsgr.com
Time Zone: (UTC-08:00) Pacific Time (US & Canada)
IP Address: 4.1.146.62
Record Tracking
Status: Original Holder: Lynzy McGee Location: DocuSign
4/29/2026 6:52:19 AM Imcgee@wsgr.com
Signer Events Signature Timestamp
Signed by:
Christopher Sontchi E Sent: 4/29/2026 7:00:14 AM
sontchillc@gmail.com G v,Sf6FbXr Sbin�cU.l Viewed: 4/29/2026 7:38:19 AM
Security Level: Email, Account Authentication 3E9s00c3E4914F7 Signed: 4/29/2026 9:13:58 AM
(None)
Signature Adoption: Pre -selected Style
Using IP Address: 207.245.75.18
Electronic Record and Signature Disclosure:
Accepted: 4/29/2026 7:38:19 AM
ID: 262128e8-4f32-4ae7-9f2c-aa5050738769
Douglas Wilson gned by: Sent: 4/29/2026 7:00:15 AM
dwilson@douglaswilson.com ED0Si
6+S R[w, Viewed: 4/29/2026 12:44:13 PM
CEO/Chairman 6666B394A608415 Signed: 4/29/2026 12:44:27 PM
Security Level: Email, Account Authentication
(None) Signature Adoption: Pre -selected Style
Using IP Address: 184.179.109.154
Electronic Record and Signature Disclosure:
Accepted: 4/29/2026 12:44:13 PM
ID: d435a2d2-1a32-4aOf-925b-14639652a3ff
Jon McMillen by. Sent: 4/29/2026 7:00:15 AM
jmcmillen@laquintaca.gov ED—Si,"ed
DU Nl(�lt((t In Viewed: 4/29/2026 9:10:59 AM
Securit Level: Email Account Authentication 1F96EA6FDB45414 Signed: 4/29/2026 9:16:22 AM
Y � 9
(None)
Signature Adoption: Pre -selected Style
Using IP Address: 47.176.173.157
Electronic Record and Signature Disclosure:
Accepted: 4/29/2026 9:10:59 AM
ID: 71del 588-38d9-4de3-b3d2-61ebb8014595
Monika Radeva bySent: 4/29/2026 7:00:16 AM
mradeva@laquintaca.gov [Signed
l.b"L F .�.e�a. Viewed: 4/30/2026 10:22:47 AM
Securit Level: Email Account Authentication 90FA47F279864F5... Signed: 4/30/2026 10:23:19 AM
Y 9
(None)
Signature Adoption: Pre -selected Style
Using IP Address: 139.104.3.15
Electronic Record and Signature Disclosure:
Accepted: 4/30/2026 10:22:47 AM
ID: 58e5f7b7-78d7-470b-958a-2245e9730b11
Signer Events
Signature
Timestamp
William H. Ihrke
Sent: 4/29/2026 7:00:16 AM
bihrke@rutan.com
ESignel1,� m
-Q;�1--XL
Resent: 4/29/2026 7:01:41 AM
Security Level: Email, Account Authentication
E2C19708275B45E .
Viewed: 4/29/2026 8:24:18 AM
(None)
Signed: 4/29/2026 8:26:36 AM
Signature Adoption: Drawn on Device
Using I Address: 2600:387:15:3b17::7
Signed using mobile
Electronic Record and Signature Disclosure:
Accepted: 4/29/2026 8:24:18 AM
ID:e7856b9d-6202-4832-bbbc-9a8ce107bc75
In Person Signer Events
Signature
Timestamp
Editor Delivery Events
Status
Timestamp
Agent Delivery Events
Status
Timestamp
Intermediary Delivery Events
Status
Timestamp
Certified Delivery Events
Status
Timestamp
Carbon Copy Events
Status
Timestamp
Brad Englander
Sent: 4/29/2026 7:00:17 AM
benglander@whitefordlaw.com
COPIED
Viewed: 4/29/2026 8:13:16 AM
Security Level: Email, Account Authentication
(None)
Electronic Record and Signature Disclosure:
Not Offered via Docusign
Catherine Lyons
Sent: 4/29/2026 7:00:17 AM
clyons@wsgr.com
COPIED
Security Level: Email, Account Authentication
(None)
Electronic Record and Signature Disclosure:
Not Offered via Docusign
Cheryl Szymanski
Sent: 4/29/2026 7:00:18 AM
cheryl.a.szymanski@gmail.com
COPIED
Viewed: 4/29/2026 7:53:18 AM
Security Level: Email, Account Authentication
(None)
Electronic Record and Signature Disclosure:
Not Offered via Docusign
Witness Events
Signature
Timestamp
Notary Events
Signature
Timestamp
Envelope Summary Events
Status
Timestamps
Envelope Sent
Hashed/Encrypted
4/29/2026 7:00:18 AM
Envelope Updated
Security Checked
4/29/2026 7:01:40 AM
Certified Delivered
Security Checked
4/29/2026 8:24:18 AM
Signing Complete
Security Checked
4/29/2026 8:26:36 AM
Completed
Security Checked
4/30/2026 10:23:19 AM
Payment Events Status Timestamps
Electronic Record and Signature Disclosure
Electronic Record and Signature Disclosure created on: 3/20/2026 11:56:01 AM
Parties agreed to: Christopher Sontchi, Douglas Wilson, Jon McMillen, Monika Radeva, William H. Ihrke
ELECTRONIC RECORD AND SIGNATURE DISCLOSURE
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