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C12-16 - SDC FAIRWAY CANYON LLC - IMPROVEMENT BONDS AND ESCROW INSTRUCTION AGREEMENTC- i � 4LW 0) AGREEMENT REGARDING IMPROVEMENT BONDS AND ESCROW INSTRUCTIONS This AGREEMENT REGARDING IMPROVEMENT BONDS AND ESCROW INSTRUCTIONS (the "Agreement ") is made and entered into effective as of July 3, 2012 (the "Effective Date "), by and between The City of Beaumont, a municipal governmental entity (the "City "), and SDC Fairway Canyon, LLC, a Delaware limited liability company (the "Developer "). PVCITAT,C A. As part of the Developer's acquisition of certain property located within the City within the Oak Valley Specific Plan (the "Project "), the Developer assumed the obligation to complete certain public improvements required by the City in connection with the approval and development of the Project (the "Bonded Improvements "), which Bonded Improvements are secured by subdivision improvement bonds listed on Exhibit "A" which is attached hereto and incorporated herein by this reference (the "Bonds "). B. In lieu of the City calling the Bonds and completing the Bonded Improvements, the Developer desires to complete the Bonded Improvements in accordance with City requirements, conditions of approval for the Project and this Agreement; to obtain the release of Bond Nos. 5014553 and 5026528 (the "Oak Valley Parkway Bonds "); and to reduce the amount of all other Bonds to maintenance bond amounts, as set forth on Exhibit "A" attached hereto under the column titled "Maintenance Bond Amount." C. The purpose of this Agreement is to facilitate the timely completion of the Bonded Improvements and set forth the terms and conditions upon which the City will agree to release the Oak Valley Parkway Bonds and reduce the amount of all other Bonds to the Maintenance Bond Amount. AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the City and Developer hereby agree as follows: L Priority Improvements. Certain Bonded Improvements listed on Exhibit "B" attached hereto and incorporated herein by this reference (the "Priority Improvements "), are considered to be of a high priority by the City and the City desires to have the Priority Improvements completed within one hundred eighty (180) days of the Effective Date. -1- 2. Escrow Account. Within five (5) business days of the Effective Date of this Agreement, the Developer shall deposit the amount of three hundred thousand dollars ($300,000.00) (the "Escrowed Funds ") with the City which shall place the funds in a special account (the "Escrow Account ") to be disbursed in accordance with this Agreement. 3. Disbursement of Escrowed Funds. The Escrowed Funds shall be disbursed by the City as follows: 3.1. The Developer shall enter into construction agreements with private contractors and achieve "Substantial Completion," as defined below, of the construction of the Priority Improvements within one hundred eighty (180) days of the Effective Date, subject to "Force Majeure Delays," as defined below. For purposes of this Agreement, "Substantial Completion" of a particular Priority Improvement shall mean that such Priority Improvement is constructed and completed as required by the City to reduce the improvement bond amount relating to such Priority Improvement to the maintenance bond amount for such Priority Improvement and that unconditional lien releases have been received for all work performed in connection with such Priority Improvement, provided, however, that conditional lien releases shall be sufficient if work is to be paid for directly from the Escrow Account to the applicable contractor, and "Force Majeure Delays" shall mean delays arising from acts of God, adverse weather conditions, war, invasion, insurrection, acts of a public enemy, riot, mob violence, civil commotion, fire or other casualty, sabotage, strikes, lockouts, labor disputes, inability to procure or general shortage of labor or materials, inability to procure equipment or supplies on the open market, unusual delay in transportation, laws, rules, regulations or orders of governmental agencies or other governmental actions, inability to obtain or delay in obtaining permits or approvals despite the reasonable commercial efforts of the party performing, legal proceedings, actions of the other party, or any other cause beyond the reasonable control of the party being delayed, not including financial difficulties. 3.2. Within five (5) business days of the City's receipt and approval of the later to occur of (i) the City's receipt and approval of the maintenance bonds for the Phase I Priority Improvements, and (ii) Substantial Completion of the Phase I Priority Improvements, as such Phase I Priority Improvements are listed on Exhibit "B," the City shall release $150,000 (the "First Release ") of the Escrowed Funds to Developer or the Developer's contractor, as directed by Developer. The Developer shall continue to work diligently following the First Release to construct the Phase II Priority Improvements such that the Developer achieves Substantial Completion of all the Priority Improvements within one hundred eighty (180) days of the Effective Date, subject to Force Majeure Delays. Within five (5) business days of the later to occur of (i) the City's receipt and approval of the maintenance bonds for the -2- Phase II Priority Improvements, and (ii) Substantial Completion of the Phase I1 Priority Improvements, as such Phase II Priority Improvements are listed on Exhibit "B," the City shall release the remaining $150,000 of the Escrowed Funds to the Developer or the Developer's contractor, as directed by Developer. 3.3. In the event the Developer does not achieve Substantial Completion of the Priority Improvements within one hundred and eighty (180) days of the Effective Date, subject to Force Majeure Delays, the City shall have the right, but not the obligation, upon written notice to the Developer, to use the Escrowed Funds to complete component portions of the Priority Improvements. Any Escrowed Funds remaining in the Escrow Account following completion of component portions of Priority Improvements by the City and final acceptance thereof by the City Council, shall remain in the Escrow Account until such time as the Developer achieves Substantial Completion of all the Priority Improvements. 4. Remaining Improvements. Exhibit "C" attached hereto and incorporated herein by this reference list (i) Bonded Improvements that have been completed or funded by the City (the "City Funded Improvements ") and (ii) Bonded Improvements to be completed by the Developer that are not Priority Improvements (the "Remaining Bonded Improvements "). The Developer agrees (I) to cause the reimbursement to the City of the City Funded Improvements in the amounts shown on Exhibit "C" relating to the City Funded Improvements through the first sale of bonds from Community Facilities District 93 -1, Improvement Area 19B, and (II) to provide future bonds that will tie to Tract Map Nos. 31462 -7 and 31462 -8 as security to complete the Remaining Bonded Improvements, or another method agreed upon in writing between the Developer and the City. 5. Release of Oak Valley Parkway Bonds. Immediately following the funding of the Escrow Account, as set forth in Section 2 above and receipt of fees to release Oak Valley Parkway Bonds, if any are required, the City shall proceed expeditiously and in good faith to process the release of the Oak Valley Parkway Bonds. 6. Reduction of Bonds. Immediately following the funding of the Escrow Account as set forth in Section 2 above and receipt by the City of the applications and fees required to reduce the amount of the Bonds to maintenance amounts, the City shall proceed expeditiously and in good faith to process the reduction in the amount of each and all of the Bonds listed on Exhibit "A" (with the exception of the Oak Valley Parkway Bonds, which are to be released in accordance with Section 5 above), to the Maintenance Bond Amount of such Bond, as such amount is set forth in Exhibit "A." -3- 7. Miscellaneous. 7.1. No party shall assign its rights, obligations or responsibilities, under this Agreement without the prior written consent of the other party. 7.2. All notices required or designed to be sent under this Agreement shall be in writing and delivered to the person to whom the notice is directed, either in person (provided that such delivery is confirmed by the courier delivery service), or by expedited delivery service with proof of delivery, or by United States Mail, postage prepaid, as a Registered or Certified item, Return Receipt Requested, or by facsimile or email transmission. Notices delivered by personal delivery or by expedited delivery shall be deemed to have been delivered at the time of such delivery and notices delivered by mail or by facsimile or email transmission shall be deemed to have been delivered upon receipt by the addressee. The notice addresses for each of the parties hereto are as follows: If to City: City of Beaumont 550 E. Sixth Street Beaumont, CA 92223 Attention: Alan C. Kapanicas, City Manager Phone: (951) 769 -8520 Fax: (951) 769 -8526 Email: aapanicas @ci.beaumont.ca.us If to Developer: SDC Fairway Canyon LLC 2392 Morse Avenue Irvine, CA 92614 Attention: Mike Turner Phone: (949) 777 -4000 Fax: (949) 777 -4050 Email: mturner @argentmanagementllc.com With a copy to: SDC Fairway Canyon LLC 2392 Morse Avenue Irvine, CA 92614 Attention: Andrew P. Cook, Esq. Phone: (949) 777 -4000 Fax: (949) 777 -4052 Email: acook @argentmanagementllc.com in 7.3. The provisions of this Agreement are not intended to create, nor shall they in any way be interpreted to create, a joint venture, a partnership, or any other similar relationship between the parties. 7.4. In the event that any party brings or commences legal proceedings to enforce any of the terms of this Agreement, and a judgment or award shall determine the substantially prevailing party in such action, such party shall be entitled to receive from the non - prevailing party in such action reasonable attorneys' fees and court costs incurred by the prevailing party in connection with such action. 7.5. The captions heading the various sections of this Agreement are for convenience and identification only, and shall not be deemed to limit or define the contents of their respective sections. 7.6. Time is of the essence of this Agreement. 7.7. This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts made and performed in such State. 7.8. Except as specifically provided herein, no delay on the part of any party in exercising any rights set forth herein, or failure to exercise such rights, shall operate as a waiver thereof or of any of its rights under this Agreement. No modification or waiver of the provisions of this Agreement shall be effective unless in writing and signed by the entity to be charged therewith, nor shall any waiver be applicable except in the specific instance for which given. 7.9. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors, heirs and assigns. This Agreement contains the entire agreement between the parties covering this matter and other written and/or oral agreements are merged herein. 7.10. This Agreement may be amended, from time to time, only in writing and executed by all of the parties. 7.11. If any part of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent possible. 7.12. No member of the City Council, or City staff member, employee or agent shall incur any liability hereunder to the Developer in their individual capacities by reason of their actions hereunder or execution hereof. -5- 7.13. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument. Signature pages may be detached from the counterparts and attached to a single copy of this Agreement to physically form one document. [Signatures follow on next page] M IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed effectively as of the day and year first above written. "CI'T'Y" THE CITY OF BEAUMONT, a municipal corporation organized and existing under the laws of the State of California By.. `% -&/ -7-3-fa Y Name: Title: frkLAZ "DEVELOPER" SDC FAIRWAY CANYON, LLC, a Delaware limited liability company By: Name: Its: -7- EXHIBIT "A" Bonds SU5012365 Arch Insurance Company 31462 STREET /SEWER $3,682,000.00 $810,040.00 SU5012366 Arch Insurance Company 31462 STORM DRAIN LINES B G J K $541,000.00 $119,020.00 SU5012367 Arch Insurance Company 31462 STORM DRAIN LINES D E F $2,082,000.00 $458,040.00 SU5012368 Arch Insurance Company 31462 STORM DRAIN LINES H I $131,000.00 $28,820.00 SU5012369 Arch Insurance Company 31462 -1 STREET /SEWER $245,584.00 $54,028.48 SU5012370 Arch Insurance Company 31462 -2 STREET/DRAINAGE /SEWER $340,000.00 $74,800.00 SU5012371 Arch Insurance Company 31462 -3 STREET/DRAINAGE /SEWER $343,000.00 $75,460.00 SU5012372 Arch Insurance Company 31462.4 STREET /SEWER $159,032.00 $34,987.04 SU5012373 Arch Insurance Company 31462 -6 STREET/DRAINAGE /SEWER $540,000.00 $118,800.00 5014543 Bond Safeguard Insurance Company 31462 -9 STREET & SEWER $311,432.00 $68,515.04 5014544 Bond Safeguard Insurance Company 31462 -15 STREET & SEWER $167,946.00 $36,948.12 5014545 Bond Safeguard Insurance Company 31462 -14 STREET & SEWER $260,623.00 $57,337.06 5014546 Bond Safeguard Insurance Company 31426 -13 STREET & SEWER $49,909.00 $10,979.98 5014547 Bond Safeguard Insurance Company 31462 -12 STREET & SEWER $59,599.00 $13,111.78 5014548 Bond Safeguard Insurance Company 31462 -11 STREET & SEWER $165,954.00 $36,509.88 5014549 Bond Safeguard Insurance Company 31462 STORM DRAIN $147,237.00 $32,392.14 5014550 Bond Safeguard Insurance Company 31462 STORM DRAIN $455,080.00 $100,117.60 5014551 Bond Safeguard Insurance Company 31462 -14, 31462 -15 STORM DRAINS $1,182,063.00 $260,053.86 5014552 Bond Safeguard Insurance Company 31462 STREETS $2,146,407.00 $472,209.54 5024786 Bond Safeguard Insurance Company 31462 -8 TUNNEL PLAN T3 $869,060.00 $191,193.20 5014553 Bond Safeguard Insurance Company 31462 OAK VALLEY PARKWAY $1,949,415.00 $0.00 5026528 Bond Safeguard Insuran ce Company 31462 OAK VALLEY PARKWAY $4,352,797.15 $0.00 TOTAL $3,053,363.72 EXHIBIT "B" Priority Improvements - Phase I • Sanders Street Asphalt Repairs - from Cherry Valley Boulevard to Trevino Trail - Approximately $56,600 • Trevino Trail Asphalt Repairs - from Sanders Street to Rosberg - Approximately $97,100 • Trevino Trail Asphalt Repairs - from Rosberg to Palmer Avenue - Approximately $27,500 • Irwin Street Storm Drainage Outfall Repairs - Approximately $59,600 • Storm Drainage Repairs at Palmer (120" diameter) - Approximately $75,800 Total: $316,600 Priority Improvements - Phase II • Drainage Culvert Repairs under Oak Valley Parkway - Approximately $9,800 • Cherry Valley Boulevard Sidewalk Repairs - Approximately $79,200 • Champions Drive Concrete Ramp Repairs - Approximately $16,700 • Rosberg Road - Storm Drainage Repairs - Approximately $6,000 • Palmer Avenue Cross Gutters, Ramps and Sidewalk Repairs - Approximately $67,700 • Palmer Avenue Asphalt Repairs (Harmon Heights to Trevino Trail) - Approximately $106,000 Total: $285,400 EXHIBIT "C" City Funded Improvements and Remaining Bonded Improvements City Funded Improvements • Oak Valley Parkway- Approximately $1,538,143 • Cherry Valley Boulevard and Palmer Avenue - Approximately $400,000 Remaining Bonded Improvements • Cherry Valley Boulevard Asphalt Repairs- Approximately $428,500 • Champions Drive Asphalt Repairs - Approximately $384,900 Total: $2,751,543 CJC`Fairway Delta JV LLC Checking- Operating Check Date 06/25/2012 Stub 1 of 1 Check Number 00001003 SDC Fairway Delta JV LLC 2392 Morse Ave Irvine CA 92614 Check Date 06/25/2012 Stub 1 of 1 Check Number 00001003 InuoiCe Number` :Invoice Date `Qescr' tion AmountP'aidyP. 062512 -CHK01 06/25/2012 Agr Imprvmnt Bonds & E 300,000.00 [1'0000 LOO 3 11' 1:0 2 L0 0 0 0 13 91: 49 706 3 7 20 3 11'