Failure to Commence Phase. 1 First Component. Notwithstanding anything set forth herein to the contrary, in the event that SED does not commence construction of the Phase 1 First Component within the time required by this Agreement, the City may provide SED written notice thereof. In the event SED does not commence construction of the Phase 1 First Component within one hundred twenty (120) days of the City’s notice or such longer date in the event the City grants SED an extension to commence construction of the Phase 1 First Component (in all respects, subject to the terms of Section 5.9 below), then SED hereby grants to City the option (the "City Option") to elect (in its sole and absolute discretion) to either (i) repurchase a portion of the Premises from SED, or its successors, that represents the minimum property necessary to construct and operate the Phase I First Component (the “Option Property”); The Parties shall coordinate in good faith to agree upon a the legal description of the Option Property recognizing the requirements and constraints of the site plan for the Project under the this Agreement, the PD Ordinance and the Entitlements. The Parties acknowledge that the Option Property, must, at a minimum, consist of 2.47 acres to meet FAR requirements of the Hotel/Residential Building. The purchase price of the Option Property shall be fair market value based on a valid appraisal completed by a state certified appraiser, jointly selected and paid for, by SED and City, (the "Purchase Price of Option Property"); or (ii) coordinate with SED to market and sell the Option Property whereby SED would receive the proceeds equal to or up to the Purchase Price of Option Property and the City and SED would split the proceeds in excess of the Purchase Price of the Option Property (if any). The City must exercise the City Option stated in this Section 5.6.7.1 within six (6) months from the time periods set forth in Section 3.2 related to the Phase 1 Component together with any extensions set forth in this Agreement. In the event that the City does not timely exercise the City Option, the City Option shall become null and void and SED shall own the Option Property free and clear of any option to repurchase from the City. The City Option shall run with the land and be binding upon the Premises and all successor owners of the Premises unless terminated pursuant to this Section 5.6.7.1.
