12-20-2005 - Approval of Subordination Agreement Related to Sale of Lakes Project by West Covina Lakes Associates, LLC (WCLA) to Ten West Associates, LLCCity of West Covina
Memorandum
AGENDA
Item No.: D-Z. b
Date: December 20, 2005
TO: Andrew G. Pasmant, City Manager
and City Council
FROM: Tom Bachman, Director
Finance Department
SUBJECT: APPROVAL OF THE SUBORDINATION AGREEMENT RELATED TO
THE SALE OF THE LAKES PROJECT BY WEST COVINA LAKES
ASSOCIATES, LLC (WCLA) TO TEN WEST ASSOCIATES, LLC.
RECOMMENDATION:
Approve the request of West Covina Lakes Associates to execute the Subordination Agreement
which transfers the obligations of the Indemnification Agreement dated February 28, 1989 from
WCLA to the new owner of the Lakes property, Ten West Associates, LLC.
DISCUSSION:
West Covina Lakes Associates (WCLA) sold the Lakes property to Ten West Associates in
November 2005. In conjunction with that sale, the City and the Community Development
Commission executed certain documents transferring rights and obligations of various
agreements with WCLA to the new owners, Ten West Associates. There was one document that
was overlooked by WCLA at the time of the sale that, while not necessary at the time of closing,
is necessary to transfer certain obligations of WCLA over to Ten West Associates.
WCLA, and now Ten West, make lease payments equal to the debt service payments on the
bonds under the parking sublease between the City and WCLA. An Indemnification Agreement
between the City and WCLA exists whereby WCLA indemnifies the City for defaults in bond
payments on the parking structure bonds. The City already signed a Subordination Agreement
dated October 4, 2005 that subordinated its rights under the Indemnification Agreement to the
new lender on the project, JP Morgan.
This subordination agreement is between the City and Ten West Associates. By executing this
agreement, Ten West assumes the obligations of WCLA under the Indemnification Agreement
and the City releases WCLA from its obligations under that same agreement.
FISCAL IMPACT: None.
Prepared by:
Prepare by: Tom achman
Director of Finance
Attachments: No. 1 — Subordination Agreement
No. 2 — Indemnification Agreement dated February 28, 1989
finance docs on track—it/agenda items/cdc/Lakes Sale Indemnification Subordination -City 12-20-05
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Attachment 1
Loan No. V=53361
Subordinate Party: City of West Covina - Indemnification Agreement
SUBORDINATION AGREEMENT
(TEN WEST ASSOCIATES LLC)
As of December _, 2005.
JP Morgan Chase Bank, N.A. ("Superior Lender"),
its successors and assigns
c/o ARCap Servicing, Inc.
5605 North MacArthur Boulevard, Suite 950
Irving, Texas. 75038
Attn: Clyde F. Greenhouse
Re: Ten West Associates LLC, a Delaware limited liability company ("Borrower"):
Dear Sir or Madam:
JP Morgan Chase Bank, N.A has made a loan to WCLA, LLC, a Delaware limited liability'
company, ("WCLA") in the original principal amount of $32,000,000.00 (the "Superior Loan"),
which Superior Loan is evidenced by, among other things, a Fixed Rate Note (as the same may
hereafter be amended, modified or extended, the "Note") and secured by, among other things, a
Deed of Trust and Security Agreement (as the same may hereafter be amended, modified or
extended, the "Security Instrument") and an Assignment of Leases and Rents (as the same may
hereafter be amended, modified or extended, the "Assignment of Rents"), encumbering the .
property at 1000 and 1050 Lakes Drive, West Covina, California, 91790 (the "Property"). The
Note, Security Instrument, Assignment of Rents and all other documents, instruments and
agreements evidencing, securing, guarantying, relating to or otherwise delivered in connection
with the Superior Loan shall referred to as the "Superior Loan Documents."
The undersigned hereby warrants, represents, certifies and agrees as follows, as of the date
hereof:
l . The undersigned is the indemnitee pursuant to an Indemnification Agreement,
dated February 28, 1989 ("Indemnit ') between the undersigned and West Covina Lakes
Associates, a California general partnership ("WCLA Partnership"). We are informed that the
obligations of WCLA Partnership were assumed by operation of law pursuant to a merger of
WCLA Partnership into West Covina Lakes Associates LLC, a California limited liability
company ("WCLA California"). We are further informed that (a) WCLA California conveyed
the Property to WCLA and WCLA assumed the obligations of WCLA California under the
Indemnity to the same extent that such obligations are binding on WCLA California, and (b)
WCLA subsequently conveyed the Property to Borrower. By execution of this Subordination
Agreement, Borrower hereby does assume the obligations of WCLA California and WCLA
under the Indemnity to the same extent that such obligations are binding on WCLA California
and WCLA.
2. The undersigned entered into a Subordination Agreement dated October 4, 2005
in favor of Superior Lender whereby the undersigned subordinated its rights under the Indemnity
to Superior Lender's rights under the Superior Loan under substantially the same terms and
conditions as in this Subordination Agreement.
3. Borrower has no current payment obligations under the Indemnity. No notice of
default has been given by the undersigned and there is no default under the Indemnity, nor to the
undersigned's actual knowledge has any event occurred which, with the giving of notice or lapse
of time, or both, would constitute a default thereunder. A true, accurate and correct copy of the
Indemnity is attached hereto as Exhibit A.
4. The Indemnity, all restatements, replacements, supplements, extensions, renewals,
amendments and modifications thereto, and the undersigned's right to receive payment of the
obligations evidenced by the Indemnity shall be and the same are hereby made and shall
continue subject and subordinate to (i) the Security Instrument; (ii) the Assignment of Rents;
(iii) the Superior Loan Documents and any assignment of the Superior Loan Documents; and
(iv) any modification or amendment of any of the terms of the Superior Loan Documents,
including, without limitation, any extension or renewal of the indebtedness evidenced by any of
the Superior Loan Documents, any additional advance of funds thereunder and any supplemental
or additional deed of trust, mortgage or other document or instrument securing the Superior
Indebtedness or any modification, renewal or extension thereof, regardless of the time of
recording of any such deed of trust, mortgage or other document or instrument (collectively, the
"Superior Indebtedness"). The subordination provided for herein automatically, and without any
notice to, consent of, or action by the undersigned or any other party whatsoever, shall extend to
all modifications, renewals and extensions whatsoever of any of the Superior Loan Documents.
No release or waiver by Superior Lender of any of its rights against any person or entity under
the Superior Loan Documents shall require notice to or consent of the undersigned or any other
party, nor shall any such release or waiver operate as a defense to or release of any of the
obligations of the undersigned or the rights of the Superior Lender under the Superior Loan
Documents. Without limiting the generality of any of the foregoing, the undersigned hereby
consents to any increases of the indebtedness owed by Borrower under the Superior
Indebtedness. Notwithstanding the foregoing, the approval of the undersigned must be obtained
to any amendment, modification or refinancing of the Superior Loan Documents which causes .
the Superior Indebtedness to exceed a loan to value ratio more than 80%, carry an interest rate in
excess of 10 year US Treasuries plus 5%, have a term greater than 30 years or loan origination
fees or points in excess of 5%.
5. Notwithstanding anything to the contrary contained in the Indemnity, subject to
obtaining the undersigned's consent (which will not be unreasonably withheld) in connection
with any sale, transfer or refinancing of the Property as to which the Borrower requests the
consent of the Superior Lender, the Indemnity is subject to the following terms and conditions:
(a) Without the prior written consent of Superior Lender, the undersigned
shall not take an Enforcement Action (as hereinafter defined) under the Indemnity unless all
Superior Indebtedness shall have been indefeasibly satisfied in full. "Enforcement Action" shall
mean either the commencement of a foreclosure proceeding, the exercise of a statutory power of
sale, the taking of a deed or assignment in lieu of foreclosure, the obtaining of a receiver or the
taking of any other enforcement action against, or the taking of possession or control of, the
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Property or any other collateral securing the Indemnity or the Superior Indebtedness, as the case
may be, or otherwise the exercise of any of the rights or remedies available to the Superior
Lender under the Superior Loan Documents or to the undersigned under the Indemnity upon the
occurrence of a default under the Superior Loan Documents or the Indemnity, as the case may
be.
(b) The undersigned shall not assert any defaults under the Indemnity as a
result of Borrower's compliance with the terms of any of the Superior Loan Documents, as the
same may be amended or increased from time to time, and the provisions of the Superior Loan
Documents shall govern any conflicting provisions of the Indemnity.
(c) The provisions_ of this paragraph 3 shall expire, and be of no further force
or effect, if (i) the undersigned gives written notice to Superior Lender ("Notice of Sublease
Default") that Borrower has defaulted in making any payment required of it under the Agreement
for Sublease of Portion of Parking Facilities, dated August 1, 1998, between the undersigned as
lessor and Borrower's predecessor in interest as lessee, a Memorandum of which was recorded
on September 1, 1988, as Instrument No. 88-1391949, Official Records of Los Angeles County
("Sublease'), and (ii) Superior Lender or Borrower shall not have cured such default of
Borrower within 6 months after Superior Lender's receipt of the Notice of Sublease Default.
6. In the event that (1) any of the following shall occur: (a) any insolvency,
bankruptcy, receivership, custodianship, assignment for the benefit of creditors, liquidation,
reorganization, readjustment, composition or other similar proceeding relating to Borrower, its
property or its creditors as such, whether under any bankruptcy, reorganization or insolvency law
or laws, federal or state, or any law, federal or state, relating to relief of debtors, readjustment of
indebtedness, reorganization, composition or extension, (b) any proceeding for any partial or
total liquidation, liquidating distribution, dissolution or other winding -up of Borrower, voluntary
or involuntary, whether or not involving insolvency or bankruptcy proceedings, or (c) any other
marshalling of the assets of Borrower (any of the foregoing events, a "Proceeding"); (ii) any
Event of Default (as defined in the Superior Loan Documents) (a "Superior Event of Default")
shall occur and not be cured or waived in writing by Superior Lender; or (iii) the maturity of any
Superior Indebtedness shall be accelerated, and until such acceleration has been rescinded or the
Superior Indebtedness that has been accelerated has been paid in full, then and in any such event
(any of such events, a "Trigger Event"), the Superior Indebtedness shall be indefeasibly paid in
full in cash, or such payment shall have been provided for, before any payment or distribution,
whether in cash, securities or other property, shall be made in respect to the Indemnity (a
"Subordinated Payment"), whether it is due or not due, and the undersigned agrees that any
payment or distribution of any kind or character, whether in cash, securities or other property,
which would otherwise (but for these subordination provisions) be payable or deliverable in
respect to the Indemnity shall be paid or delivered directly to Superior Lender (or to a banking
institution selected by the court or other person making the payment or delivery or designated by
the Superior Lender) for application in payment of the Superior Indebtedness until all Superior
Indebtedness shall have been paid in full, or such payment shall have been provided for, all as
provided more specifically in the Note. The undersigned hereby undertakes and agrees; upon the
request of Superior Lender, to execute, verify, deliver and file in a timely manner any proofs of
claim, consents, assignments or other action necessary or appropriate to enforce the obligations
of Borrower to the undersigned in respect of the Subordinated Payments, and to vote any claims
at any meeting of creditors or for any plan or with respect to any matter as Superior Lender shall
3 3807-38462WCS243\AGRMn 602360.2
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direct, all in order to preserve and maintain all claims against Borrower for Subordinated
Payments so that the Superior Lender will have the benefit of such claims as provided herein.
Upon failure of the undersigned to do so, Superior Lender shall be deemed to be irrevocably
appointed the agent and attorney -in -fact of the undersigned to execute, verify, deliver and file
any such proofs of claim, consents, assignments or other instrument, to vote any such claims in
any Proceeding, and to receive and collect any and all dividends, payments, or other
disbursements made thereon in whatever form the same may be paid or issued and to apply the
same on account of the Superior Indebtedness in the manner provided in this paragraph 4. The
undersigned hereby declares that the foregoing power is coupled with an interest and such power
is and shall be irrevocable by the undersigned. Upon the occurrence of any Proceeding, the
provisions of this paragraph 4 shall remain in full force and effect, and the court having
jurisdiction over the Proceeding is hereby authorized to preserve such priority and subordination
in approving any such plan of reorganization, arrangement or liquidation without the prior
written consent of the Superior Lender.
7. If any payment or distribution of any character, by setoff or otherwise, or any
security, whether in cash, securities or other property, shall be received by the undersigned in
contravention of any of the terms hereof, such payment or distribution or security shall be
received in trust for the he
of, and shall be promptly paid over or delivered and transferred to
the holders of the Superior Indebtedness at the time outstanding in accordance with the priorities
then existing among such holders for application to the payment of all Superior Indebtedness
remaining unpaid, to the extent necessary to pay all such Superior Indebtedness in full.
8. So long as any of the Superior Indebtedness remains outstanding, the undersigned
shall not increase, renew, extend, amend or modify the Indemnity unless Superior Lender, prior
to the effectiveness of any such increase, renewal, extension, amendment or modification, shall
have executed a written instrument evidencing its consent to such action.
9. To further evidence the subordinations and provisions referred to in
paragraphs (2) through (6) above, the undersigned agrees that, within 10 days after request by
Superior Lender, it will do, execute, acknowledge and deliver all and every such further acts,
deeds, conveyances, documents, estoppels and instruments as Superior Lender may reasonably
request for the better assuring and evidencing of the foregoing subordination and provisions.
10. Unless and until a Trigger Event shall occur, payments may be made on account
of the Indemnity only if and to the extent that all Superior Indebtedness then presently due and
payable and all other payments required to be made under the Superior Loan Documents,
including, without limitation, all taxes, insurance premiums, maintenance, capital reserve
requirements and operating charges and disbursements incurred in connection with the operation
and maintenance of the Property, have been paid in full in cash and all of the covenants,
obligations and liabilities of Borrower set forth in the Superior Loan Documents have been
fulfilled.
11. The undersigned, and the person or persons executing this certificate on behalf of
the undersigned, have the power and authority to execute this certificate. This document may be
executed in' multiple counterparts, each of which shall be an original and all of which shall
constitute ne agreement.
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12. The undersigned and Borrower acknowledge that it is not the intent of this
Agreement to affect or diminish the rights of the undersigned with respect to: (a) the Guaranty
between the undersigned and W&B Builders, Inc., executed by W&B Builders, Inc. on
February 23, 1989, (b) the Sublease, or (c) the Letter of Credit, in the face amount of $7,750,000
issued by National Westminster Bank PLC in favor of Dai Ichi Kangyo Bank of California, as
Trustee under the Indenture of Trust, dated August 1, 1988 between the Redevelopment Agency
of the City of West Covina and said Trustee.
13. In consideration of the assumption by Borrower of the obligations of WCLA and
WCLA California pursuant to the Indemnity, the undersigned releases WCLA and WCLA
California from any liability under the Indemnity.
Superior Lender and its successors and assigns may rely upon the truth and accuracy of the
certifications and agreements contained herein, and said certifications and agreements shall be
binding upon the undersigned and its successors and assigns and inure to, the benefit of Superior
Lender and its successors and assigns.
SUBORDINATE PARTY: THE CITY OF WEST COVINA
ATTEST:
APPROVED:
By:
Name:
Title:
Clerk
City Attorney
By:
Name:
Title:
5 3807-38462\ACS243\AGRM71602360.2
11/21/05
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CONFIRMED AND AGREED:
TEN WEST ASSOCIATES LLC,
a Delaware limited liability company
By: I Ten West Wilshire,
A CALIFORNIA LIMITED PARTNERSHIP,
its sole Member
By: Ten West Associates, II,
a California general partnership,
its General Partner
.By:
Arthur Kleinman
General Partner
By:
Alan Freiman
General Partner
NOTARYACKNOWLEDGEMENTS ON FOLLOWING PAGE
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0
NOTARYAC%NOREEDGEMENTS TO
S UBORDINA TION A GREEMENT
STATE OF CALIFORNIA )
ss.
COUNTY OF
On , 2005, before me,
personally appeared , personally known to me or proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the within instrument
and acknowledged to me that he executed the same in his authorized capacity, and that by his
signature on the instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
Signature of Notary
STATE OF CALIFORNIA )
ss.
COUNTY OF 1
On , 2005, before me,
personally appeared , personally known to me or proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the within instrument
and acknowledged to me that he executed the same in his authorized capacity, and that by his
signature on the instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
Signature of Notary
7 3807-38462\ACS243\AGRM-n 602360.2
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EXHIBIT A
TO
SUBORDINATION AGREEMENT
COPY OF THE INDEMNIFICATION AGREEMENT
3807-38462\ACS243\AGRMn 602360.2
11/21/05
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Attachment 2
IME2QdITICATION AGRrMd:E iT
This Indemnification Agreement (the "Agreement") is made by
and betWeen the following parties:
1. THE CITY OF WEST COVINA, a public body, corporate and
politic, exercising governmental fune..:ion.s and powers, with
offices at 1444 West Garvey Avenue, West Covina, California 91790
(the "City") .
2. WEST COVINA LASES ASSOCIATES, a California general
Partnership, an affiliate of W & B Builders, Inc., a California
corporation, with offices at 2716 Ocean Park Boulevard, Santa
Monica, California 90406 ("Developer").
R E C I T A L S
A. The Redevelopment Agency of the City of West Covina
(the "Agency") and Developer's assignor, Watt Investment
Properties, Inc. ("WIP") entered into that certain Restated
Disposition and Development Agreement on June 26, 1987, which
provided for the disposition and development of certain real
property in the City of West Covina Central Business District
Redevelopment Project (the "RDDA").
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v 021689 12n:v*m
B. Section 701.1 of the RDDA sets forth a financ'_.ng plan,
which financing plan has been amended as discussed below, for the
construction and development of Public Parking Facilities on
Agency Parcels 3 and 4 to accommodate the buildings to be
const--ucted on Developer Parcels 1 and 2 and the Hotel Parcel,
Parcel 5 of the Site. The construction of the Public Parking
Facilities was to have been financed by tax exempt bonds
heretofore issued by the Agency in cooperation with the Parking
Authority of the City of West Covina (the "Authority"). As
originally set forth, the financing plan required that the
Developer sub -sublease the Public Parking Facilities from the
Agency for a rent "equal to the entire debt service (as it may be
reduced by application of arbitrage earnings on the debt service
fund)" on such bonds,as such debt becomes due as required under
the relevant bond documents. Pursuant to such plan, Agency and
Parking Authority entered into that certain instrument entitled
Installment Sale Agreement, with Agency as buyer and Parking
Authorityas seller. Section 4.3 of that Installment Sale
Agreement provided that Agency agreed to pay to the Authority,
its successors and assigns, the Installment Payments to be due
and payable on each Payment Date.
C. Agency and WIP entered into that certain First
Implementation Agreement to the Restated Disposition and
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YCDwpT1_3CL 3258-09b02
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Development Agreement for the Lakes of West Covina on
December 22, 1987, (the "First Implementation Agreement") to
effectuate and implement the RDDA and the financing plan as
originally structured.by providing for (1) a contribution by the
Agency toward the payment of debt service on the Certificates
issued to finance the acquisition and construction of Public
Parking Facilities to be located on Agency Parcels 3 and 4, (2) a
deferral of the purchase price to be paid by Developer for
Developer Parcels 1 and 2, and (3) the acquisition of an equity
interest by the Agency in Developer Parcels 1 and 2.
D. The. financing of the Public Parking Facilities has been
restructured as reflected in those certain bond documents (the
"Bond Documents") to be approved and executed concurrently
herewith. The restructuring of the bonds has been undertaken in
accordance with the City,s agreement to cooperate with the Agency
and to exercise all powers and functions which shall be necessary
for 'the City and Agency.to carry out and undertake the
transactions specified in and in the manner contemplated by the
_ RDDA, the Sublease and the operating Agreement. 'The following
summary of the financing arrangement is provided for ease of
reference only; should any discrepancy exist between this sunnary
and the Bond Documents, the Bond Documents shall control. As
restructured, the Agency proposes to issue approximately
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02IM9 12a:mba
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$7,750,000 in aggregate principal amount of Agency Parking Lease
Revenue Bonds (The Lakes Public Parking Project) (the "Bonds")'.,
pursuant to an Indenture of Trust, dated as of August 1, 1988
between the Agency and Dai-Ichi Rangyo Bank of California, as
Trustee. The Bonds will be payable from lease payments to be
made pursuant to a Lease Agreement, dated as of August 1, 1988,
by and between the Agency as lessor and City of West Covina as
lessee. In turn, the Lease Payments Will be payable from
sublease payments to be made pursuant to a Sublease Agreement,
dated as of August 1, 1988, by and between the City as sublessor
and Developer as sublessee, parking revenues and other sources as
provided in the Bond Documents.
E. In connection with the Agency Parking. Lease Revenue
Bonds (The Lakes Public Parking Project) the National Westminster
Bank PLC ("NWB") has issued a Letter of Credit in. favor of the
Trustee (the "NWB Letter of Credit"; where appropriate in this
Agreement, the "NWB Letter of Credit" shall also refer to any
substitute therefor or replacement thereof issued in accordance
with the terms of the Bond Documents). In order to induce NWB to
issue the NWB Letter of Credit, concurrently herewith the City is
entering into a reimbursement agreement (the 'INWB Reimbursement
Agreement") with NWB as of August 1, 1988, or, a replacement
therefore.
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O21659 1228=0
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F. To induce the City to enter into the NWB Reimbursement
Agreement, the City requires the Developer to execute this
Agreement pursuant to which Developer agrees to indemnify and
hold harmless the City, according to the terms of this Agreement.
G. It is a condition precedent to the City entering into
the NWB Reimbursement Agreement that Developer shall have
executed this Agreement and that WIPIs parent, W & B Builders,
Inc., a California corporation, shall have executed the Guaranty
as required pursuant to that certain Second Implementation
Agreement to the RDDA of even date herewith (the "Second
Implementation Agreement"). j
H. When used in this Agreement, capitalized terms shall
have the same meanings as provided in the Bond Documents, the
RDDA or the Second Implementation Agreement.
A G R E E M E N T
In consideration of the foregoing premises and. in order to
induce the City to execute the NWB Agreement, the parties hereto
agree as follows:
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WMVWATT.SC4 3258-09602
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1. Indemnification. To the fullest extent permitted by
law, Developer hereby indemnifies and holds harmless the City,
its officials, officers, agents and employees, from and against
any and all claims, damages, losses, liabilities, reasonable
costs or expenses whatsoever (including reasonable attorneys,
fees) which the City, its officials, officers, agents and
employees, may incur or which may be claimedagainst the City,
its officials, officers, agents and employees, by any person or
entity by reason of or in connection with (a) the application,
issuance or enforcement of the NWB Letter of Credit or the NWB
Reimbursement Agreement; (b) the execution, delivery, enforcement
or transfer of, or payment or failure to pay under, the NWB
Letter of Credit; (c) the use of the.proceeds of the Bonds; (d)
any breach by the City, the Agency, the Certificate Trustee, NWB
or Developer of any warranty, covenant, term or condition in, or
the occurrence of any default under the Bonds, the Trust
Agreement, the NWB better of Credit, the NWB Reimbursement
Agreement; the Lease Agreement or the Sublease Agreement,
together with all reasonable expenses resulting from the
compromise or defense of any claims or liabilities arising as a
result of any such breach or default; (e) any failure by the
City, the Agency, the Certificate Trustee, NWB or Developer to
comply with any applicable federal and state laws and
regulations, or other action or failure to act, pertaining to the
YCCWATT.ICL 3258-09602
�: 021689 1228:2bs
offer and sale of the Bonds; (f) any action or proceeding
relating to a court order, injunction or other process or decree
restraining or seeking to restrain NWB.from paying any amount
under the NWB Letter..of Credit; or (g) any defense against any
legal action commenced to challenge the validity of any of the
above instruments. If any action shall be brought against the
City, in respect of which indemnity may be sought against
Developer, the City shall promptly notify Developer in writing,
and Developer shall promptly assume the defense thereof,
including the employment of counsel, the payment of all expenses
and the right to negotiate and consent to settlement. The
failure by the City to notify the Developer of any such action
shall not relieve the Developer from.any liability which it may
have to City (or other indemnified party) pursuant to this
Indemnification Agreement, except to the extent such failure
shall have prejudiced the ability of the Developer to indemnify
and defend the City (or other indemnified- party) or shall have
increased the liability of the Developer with respect thereto.
The City shall have the right to employ separate counsel in any
_ such action and to participate in the defense thereof, and the
fees and expenses of such counsel shall be at the expense of
Developer; provided, however, that Developer and City shall
attempt in good faith to use the same counsel if. such is possible
without prejudice to City. Developer shall not be liable for any
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YCowATT.IC6 3u8-09W2
v 021689 1225mbe
settlement of any such action. eff acted without its consent by the
City, but if settled with the consent of Developer or if there be
a final judgment for the. plaintiff in any such action against
Developer or the City, with or without the consent of Developer,
Developer agrees to indemnify and hold harmless the City to the
extent provided herein.
2. Continuing Obligation. The obligation of Developer
under this Agreement shall continue until the date that a drawing
is no longer available under the NWB Letter of Credit and all of
-the obligations and other amounts payable under this Agreement
and the NWB Reimbursement Agreement have been paid in full, and
shall (a) be binding upon Developer, its successors and assigns.,
and (b) inure to the benefit of and be enforceable by the City,
its officials, officers, agents and employees, and their -
respective successors and assigns; provided that Developer may
not assign all or any part of this Agreement without the prior
written consent of the City.
3. Transfer of NWB Letter of Credit; Increase, Reduction
or Reinstatement of Stated Amount. The NWB Letter of Credit may
be transferred in accordance with the provisions set forth
therein and the Stated Amount (as defined in the Reimbursement
Agreement) of the NWB Letter of Credit may be increased, reduced
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021689 12Z8.aft
or reinstated in accordance with the provisions set forth
therein, all without impairment of Developer's obligations
hereunder and without causing any release of Developer hereunder.
4. Liability of the city. As'between Developer, on the
one hand, and the City, its officials, officers, agents and
employees, on the other, Developer assumes all risks of the acts
or omissions of the Trustee and any transferee of the NWB Letter
of Credit with respect to their use of'the NWB Letter of Credit.
As between Developer and.the City, neither the City nor any of
its officials, officers, agents and employees, shall be liable or
responsible for: (a) the use which may be made of the NWB Letter
of Credit or for any acts or omissions of the Trustee and any
transferee in connection therewith; (b) the validity,
sufficiency,. accuracy, genuineness or legal effect. of documents,
or of any endorsements) thereon, submitted by any party in
connection with the application for and issuance of the NWB
Letter of Credit or purporting to assign or transfer the NWB
Letter of. Credit, even. if such documents should in fact prove to
be in any or all respects invalid, insufficient, fraudulent or
forged; (c) payment by NWB against presentation of documents
which do not comply with the terms of the NWB Letter of Credit;
(d) errors, omissions, interruptions or delays in transmission or
delivery of any messages by mail, cable, telegraph, telex or
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021689 1228:wbe
otherwise; (e) errors in interpretation of technical terms;
(f) delay in the transmission of any document required to make a
drawing under the NWB Letter of Credit; or (g) any other
circumstance whatsoever in making or failing to make payment
under the NWB Letter of Credit; except that .Developer shall not
be responsible to assume the risks of intentional misconduct or
gross negligence of City.
As between Developer and the City, Developer assumes all
liability and responsibility for any and all contractual rights,
implied contractual rights or collateral rights asserted by any
person or entity against the City or Developer which arise out of
or result from the application for, issuance of, enforcement of,
performance under, payment under or default under, the NWB
Letter of Credit or the NWB Reimbursement Agreement
5. Representations and Warranties. Developer hereby
represents and warrants as follows:
(a) Developer is a California general partnership,
}validly existing and in good standing under -the laws of the State
of California.
(b) The execution, delivery and performance by
Developer of this Agreement are within Developer's powers, have
-la-
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been duly authorized by all necessary action, and do not
contravene (1) Developer's partnership agreement or (2) any law
or contractual restriction or provision binding on or affecting
Developer, and do not result in or require the creation of any
lien, security interest, or other charge or encumbrance upon or
with respect to any of its properties.
(c) No authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and
performance by Developer of this Agreement.
(d) This Agreement is the legal; valid and binding
obligation of Developer enforceable against Developer in
accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other laws or equitable principles relating to or limiting
creditors' rights generally.
(e) (Reserved]
(f) There are no actions, suits or proceedings and no
proceedings before any governmental commission, board, bureau or
other administrative agency, pending or, to the knowledge of
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Developer, threatened against Developer which might (to the
extent not covered by,insurance) in the opinion of Developer have
a material adverse effect on the financial condition of
Developer, or Developer's ability to fulfill its obligations
under this Agreement.
(g) The execution of this Indemnification Agreement
does not violate and is not prohibited by any contractual
obligations of Developer, any equitable obligations of Developer,
or any judicial order applicable to or binding on Developer.
(h) Developer agrees that it will provide a
Certificate of Secretary and an opinion of Developer's general
counsel attesting to the correctness - of the statements contained
in this section 5 prior to the date of this Agreement.
6. Events of Default. Each of the following events, acts
or occurrences shall be an Event of Default hereunder:
(a) Default by Developer, after demand therefor by the
City, in the payment when due (and after the expiration of
applicable grace periods, if any, provided in the NWB
Reimbursement Agreement) of any amount owing by Developer
hereunder or under the Sublease Agreement; or
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021689 1228:ebe
(b) Any representation or warranty on the part of
Developer contained in this Agreement or in any certificate,
letter. or other writing or instrument furnished or delivered to
the. City pursuant hereto or in connection herewith shall at any
time prove to have been incorrect in any material respect when
made, effective, or reaffirmed, as the case may be and seven (7)
days after notice thereof by the City to Developer shall have
elapsed; or
(c) Default by Developer in any material respect in
the performance or observance of any other term, covenant,
condition or agreement on its part to be performed or observed
1-1 hereunder (and not constituting an. Event of Default under any
other clause of this Section 6) and such default shall continue
unremedied for thirty ( 3 0) days after written notice thereof
shall have been given to Developer by the City; or
(d) Either (1) Developer shall generally fail to pay
or admit in writing its inability to pay, its debts as they
become due, or Developer shall voluntarily commence any
proceeding or file any petition under any bankruptcy, insolvency
or similar law or seeking dissolution, liquidation or
reorganization or the appointment of a receiver, trustee,
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•
custodian or liquidator for itself or a substantial portion of
its property, assets or business or to effect a plan or other
arrangement with its creditors or shall file an answer admitting
the jurisdiction of the court and the material allegations of any
involuntary petition filed against it in any bankruptcy,_
insolvency or similar proceeding, or shall be adjudicated
bankrupt, or shall make a general assignment for the benefit of
creditors, or shall consent to or acquiesce in the -appointment of
a receiver, trustee, custodian or liquidator for itself or a
substantial portion of its property, assets or business or
(2) corporate action shall be taken by Developer for the purpose
of effectuating any of the foregoing; or
(e) Involuntary proceedings or an involuntary petition
shall be commenced or filed against Developer under any
bankruptcy, insolvency or similar law or seeking the dissolution,
liquidation or reorganization of Developer; or the appointment of
a receiver, trustee, custodian or liquidator for Developer or of
a substantial part of the property, assets or business of
Developer; or the issuance or levy of any writ, judgment,
attachment, execution or similar process against a substantial
part of the property, assets or business of Developer and such
proceedings or petition shall not be dismissed, or such writ,
judgment, attachment, execution or similar process shall not be
YCOYYATT.IC4 3258-09602 —14
�/ 021689 122.E;tuba
released, vacated or fully bonded, within sixty (60) days after
commencement, filing or levy, as the case may be.
7. Amendments, Etc. No amendment or waiver of any
provision of this Agreement nor consent to any departure by
Developer therefrom shall in any event be effective unless the
same shall be in writing and signed or approved in writing by the
City, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose - for which
given.
8. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing and
delivered by hand, written telecommunication or by U.S. certified
or registered mail, return receipt requested, and, if to
Developer, addressed to it at 2716 Ocean Park Boulevard, Santa
Monica, CA 90406, with a copy to Leven & Bene2ra, 10850 Wilshire
Boulevard, Suite 600, Los Angeles, California 90024, or if to the
City, addressed to it at 1444 West Garvey Avenue, West Covina,
California 91790, with a copy to Burke, Williams & Sorensen, 624
S. Grand Avenue, llth Floor, Los Angeles, California 90017, or as
to each party at such other address as shall be designated by
such party in a written notice to the other party. All such
notices and other communications shall, if mailed, be effective
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021689 1228_eba
•
three days after deposit in the mails, addressed as aforesaid.
9. No Waiver by the City; Remedies. No failure on the
part of the City to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other
right. All remedies are cumulative and not exclusive of any
remedies provided*by law.
Separate suits may brought hereunder as causes of
action accrue, and suit or suits upon one or more causes of
action shall not prejudice or bar subsequent suits, whether
theretofore or thereafter accruing.
v
0
10. Costs. Exnenses and Taxes. Developer agrees to pay on
demand all reasonable costs and out-of-pocket expenses in
connection with the preparation, execution, delivery and
administration of this Agreement and the documents to be
delivered by Developer hereunder and under the NWB Reimbursement
Agreement, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the City with respect
thereto and with respect to advising the city as to its rights
and responsibilities under this Agreement, and all costs and
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IV
•
expenses, if any, in connection with the enforcement of this
Agreement and the documents to be delivered by Developer
hereunder and under the NWB Reimbursement Agreement. In
addition, Developer shall pay any and all stamp and other taxes
(other than taxes based on the income or gross revenue of the
City) payable or determined to be payable in connection with the
execution and delivery of this Agreement and the document to be
delivered by it hereunder and under the NWB Reimbursement
Agreement, and agrees to save the City harmless from and against
any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes if demand for
payment thereof has been made upon Developer by the City. The
City agrees to submit a certificate as to all costs, expenses'
taxes and fees payable by Developer pursuant to this section 10
and any such certificate shall be presumed correct as to the
amount thereof. City,shall have no liability under this
Section 10 in respect of any such costs, expenses, taxes or fees
all of which are to be paid by Developer.
11. Waiver by Developer. Developer hereby waives and
abandons, so far as its respective obligations under this
Agreement are concerned, all rights to claim any of the property,
as exempt from levy, execution, sale or other legal process under
the laws of any state, territory, or possession.
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021689 122ambs
12. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the' laws of the State of
California.
13. .Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof or affecting the validity, enforceability or legality of
such provision in any other jurisdiction.
14. pate of Indemnification Agreement. This Agreement is
executed in five (5) duplicate originals, each of which is deemed
u
to be an original. This Agreement includes twenty (20) pages.
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I
The date of this Agreement shall be the date when the Agreement
shall have been executed by the City.
IN WITNESS WHEREOF, the City and Developer have duly
executed this Agreement as of the dates set opposite the
signatures.
DATED: Feb. 28 1984
0
DATED: Feb. 28 1980
THE CITY OF WEST COVINA
By
Mayor
WEST COVINA LAKES ASSOCIATES, a
California general partnership
By: WIP/Lakes Associates, a
California Limited
Partnership, Its General
Partner
By: watt Investment
Properties, Inc., a
Caliia corpora ion,
By
Ro 0. Williams
S for Vice President
B
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021689 1228_mbs
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APPROVED:
KING, WEISER, EDEIMAN & BAZAR
Agency Special Counsel
By
EMMERT M. WEISER
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