SR-410-003 (3)
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DeT 1 1 1988
Santa Monica, California
CA:RMM:lld345/hpc
city Council Meeting 10-11-SS
STAFF REPORT
TO:
Mayor and City council
City Attorney
FROM:
SUBJECT:
Recommendation to Authorize Execution of the
Consent to Transfer and Assignment with
National Medical Enterprises, Inc. and NME
Headquarters, Inc.
National Medical Enterprises, Inc. ( t1NME It) has requested
that the city approve the transfer of its property at 2600
Colorado Boulevard to one of its subsidiaries. The transfer will
have no impact on NME I s obligations under the terms of the
Development Agreement with the City and amendments thereto. This
Staff Report transmits for City council review and approval a
Consent to Transfer and Assignment between NME, NME Headquarters,
Inc. (UNMEHQU), and the city.
NME is currently arranging financing for several of its
projects through a subsidiary of Merrill Lynch. The transaction
is structured and the documentation is drafted to provide for
loans directly to the subsidiaries, with guaranties from NME.
The only NME project that is not currently owned by one of NME's
subsidiaries
is
the
2600
Colorado
Boulevard
Corporate
Headquarters proj ect. NHE has requested that it be allowed to
transfer the 2600 Colorado Boulevard project from NME to a
wholly-owned subsidiary, NMEHQ.
This would enable NME to
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OCT 1 1 1988
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for and realize substantial cost and administrative savings which
would result from borrowing money for the 2600 Colorado Boulevard
Project from a Subsidiary of Merrill Lynch, rather than from its
current lender.
RECOMMENDATION
It is respectfully recommended that the City Council
approve and authorize the execution of the accompanyinq Consent
to Transfer and Assignment.
PREPARED BY: Robert M. Myers, City Attorney
Laurie Lieberman, Deputy city Attorney
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CONSENT TO TRANSFER AND ASSIGNMENT
THIS CONSENT TO TRANSFER AND ASSIGNMENT (the "Consent"), is
entered into this day of September, 1988, by and between
NATIONAL MEDICAL ENTERPRISES, INC., a Nevada corporation ("NME"),
NME HEADQUARTERS, INC., a California corporation ("NMEHQU), and
the CITY OF SANTA MONICA, a municipal corporation, for itself and
for each of its agencies, departments, bureaus, and other
subdivisions (the "City"), is made with reference to:
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A. NME, NMEHQ, and certain other subsidiaries and
affiliates of NME have entered into that certain Master Loan
Agreement, dated as of May 26, 1988, with MP Funding Corporation,
a Delaware corporation (the 11 Lender" ), pursuant to which Lender
has agreed to lend money to certain Subsidiaries and affiliates
of NME if such subsidiaries and affiliates agree to deliver a
deed of trust with respect to the project being financed and NME
agrees to guaranty the indebtedness of such subsidiaries and
affiliates to Lender.
B. There will be material and substantial cost,
administrative and mechanical savings with respect to the Kaster
Loan Agreement if NMEHQ, rather than NME, borrows from Lender the
money necessary to finance the construction of the project
located at 2600 and 2700 Colorado Boulevard in Santa Monica,
California. A legal description of the land on which the project
is being constructed is attached as Exhibit A hereto (the
"Land"). The Land, together with all of NME's right, title, and
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interest in and to the real property, personal property, and
fixtures located thereon, and all rights and obligations of NME
with respect to the project, are referred to herein collectively
as the IIproject...
C. In order to achieve such material and substantial cost,
administrative and mechanical savings, NME desires to transfer
and assign the Project to its wholly-owned subsidiary, NMEHQ.
D. City has agreed to consent to the transfer and
assignment of the Project by NME to NMEHQ, and the encumbrance of
the Project by NMEHQ in favor of Lender, on the terms and subject
to the conditions set forth in this Consent including, without
limitation, NME's agreement to guaranty the obligations of NMEHQ
to City.
NOW, THEREFORE, in consideration of the foregoing Recitals
and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
AGREEMENT
1. Consent to Transfer and Assignment. city hereby
irrevocably consents to the transfer and assignment by NME to
NMEHQ of the Project and all contracts, documents, instruments,
agreements, permits, and licenses entered into by or granted to
NME in connection with the Project, and the delegation by NHE to
NMEHQ of all of NME's obligations, duties, and responsibilities
to the City and to all other parties with respect to the Project,
including without limitation, under the Development Agreement (as
defined below). For purposes of this Consent, the Development
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Agreement shall mean that certain Development Agreement, dated as
of April 16, 1982, between Colorado Place Associates, a
California general partnership, and the City, as such Development
Agreement has been amended by that certain Covenant and
Agreement, dated as of August 30, 1984, between Campeau/Sedgwick
Properties, a California general partnership, Campeau corporation
of California, a California corporation ("Campeau"), Grant
Sedgwick, an individual, and City, by that certain First
Amendment to Development Agreement, dated as of February 20,
1987, between 2600 Colorado Associates, a California limited
partnership, Campeau and City, by that certain Second Amendment
to Development Agreement, dated as of April 8, 1987, between NME
and city and by that certain Third Amendment to Development
Agreement, dated as of August 8, 1988, between NME and city.
2. NME Guaranty. In consideration of city entering into
this Consent, NHE hereby irrevocably guaranties the full and
punctual payment and performance by NMEHQ of each and every
obligation of NMEHQ to City including, without limitation, under
the Development Agreement.
3. Consent to Encumbrance. The City hereby acknowledges
and agrees that there exists no covenant or agreement between the
City and NME, NMEHQ, or any of their predecessors-in-interest
prohibiting or restricting the encumbrance of the Project. NMEHQ
hereby agrees to include in any deed of trust or other instrument
enc~mbering the Project, language to the effect that any lender
or other person acquiring a security interest in the Project is
taking subject to this Agreement and the Development Agreement.
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4 . NMEHQ Assumption. As a condition of approval by the
Ci ty of the transfer and assignment by NME to NMEHQ, NMEHQ
assumes and promises to perform all of NME's obliqations, duties,
and responsibilities to the City and to all other parties with
respect to the project including, without limitation, under the
Development Agreement as defined in Paragraph 1 of this
Agreement.
s. Headings. The paragraph headings in this Consent are
for reference only and shall not be used in construing or
interpreting any of its provisions.
6. Severability. If any provision of this Consent is
determined to be invalid, the remainder of this Consent shall
survive.
7. California Law. This Consent shall be governed by and
construed in accordance with California law.
8 . Counterparts. This Consent may be executed in any
number of counterparts, each of which shall be an original and
all of which taken together shall constitute one agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Consent to Transfer and Assiqnment to be executed and delivered
as of the day and year first above written.
CITY OF SANTA MONICA,
a municipal corporation
By:
JOHN JALILI
City Manager
APPROVED AS TO FORM:
ROBERT M. MYERS
City Attorney
NATIONAL MEDICAL ENTERPRISES,
INC., a Nevada corporation
By:
Title:
NME HEADQUARTERS, INC.,
a California corporation
By:
Title:
LLD344jhpc
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