REIMBURSEMENT AGREEMENT
This REIMBURSEMENT AGREEMENT (“Agreement”) is made and entered into as of ____________, 2022 (the “Effective Date”), by and between the CITY OF RIALTO, a municipal corporation (“City”), and LEWIS-HILLWOOD RIALTO COMPANY, LLC, a Delaware limited liability company (“LHR”).
R E C I T A L S
A. The City and LHR are parties to that certain Second Amended and Restated Contract of Sale for Areas B, C, and D, dated as of September 25, 2012 (“Airport Agreement”), pursuant to which the City granted to LHR an option to purchase all or a portion of certain real property that comprises or formerly comprised the Rialto Municipal Airport (“Property”).
B. Portions of the Property along the east side of Linden Avenue consist of various structures, including aircraft hangars, offices, storage buildings, and related industrial facilities. To facilitate the expeditious demolition and remediation of the structures, the City and LHR desire for LHR to contract for the following work: hazardous materials survey; program management services for the demolition and remediation project; and, demolition and remediation of the structures (collectively, the “Work”).
C. LHR elected to enter into an agreement with Converse Consultants for the preparation of a hazardous materials survey (“Converse Contract”). The Converse Contract is attached hereto as Exhibit A and incorporated herein by this reference.
D. LHR elected to enter into an agreement with KEC Engineers for the program management services for the demolition and remediation project (“KEC Contract”). The KEC Contract is attached hereto as Exhibit B and incorporated herein by this reference.
E. LHR elected to bid out and advertise the demolition and remediation project in accordance with the State of California Public Contract Code. As a result of the bids LHR received, LHR has entered into an agreement with CVE NB Contracting Group, Inc. for the demolition and remediation project (“CVE Contract’). The CVE Contract is attached as Exhibit C and incorporated herein by this reference.
F. Subject to the terms and conditions set forth in this Agreement, LHR shall contract for the Work and the City shall reimburse LHR the costs for the performance of the Work.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the City and LHR agree as follows:
Responsibilities of City. City agrees to pay to LHR all third-party costs (“Reimbursable Costs”) actually incurred and paid by LHR for the Work directly attributable to and in accordance with (a) the Converse Contract (b) the KEC Contract and (c) the CVE Contract. City shall make such reimbursement payments to LHR in accordance with the procedures set forth in Section 4 below from moneys held in Escrow Account No. 1084650200 (“City Escrow Account”), established pursuant to the Escrow Instructions by and between the City, LHR, and First American Trust FSB (“Escrow Holder”) dated February 19, 2013. The total amount to be paid by City pursuant to this Section 1 (exclusive of change orders pursuant to Section 2) shall not exceed Six Hundred Three Thousand Eight Hundred Twenty-Three Dollars ($603,823). A budget for the services subject to the reimbursement by the city, as described in this Section, is set forth below:
Item Subject to Reimbursement
Estimated Reimbursable Costs
Converse Consultants – Hazardous Material Survey
$10,728
KEC Engineers – Program Management Services
$50,000
CVE NB Contracting Group – Demolition and Remediation
$543,095
Total
$603,823
Change Orders. City shall have the right to review and approve or disapprove any and all change orders under the contracts described in Section 1 that would result, cumulatively or individually, in an increase in the contract price of twenty percent (20%) or more. The City Manager shall have authority to approve change orders on behalf of the City; provided that City shall have no obligation to pay or reimburse LHR for work performed under change orders cumulatively exceeding One Hundred Twenty Thousand Seven Hundred Sixty Five Dollars ($120,765), without prior approval. The City’s total obligation under Sections 1 and 2 of this Agreement is hereby expressly limited to Seven Hundred Twenty Four Thousand Five Hundred Eighty Eight Dollars ($724,588), without prior approval.
Responsibilities of LHR. LHR shall be responsible for (a) preparing (or causing to be prepared) a complete Hazardous Material Survey as described in the Converse Contract (b) program management services for the demolition and remediation project as described in the KEC Contract, and (c) demolition and remediation work as described in the CVE Contract. LHR shall provide the City with copies of all reports and design documents produced by LHR or any of its contractors and/or consultants in connection with the demolition and remediation work. LHR shall notify the City of, and allow the City to participate in, all meetings related to the Work. The final completion of the Work shall be subject to the approval of the City’s Designee.
Reimbursement Procedure.
(a) On or after the Effective Date, LHR shall submit to the City’s Designee from time to time, but no more frequently than monthly and no less frequently than every two months a “Request for Reimbursement” setting forth the exact amount of Reimbursable Costs for which LHR is seeking reimbursement. Each Request for Reimbursement shall be accompanied by the list of Reimbursable Costs for which reimbursement is sought setting forth (1) the nature of the product or service obtained by LHR, (2) the name of the provider of the product or service, and (3) the charge for such product or service in the full amount of the payment made by LHR. Such list shall be certified as accurate and correct by LHR’s project manager in charge of overseeing the preparation and implementation of the Work. (b) Seven (7) business days after receipt of such Request for Reimbursement by the City’s Designee, the City’s Designee shall deliver, or cause to be delivered, a copy of such Request for Reimbursement to Escrow Holder with written instructions to release to LHR either (i) the full amount of the requested sum as set forth in the Request for Reimbursement (the “Full Reimbursement Sum”) from the City Escrow Account, or (ii) the Full Reimbursement Sum less that which the City contests is either not yet due or subject to objection (in either case, the “Contested Portion”). The City’s Designee shall simultaneously give written notice to LHR (“Notice of Contest”) of the amount of the Contested Portion and stating with reasonable specificity its reason for objecting to the Contested Portion. The City’s Designee and a representative from LHR shall meet and confer, either in person or by phone, within five (5) business days after LHR’s receipt of the Notice of Contest and shall use their good faith efforts to promptly resolve any issues regarding the Contested Portion. As used herein, “business days” shall mean Monday through Thursday, excluding federal and state holidays.
City Officers and Employees. No officer or employee of the City shall be personally liable to LHR or any successors in interest in the event of any default or breach by the City or for any amount which may become due to LHR or any successor(s) in interest or for breach of any obligation of the terms of this Agreement. No officer or employee of LHR shall be personally liable to the City or any successor(s) in interest in the event of any default or breach by LHR or for any amount which may become due to the City or their successors in interest or for breach of any obligation of the terms of this Agreement.
Notice. Any notice, demand, request, consent, approval, or communication either party desires or is required to give to the other party or any person shall be in writing and either served personally or sent by prepaid, first-class mail to the address set forth below. Notice shall be deemed communicated immediately upon personal delivery or forty-eight (48) hours from the time of mailing if mailed as provided in this Section.
To City: City of Rialto
150 S. Palm Avenue
Rialto, CA 92376
Attn: City Manager
Copies to: City Attorney
City of Rialto
150 S. Palm Avenue
Rialto, CA 92376
To LHR: Bryan Goodman
Lewis-Hillwood Rialto Company, LLC
1156 Mountain Avenue
Upland, CA 91786
Copies to: Jay Dupre
Vice President/General Counsel
Lewis Management Corp.
1156 Mountain Avenue
Upland, CA 91786
Scott Morse
HGI CA Investors, L.P.
901 Via Piemonte, Suite 175
Ontario, CA 91764
Tel (909) 382-0033 ext. 8103
Fax (909) 382-0073
Assignment.
The parties hereto may not assign their obligations hereunder to any person or entity without the prior written consent of the other party hereto, which consent shall not be unreasonably withheld. It shall be reasonable for a party to withhold its consent hereunder if the proposed assignee is unwilling, or financially incapable, or not professionally competent to carry out the assigning party’s obligations hereunder. In addition, any such assignment shall only be effective if, in addition to being approved in writing as provided in the first sentence of this Section, the assigning party and the proposed assignee execute an Assignment and Assumption Agreement whereby the assignee assumes all the duties and responsibilities of the assigning party under this Agreement in the form approved by the non-assigning party, such approval not to be unreasonably withheld.
Upon the receipt by LHR of the final payment due under this Agreement, LHR shall execute an assignment agreement for the Converse Contract assigning all of its rights and remedies against Converse under the Converse Contract to the City in a form approved by the City, such approval not to be unreasonably withheld.
General Provisions.
Except as otherwise provided herein, the terms, conditions, covenants, and agreements set forth herein shall apply to and bind the heirs, executors, administrators, assigns, and successors of the parties hereto.
The parties to this Agreement do not rely upon any warranty or representation not contained in this Agreement.
This Agreement shall be governed by and interpreted in accordance with the laws of the State of California.
Any failure or delay by any party in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any rights or remedies provided for herein.
This Agreement may be amended at any time by the mutual consent of the parties by an instrument in writing signed by the parties.
This Agreement, upon acceptance by the parties hereto, constitutes the sole and only agreement between the parties hereto as to the subject matter hereof, and is intended by each to constitute the final written memorandum of all of their agreements and understandings in this transaction. No covenants, warranties, and/or representations, express or implied, and no promises or prior agreements whatsoever have been made, agreed to, or entered into by the parties hereto which are not expressly set forth herein; and if either party hereto has attempted to make such covenants, warranties, and/or representations, promises or prior agreements, the same are each superseded hereby and waived.
The parties hereto acknowledge and agree that each has been given the opportunity to review this Agreement independently with legal counsel and other professionals of each party’s own choosing, and/or has the requisite experience and sophistication to understand, interpret, and agree to the particular language of the provisions hereof. All words, unless otherwise specifically defined in this Agreement, shall have their ordinary meanings as set forth in any dictionary of American English in common usage; there are no secrets or code words. Any capitalized word, term, or phrase not otherwise defined in any Exhibit shall have the meaning assigned to it in this Agreement. The parties have equal bargaining power and intend the plain meaning of the provisions herein. In the event of an ambiguity in or dispute regarding the interpretation of same, the interpretation of this Agreement shall not be resolved by any rule of interpretation providing for interpretation against the Party who causes the uncertainty to exist or against the draftsman.
Severability. In the event that any provision or provisions of this Agreement are held unenforceable, all provisions not so held shall remain in full force and effect.
Authority of Signatories. The persons executing this Agreement on behalf of the parties hereto warrant that they are duly authorized to execute this Agreement on behalf of said parties and that by so executing this Agreement the parties are formally bound to the provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above.
CITY:
CITY OF RIALTO,
a California municipal corporation
Marcus Fuller, City Manager
ATTEST:
Barbara McGee, City Clerk
APPROVED AS TO FORM:
Eric Vail, City Attorney
LHR:
LEWIS-HILLWOOD RIALTO COMPANY, LLC,
a Delaware limited liability company
By: Lewis-Rialto Company, LLC, a Delaware
limited liability company, its Managing Member
By: Lewis Management Corp., a Delaware Corporation, its Sole Manager By: _________________________
Name: _________________________
Title: Authorized Agent
By: HGI CA INVESTORS, L.P.,
a California limited partnership
By: HGI GP, LLC, a Texas limited liability company, its general partner By: _________________________
Name: _________________________
Title: _________________________
EXHIBIT A
CONVERSE CONTRACT
EXHIBIT B
KEC CONTRACT
EXHIBIT C
CVE CONTRACT
2 DOCSOC/1617939v8/024126-0187
EXHIBIT A-1