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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
PROMETHEUS INCOME PARTNERS
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(Name of Issuer)
UNITS OF LIMITED PARTNERSHIP INTEREST
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(Title of Class of Securities)
742941 10 7
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(CUSIP Number)
John F. Hartigan, Esq.
Morgan, Lewis & Bockius LLP
801 South Grand Avenue
Los Angeles, CA 90017
(213) 612-2500
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
December 30, 1996
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A fee
is not required only if the reporting person (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
Page 1 of 12 Pages
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CUSIP No. 742941 10 7 SCHEDULE 13D Page 2 of 12 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
PROM INVESTMENT PARTNERS L.L.C.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
AF; WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
[ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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7 SOLE VOTING POWER
1,367.395 Units of Limited Partnership Interest
---------------------------------------------------------
8 SHARED VOTING POWER
NUMBER OF SHARES
BENEFICIALLY OWNED 0
BY EACH REPORTING ---------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
1,367.395 Units of Limited Partnership Interest
---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,367.395 Units
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.2%
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14 TYPE OF REPORTING PERSON*
OO
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* SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
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CUSIP No. 742941 10 7 SCHEDULE 13D Page 3 of 12 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
AP-GP PROM PARTNERS INC.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
[ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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7 SOLE VOTING POWER
1,367.395 Units of Limited Partnership Interest
---------------------------------------------------------
8 SHARED VOTING POWER
NUMBER OF SHARES
BENEFICIALLY OWNED 0
BY EACH REPORTING ---------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
1,367.395 Units of Limited Partnership Interest
---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,367.395 Units
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.2%
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14 TYPE OF REPORTING PERSON*
CO
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* SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 4
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CUSIP No. 742941 10 7 SCHEDULE 13D Page 4 of 12 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
APOLLO REAL ESTATE INVESTMENT FUND II, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
[ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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7 SOLE VOTING POWER
1,367.395 Units of Limited Partnership Interest
---------------------------------------------------------
8 SHARED VOTING POWER
NUMBER OF SHARES
BENEFICIALLY OWNED 0
BY EACH REPORTING ---------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
1,367.395 Units of Limited Partnership Interest
---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,367.395 Units
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.2%
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14 TYPE OF REPORTING PERSON*
PN
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* SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 5
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CUSIP No. 742941 10 7 SCHEDULE 13D Page 5 of 12 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
APOLLO REAL ESTATE ADVISORS II, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
[ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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7 SOLE VOTING POWER
1,367.395 Units of Limited Partnership Interest
---------------------------------------------------------
8 SHARED VOTING POWER
NUMBER OF SHARES
BENEFICIALLY OWNED 0
BY EACH REPORTING ---------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
1,367.395 Units of Limited Partnership Interest
---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,367.395 Units
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.2%
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14 TYPE OF REPORTING PERSON*
PN
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* SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 6
STATEMENT PURSUANT TO RULE 13d-1
OF THE
GENERAL RULES AND REGULATIONS
UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "ACT")
================================================================================
Item 1. Security and Issuer.
This statement relates to units of limited partnership
interest (the "Units") of Prometheus Income Partners, a California limited
partnership (the "Partnership"), which has its principal executive offices at
350 Bridge Parkway, Redwood City, California 94065.
Item 2. Identity and Background.
This Statement is filed jointly by Prom Investment Partners
L.L.C., a Delaware limited liability company ("Prom Investment Partners"),
AP-GP Prom Partners Inc., a Delaware corporation ("AP-GP Prom Partners"),
Apollo Real Estate Investment Fund II, L.P., a Delaware limited partnership
("AREIF II"), and Apollo Real Estate Advisors II, L.P., a Delaware limited
partnership ("AREA II"). Prom Investment Partners, AP-GP Prom Partners, AREIF
II and AREA II are sometimes collectively referred to herein as the "Reporting
Persons."
Prom Investment Partners was organized for the purpose of
acquiring the Units pursuant to a tender offer on Schedule 14D-1, commenced on
October 18, 1996 (the "Tender Offer"). The principal executive office of Prom
Investment Partners is at 1301 Avenue of the Americas, 38th Floor, New York,
New York 10019. The managing member of Prom Investment Partners is AP-GP Prom
Partners, a newly-formed Delaware corporation which is ultimately controlled by
Apollo Real Estate Capital Advisors II, Inc., a Delaware corporation
("Advisors"), as general partner of AREA II, the general partner of AREIF II, a
private real estate investment fund and the sole shareholder of AP-GP Prom
Partners.
AREIF II is principally engaged in the business of investment
in real estate and real estate-related interests. The address of AREIF II's
principal business and its principal office is c/o Apollo Real Estate Advisors
II, L.P., Two Manhattanville Road, Purchase, New York 10577.
AREA II is the general partner of AREIF II. AREA II is
principally engaged in the business of serving as managing general partner of
AREIF II. The address of AREA II's principal business and its principal office
is c/o Apollo Real Estate Advisors II, L.P., Two Manhattanville
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Road, Purchase, New York 10577. Advisors is the sole general partner of AREA
II. Advisors is principally engaged in the business of serving as general
partner of AREA II.
Attached hereto as Appendix A is information concerning the
executive officers and directors of AP-GP Prom Partners, the managing member of
Prom Investment Partners, and Advisors, the general partner of AREA II, as well
as certain other entities, which information is required to be disclosed in
response to Item 2 and General Instruction C to Schedule 13D. All such persons
identified on Appendix A disclaim beneficial ownership of and any pecuniary
interest in the Units beneficially owned by the Reporting Persons.
None of the Reporting Persons, Advisors, nor any of the
persons or entities referred to in Appendix A hereto, has, during the last five
years, been convicted in a criminal proceeding (excluding traffic violations
and similar misdemeanors) or been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree, or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to such
laws.
Item 3. Source and Amount of Funds or Other Consideration.
As of the date hereof, the Reporting Persons are deemed to
beneficially own 1,367.395 Units. The source of all funds used to acquire
beneficial ownership of such Units was investment funds from working capital of
Prom Investment Partners, which was contributed by its members AREIF II, AP-GP
Prom Partners and Prom LFG L.L.C.. None of the funds used to acquire
beneficial ownership were borrowed funds or otherwise obtained for the purpose
of acquiring Units. AP-GP Prom Partners, the managing member of Prom
Investment Partners, and AREA II, the general partner of AREIF II, are deemed
to beneficially own the Units beneficially owned by Prom Investment Partners
and AREIF II, respectively. The Units beneficially owned by the Reporting
Persons were acquired as described below.
Pursuant to the Tender Offer, Prom Investment Partners
purchased an aggregate of 1,362.395 Units on December 30, 1996 for an aggregate
purchase price of approximately $674,385.50. Prom Investment Partners obtained
all of such funds from capital contributions from its members, including AREIF
II. Prior to commencing the Tender Offer, Prom Investment Partners purchased 5
units from an affiliate of its financial advisor at a purchase price of $405
per unit.
Item 4. Purpose of Transaction.
Each of the Reporting Persons acquired beneficial ownership of
the Units for investment purposes and not with the purpose of changing or
influencing control of the Partnership. Each of the Reporting Persons retains
the right, however, to change such investment intent, to acquire further Units
or to sell or otherwise dispose of all or a part of the Units beneficially
owned by such Reporting Persons in any manner permitted by law.
Although the foregoing currently reflects the present plans
and intentions of the Reporting Persons, the foregoing is subject to change at
any time. The Reporting Persons have and will, on an on-going basis, continue
to evaluate their investment in the Partnership. In the event of a
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material change in the present plans or intentions of the Reporting Persons,
the Reporting Persons will amend this Schedule 13D to reflect such change.
Item 5. Interest in Securities of the Issuer.
(a) and (b) As of the date hereof, the Reporting Persons are
deemed to beneficially own an aggregate of 1,367.395 Units, which constitutes
approximately 7.2% of the Units outstanding.* The Reporting Persons have sole
voting and sole dispositive power of all such Units beneficially owned.
(c) Except for the purchase of Units pursuant to the
Tender Offer, neither Prom Investment Partners, AP-GP Prom Partners, AREIF II,
AREA II, and to the best of Prom Investment Partners' knowledge, the persons
listed on Appendix A, nor any affiliate thereof has effected any transaction in
the Units within the past 60 days.
(d) The Reporting Persons have no knowledge of any
persons who have the right to receive or the power to direct the receipt of
distributions from, or the proceeds from the sale of, any Units beneficially
owned by the Reporting Persons.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
The information set forth in Item 3, Item 4 and Item 5 above
is hereby incorporated by reference herein.
AREIF II entered into an Option Agreement, dated as of October
17, 1996 (the "Option Agreement"), with Liquidity Financial Group, L.P., a
California limited partnership ("LFG") and an affiliate of the financial
advisor of Prom Investment Partners in connection with the Tender Offer,
pursuant to which LFG was granted an option, for the 6 month period following
December 30, 1996, to acquire, indirectly through a member of Prom Investment
Partners, up to a 5% interest in Prom Investment Partners.
Prom Investment Partners entered into an Advisory Agreement,
dated as of October 17, 1996 (the "Advisory Agreement"), with Liquidity
Financial Advisors, Inc., a California corporation ("Liquidity Financial"),
pursuant to which Liquidity Financial is entitled to certain advisory fees in
exchange for advisory services it performed for Prom Investment Partners in
connection with the Tender Offer. Such advisory fees are to be equal to 2% of
the amount invested, as of the ninetieth day after
- ------------------
* All calculations of percentages of beneficial ownership in this
Schedule 13D are based on there being 18,995 Units outstanding, as of
September 30, 1996, as disclosed in the Partnership's Quarterly Report
on Form 10-Q for the period ended September 30, 1996.
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acquisition of the Units pursuant to the Tender Offer, or approximately
$13,488. Further, after the members of Prom Investment Partners have received
certain minimum priority returns on their invested capital, Liquidity Financial
will be entitled to additional participations in distributions from the
Partnership pursuant to the terms of the Advisory Agreement.
The discussion herein of the Option Agreement and the Advisory
Agreement is subject to and qualified in its entirety by reference to such
agreements, copies of which are attached hereto as exhibits and incorporated
herein by reference.
Except as described above, the Reporting Persons do not have
any contracts, arrangements, understandings or relationships with respect to
any securities of the Partnership.
Item 7. Material to be Filed as Exhibits.
EXHIBIT
NO. DESCRIPTION
EX-99.1 Option Agreement, dated as of October 17, 1996, between LFG
and AREIF II.
EX-99.2 Advisory Agreement, dated as of October 17, 1996, between
Liquidity Financial and Prom Investment Partners.
Page 9
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: January 8,1997
PROM INVESTMENT PARTNERS L.L.C.
By: AP-GP Prom Partners Inc., its managing member
By: /s/ MICHAEL D. WEINER
-----------------------------------------
Name: Michael D. Weiner
Title: Secretary
AP-GP PROM PARTNERS INC.
By: /s/ MICHAEL D. WEINER
----------------------------------------------
Name: Michael D. Weiner
Title: Secretary
APOLLO REAL ESTATE INVESTMENT FUND II, L.P.
By: Apollo Real Estate Advisors II, L.P.
Managing Member
By: Apollo Real Estate Capital Advisors II, Inc.
General Partner
By: /s/ MICHAEL D. WEINER
-----------------------------------------
Name: Michael D. Weiner
Title: Vice President
APOLLO REAL ESTATE ADVISORS II, L.P.
By: Apollo Real Estate Capital Advisors II, Inc.
General Partner
By: /s/ MICHAEL D. WEINER
-----------------------------------------
Name: Michael D. Weiner
Title: Vice President
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APPENDIX A
The following sets forth information with respect to the
executive officers and directors of AP-GP Prom Partners, which is the managing
member of Prom Investment Partners, and Advisors, which is the sole general
partner of AREA II.
AP-GP Prom Partners. Messrs. Lee S. Neibart, W. Edward
Scheetz and Richard Mack are executive officers and directors of AP-GP Prom
Partners. The principal occupation of each of Messrs. Neibart and Scheetz,
each of whom is a citizen of the United States, is to act as an officer of
Advisors. The principal occupation of Mr. Mack, who is a citizen of the United
States, is to act as an associate of Advisors. The business address of each of
Messrs. Neibart, Scheetz and Mack is c/o Apollo Real Estate Management II,
L.P., 1301 Avenue of the Americas, New York, New York 10019.
Capital Advisors II. Messrs. Leon D. Black, John J. Hannan
and William L. Mack are executive officers and directors of Advisors. The
principal occupation of each of Messrs. Black and Hannan, each of whom is a
citizen of the United States, is to act as an executive officer and director of
Apollo Capital Management, Inc., a Delaware corporation ("Apollo Capital"), and
of Lion Capital Management, Inc., a Delaware corporation ("Lion Capital").
Messrs. Black and Hannan are founding principals of Apollo Advisors, L.P.
("Apollo Advisors"), Lion Advisors, L.P. ("Lion Advisors") and together with
Mr. Mack of Apollo Real Estate Advisors II, L.P. The principal occupation of
Mr. Mack, who is a citizen of the United States, is to act as a consultant to
Apollo Advisors and as a principal of Apollo Real Estate Advisors, L.P. and to
act as President and Managing Partner of the Mack Organization, an owner and
developer of and investor in office and industrial buildings and other
commercial properties. The principal business of Apollo Advisors and of Lion
Advisors is to provide advice regarding investments in securities and the
principal business of Apollo Real Estate Advisors, L.P. is to provide advice
regarding investments in real estate and real estate-related investments. The
business address of each of Messrs. Black, Hannan and Mack is c/o Apollo Real
Estate Management II, L.P., 1301 Avenue of the Americas, New York, New York
10019.
Page 11
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EXHIBIT INDEX
Exhibit
Ex-99.1 Option Agreement, dated as of October 17, 1996, between LFG and
AREIF II.
Ex-99.2 Advisory Agreement, dated as of October 17, 1996, between
Liquidity Financial and Prom Investment Partners.
Page 12
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EX-99.1
OPTION AGREEMENT
AGREEMENT, dated as of October 17, 1996 (this "Agreement"), by
and between Liquidity Financial Group, L.P., a California limited partnership
(the "Optionee"), and Apollo Real Estate Investment Fund II, L.P., a Delaware
limited partnership (the "Fund").
W I T N E S S E T H:
WHEREAS, the Fund owns 29.23% of the outstanding limited
liability company interests (the "Prom Interests") of Prom LFG L.L.C., a
Delaware limited liability company ("Prom LFG");
WHEREAS, Prom LFG owns 17.1% of the outstanding limited
liability company interests (the "Bidder Interests") of Prom Investment
Partners L.L.C., a Delaware limited liability company (the "Bidder");
WHEREAS, the Bidder has commenced or will commence a tender
offer (the "Tender Offer") to acquire up to 9,000 of the issued and outstanding
limited partnership units (the "Units"), or approximately 47.4%, of Prometheus
Income Partners, a California limited partnership (the "Target"), at a price of
$405 per Unit; and
WHEREAS, the Fund desires to grant to the Optionee an option
to acquire up to 100% of the Fund's Prom Interests (the "Option Interests"),
upon the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises,
the mutual covenants set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Optionee and the Fund hereby agree as follows:
1. Grant of the Options. The Fund hereby grants to the Optionee
the right to purchase (the "Option") all or any part of the Option Interests
from the Fund exercisable from the date Bidder accepts for payment Units
tendered pursuant to the Tender Offer until that date which is six months after
the date the Option becomes exercisable (the "Option Period"), at a purchase
price (the "Purchase Price") equal to five percent (5%) of the aggregate
consideration paid and expenses incurred by the Bidder for the Units in the
Tender Offer together with interest at a rate of 10% per annum based on a year
of 366 days (calculated from and after the date of the closing of the Tender
Offer through and including the date of the closing of the Option). If
Optionee does not exercise the entire Option, the Purchase Price shall be
reduced pro rata in accordance with the percentage of the entire Option
exercised by the Optionee.
<PAGE> 2
2. Exercise of the Option. The Option to purchase the Option
Interests shall be exercisable in whole or in part on the terms and subject to
the conditions hereinafter set forth:
(a) In the event that the Optionee is entitled to and
wishes to exercise the Option, the Optionee shall, during the Option Period,
send a written notice (the "Exercise Notice") to the Fund identifying the date
and place for the closing (the "Closing") of the Option Interests to be
purchased. Delivery of the Exercise Notice prior to the expiration of the
Option Period shall be sufficient to entitle the Optionee to purchase the
Option Interests notwithstanding that the Closing may occur after the
expiration of the Option Period; provided, however, that the Closing shall not
be more than fifteen (15) business days from the date that the Exercise Notice
is received by the Fund unless another date is agreed upon in writing by the
Fund and the Optionee.
(b) Payment of the Purchase Price for the Option
Interests to be acquired pursuant to the exercise of the Option will be made by
the Optionee at the Closing by delivering to the Fund, by wire transfer or by
certified check payable to the order of the Fund, an amount equal to the
Purchase Price.
3. Transferability of the Option. The Option may not be
assigned, transferred, or otherwise disposed of, or pledged or hypothecated or
in any way be subject to execution, attachment or other process. Any
assignment, transfer, pledge, hypothecation or other disposition of the Option
attempted contrary to the provisions of this Agreement or any levy, execution,
attachment or other process attempted upon the Option will be null and void and
without effect.
4. Sale of Option Interests. Except as provided in this
Agreement, the Fund shall not, without the express written consent of the
Optionee, during the Option Period, (i) sell or otherwise dispose of any or all
of the Option Interests, or (ii) convert such Option Interests into cash,
capital stock or other securities.
5. Adjustment Upon Changes in Capitalization. In the event of
any change in the Prom Interests by reason of dividends, split-ups,
recapitalizations, combinations, exchanges of interests or the like, the type
and number of interests of Prom Interests subject to the Option and the
Purchase Price shall be appropriately adjusted and proper provision shall be
made so that, in the event that any additional Prom Interests become
outstanding as a result of any such change after the date of this Agreement,
the Option shall be adjusted so that, after such change and together with the
Prom Interests previously outstanding pursuant to the exercise of the Option
(as adjusted on account of any of the foregoing change in Prom Interests), it
equals 29.23% of the number of Prom Interests then outstanding.
6. Investment. The Optionee acknowledges that the Option
Interests are not being offered pursuant to a registration statement under the
Securities Act of 1933, as amended (the "Act"), or any other securities laws.
The Optionee acknowledges that the Option Interests are being acquired for the
Optionee's own account for investment purposes only and not with a view to, or
for sale in connection with, any public distribution thereof and will not sell,
or offer to sell or otherwise dispose of, any interest in the Option Interests
acquired by the Optionee in violation of the Act. The Optionee has had
substantial experience in business and financial matters and in making
investments of the type contemplated by this Agreement, is capable of
evaluating the merits and risks of the purchase of the Option Interests and is
able to bear the economic risks of such investment.
<PAGE> 3
7. Representations and Warranties of the Fund. The Fund hereby
represents and warrants to the Optionee as follows:
a. Organization. The Fund is a limited partnership duly
formed, validly existing and in good standing under the laws of the State of
Delaware, has all requisite power and authority to execute and deliver this
Agreement and perform its obligations hereunder. The execution and delivery by
the Fund of this Agreement and the performance by the Fund of its obligations
hereunder have been duly and validly authorized by the general partner of the
Fund and no other partnership actions on the part of the Fund are necessary to
authorize the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby.
b. Authorization. This Agreement has been duly and validly
executed and delivered by the Fund and constitutes a valid and binding
agreement enforceable against the Fund in accordance with its terms, except
that (i) such enforcement may be subject to applicable bankruptcy, insolvency
or other similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
c. Title to Option Interests. As of the date hereof,
the Fund is the legal, beneficial and record owner of the Option Interests.
The Fund has good and marketable title to all of the Option Interests, free and
clear of any liens, encumbrances, equities, restrictions and claims of every
kind and nature. No person other than the Fund has any interest in or right to
acquire any interest in any of the Option Interests. There are no rights,
options, convertible or exchangeable, instruments or interests or commitments,
agreements, arrangements or undertakings of any kind to which the Fund is a
party or by which the Fund is bound obligating the Fund to deliver, sell, or
cause to be sold or delivered, the Option Interests.
d. No Conflicts. Except for authorizations, consents
and approvals as may be required hereunder, (i) no filing with, and permit,
authorization, consent or approval of any state or federal public body or
authority is necessary for the execution of this Agreement by the Fund and the
consummation by the Fund of the transactions contemplated hereby and (ii) none
of the execution and delivery of this Agreement by the Fund and the
consummation by the Fund of the transactions contemplated hereby will (A)
conflict with any or result in any breach of any provision of the
organizational documents of the Fund, (B) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration) under
any of the terms, conditions or provisions of any indenture, license, contract,
agreement or other instrument or obligation to which the Fund is a party or by
which it may be bound, or (C) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Fund.
8. Representations and Warranties of the Optionee. The Optionee
hereby represents and warrants to the Fund as follows:
a. Organization. The Optionee is a limited partnership duly
formed, validly existing and in good standing under the laws of the State of
California, has all requisite power and authority to execute and deliver this
Agreement and perform its obligations hereunder. The execution and delivery by
the Optionee of this Agreement and the performance by the Optionee of its
obligations
<PAGE> 4
hereunder have been duly and validly authorized by the general partner of the
Optionee and no other partnership actions on the part of the Optionee are
necessary to authorize the execution, delivery or performance of this Agreement
or the consummation of the transactions contemplated hereby.
b. Authorization. This Agreement has been duly and validly
executed and delivered by the Optionee and constitutes a valid and binding
agreement enforceable against the Optionee in accordance with its terms, except
that (i) such enforcement may be subject to applicable bankruptcy, insolvency
or other similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
c. No Conflicts. Except for authorizations, consents
and approvals as may be required hereunder, (i) no filing with, and permit,
authorization, consent or approval of any state or federal public body or
authority is necessary for the execution of this Agreement by the Optionee and
the consummation by the Optionee of the transactions contemplated hereby and
(ii) none of the execution and delivery of this Agreement by the Optionee and
the consummation by the Optionee of the transactions contemplated hereby will
(A) conflict with any or result in any breach of any provision of the
organizational documents of the Optionee, (B) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any
indenture, license, contract, agreement or other instrument or obligation to
which the Optionee is a party or by which it may be bound, or (C) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Optionee.
9. Termination. Except as otherwise provided herein, the
covenants and agreements contained herein with respect to the Option Interests
shall terminate upon the expiration of the Option Period.
10. Notices. Notices relating to this Agreement shall be in
writing and delivered in person or by hand delivery or certified mail, return
receipt requested, postage prepaid, as follows:
If to the Optionee:
Liquidity Financial Group, L.P.
2200 Powell Street, Suite 700
Emeryville, California 94608
Attention: Brent Donaldson
with a copy to:
Morgan, Lewis & Bockius
1800 M Street N.W.
Washington, D.C. 20036
Attention: Lloyd Feller, Esq.
<PAGE> 5
If to the Fund:
c/o Apollo Real Estate Advisors, L.P.
1301 Avenue of the Americas
38th Floor
New York, New York 10019
Attention: W. Edward Scheetz
Richard Mack
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Fax: (212) 856-7811
Attention: Peter M. Fass, Esq.
Steven L. Lichtenfeld, Esq.
or to such other address as either party may designate by written notice to the
other in accordance with this provision, and is hereby deemed to have been
given or made: if delivered in person, immediately upon delivery; if by telex,
telegram or facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight courier service
with instructions to deliver the next business day, one (1) business day after
sending; and if by certified mail, return receipt requested, three (3) days
after mailing.
11. Benefits of Agreement. This Agreement shall inure to the
benefit and shall be binding upon the successors, heirs, legal representatives
and permitted assigns of the parties hereto.
12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard
to the principles thereof respecting conflicts of laws.
13. Holidays. Whenever any payment to be made hereunder shall be
stated to be due on a Saturday, Sunday or any national holiday, such payment
may be made on the next succeeding business day.
14. Section Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
15. Entire Understanding and Release. (a) This Agreement
contains the entire agreement between the Fund and the Optionee and supersedes
any and all prior agreements, understandings and undertakings, whether written
or oral, between the Fund and its officers, directors, employees or agents on
the one hand, and the Optionee on the other hand. No representations,
warranties, covenants or agreements, except those expressly set forth in this
Agreement will be deemed to have been made by either the Fund and its officers,
directors, employees or agents on the one hand, and the Optionee on the other
hand.
<PAGE> 6
(b) The Optionee hereby releases, acquits and forever
discharges the Fund and its partners, employees and agents, as well as each of
their respective heirs, personal representatives, successors and assigns, from
any and all losses, damages, claims, demands, debts, actions, causes of action,
suits, contracts, agreements, obligations, accounts, defenses and liabilities
of any kind or character whatsoever, known or unknown, suspected or
unsuspected, in contract or in tort, at law or in equity, which the Optionee
ever had, now has, or might hereafter have against the Fund and its partners,
employees and agents for or by reason of any matter, cause or thing whatsoever
which relates in any manner, in whole or in part, directly or indirectly, to
any agreement, understanding, or undertaking of the Fund and its partners,
employees, and agents in connection with the transactions contemplated by this
Agreement
16. Severability. If any of the provisions of this Agreement
shall be held by a court of competent jurisdiction to be void or unenforceable,
the balance of the provisions of this Agreement shall remain in effect and be
enforced so as to give effect as nearly as possible to the intentions of the
Fund and the Optionee.
17. Execution. This Agreement may be executed in one or more
counterparts, each of which shall be deemed as original, but all of which
together shall constitute one and the same instrument. Facsimile signatures
shall be deemed an original.
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
LIQUIDITY FINANCIAL GROUP
By: Liquidity Financial Corporation,
its general partner
By: /s/ BRENT DONALDSON
--------------------------------
Name: Brent Donaldson
Title: President
APOLLO REAL ESTATE INVESTMENT FUND II,
L.P.
By: Apollo Real Estate Advisors II,
L.P., its general partner
By: Apollo Real Estate Capital
Advisors II, Inc., its general
partner
By: /s/ W. EDWARD SCHEETZ
-------------------------------
Name: W. Edward Scheetz
Title: Vice President
<PAGE> 1
EX-99.2
LIQUIDITY FINANCIAL ADVISORS, INC.
2200 Powell Street, Suite 700
Emeryville, California 94608
As of October 17, 1996
Prom Investment Partners L.L.C.
1301 Avenue of the Americas
38th Floor
New York, New York 10019
Attention: Mr. W. Edward Scheetz
Gentlemen:
When signed by Liquidity Financial Advisors, Inc. ("Advisor")
and countersigned by Prom Investment Partners L.L.C. (the "Bidder") this letter
shall constitute an amended and restated agreement with respect to the Bidder's
engagement of the Advisor to act as its financial advisor in connection with
its proposed acquisition of units of limited partnership interest in Prometheus
Income Partners, A California Limited Partnership (the "Partnership").
1. CERTAIN DEFINITIONS. Capitalized words and phrases used in this
letter agreement have the following meanings:
a. "Acquisition" means, directly or indirectly, through one
transaction or a series of transactions, (1) the acquisition
of record and beneficial ownership of more than 1% of the
outstanding limited partnership interests in the Partnership
by the Bidder and/or one of its Affiliates by means of a
merger, consolidation, reorganization or other business
combination pursuant to which the Bidder and/or one of its
Affiliates is merged or otherwise combined with the
Partnership; (2) the acquisition by the Bidder and/or one of
its Affiliates by assignment of an economic interest
consisting of, or of record and beneficial ownership of, more
than 1% of the outstanding limited partnership interests in
the Partnership by means of a tender or exchange offer,
negotiated purchase or otherwise; or (3) the acquisition by
the Bidder and/or one of its Affiliates of title to, or
control over, all or substantially all of the assets of the
Partnership.
b. "Acquisition Equity" with respect to a Person means the amount
of such Person's equity capital invested in an Acquisition
Transaction or Affiliate Acquisition Transaction as of the
ninetieth day after the consummation of such Acquisition
Transaction or Affiliate Acquisition Transaction.
c. "Acquisition Fee" shall have the meaning set forth in
paragraph 4(a).
d. "Acquisition Transaction" means the proposed Acquisition by
the Bidder of the Units.
e. "Advisor" means Liquidity Financial Advisors, Inc., a
California corporation.
<PAGE> 2
f. "Affiliate" with respect to any Person has the meaning set
forth in Rule 12b-2 promulgated under the Securities Exchange
Act of 1934, as amended.
g. "Affiliate Acquisition Transaction" means the Acquisition
Transaction and any Acquisition by an Affiliate of the Bidder
of limited partnership interests in a real estate limited
partnership in connection with which the Advisor was engaged
to act as financial advisor for such Affiliate.
h. "Anticipated Acquisition Equity" shall have the meaning set
forth in paragraph 4(b).
i. "Apollo Affiliate Investors" means AP-GP Prom Partners, Inc.,
Apollo Real Estate Investment Fund II, L.P. and any of their
Affiliates that invest in an Affiliate Acquisition
Transaction.
j. "Associate" with respect to any Person has the meaning set
forth in Rule 12b-2 promulgated under the Securities Exchange
Act of 1934, as amended.
k. "Bidder" means Prom Investment Partners L.L.C., a Delaware
limited liability company.
l. "Business Day" means a day other than a Saturday, a Sunday or
a day on which banking institutions in the City of New York
are authorized or obligated by law or executive order to
close.
m. "Cash Flow Fee" shall have the meaning set forth in paragraph
5(a).
n. "Indemnified Party" shall have the meaning set forth in
paragraphs 7(a) and (b).
o. "Invested Capital" with respect to any Person means the
amounts contributed from time to time by such Person to the
capital of another Person.
p. "LF Partnership" shall have the meaning set forth in
paragraph 7.
q. "Partnership" means Prometheus Income Partners, A California
Limited Partnership.
r. "Person" means an individual, a corporation, a partnership, a
joint venture, a limited liability company, a trust, or any
other entity.
s. "Term" shall have the meaning set forth in paragraph 2(a).
t. "Units" means units of limited partnership interest in the
Partnership, including depositary units.
<PAGE> 3
2. TERM; SERVICES.
a. The term ("Term") of the engagement by the Bidder of the
Advisor hereunder shall be two years beginning on the date of
this letter agreement. During the Term, the Advisor will
assist the Bidder on an exclusive basis in analyzing,
structuring, negotiating and effecting the Acquisition
Transaction on the terms and conditions set forth in this
letter agreement. In this connection, during the Term,
exclusively on the Bidder's behalf, the Advisor will, as
requested by the Bidder:
i. perform financial analysis of the Partnership in the
context of the Acquisition Transaction;
ii. assist the Bidder in its determination of the
appropriate price to be paid in the Acquisition
Transaction for the Units;
iii. advise the Bidder as to the structure and form of the
Acquisition Transaction;
iv. furnish the Bidder with such publicly-available due
diligence material as may reasonably be requested by
the Bidder;
v. furnish the Bidder with a current list of the limited
partners of the Partnership (or holders of Units) and
their addresses; and
vi. render such other financial advisory services as may
from time to time be reasonably requested by the
Bidder in connection with the Acquisition
Transaction.
b. The Advisor represents and warrants that neither it nor its
Affiliates or Associates have furnished to any Person except
the Bidder, and covenants and agrees that during the Term it
will not, and will cause its Affiliates and Associates not to
furnish, to any Person (other than counsel for the Advisor)
(i) the due diligence materials provided to the Bidder
hereunder, (ii) any list of the limited partners of the
Partnership (or holders of Units) or (iii) any financial
analysis of the Partnership prepared for the Bidder, unless
(I) it has first (A) furnished the Bidder with a written
notice setting forth its intention to do so, the identity of
each intended recipient of such material and a description of
any proposed or contemplated Acquisition or other transaction
involving such recipients and (B) offered the Bidder the
exclusive opportunity to engage the Advisor in connection with
such Acquisition or other transaction, (II) the Bidder has
failed to so engage the Advisor within 10 Business Days after
receipt of such written notice and (III) the Bidder has
consented in writing to the proposed action of the Advisor,
which consent shall not unreasonably be withheld; provided,
however, that the Advisor will not, and will cause its
Affiliates and Associates not to, disclose to any Person in
violation of any agreement between the Advisor or any
Affiliate or Associate of the Advisor and the Partnership or a
general partner of the Partnership any list of the limited
partners of the Partnership (or holders of Units) or take any
other action in violation of any such agreement.
<PAGE> 4
c. The Advisor (i) represents and warrants that it has heretofore
disclosed in writing to the Bidder the identity of any Person
that holds or has a beneficial interest in Units for whom the
Advisor or its Affiliates serve as general partners or
advisors or to whom the Advisor or its Affiliates owe any
fiduciary duty or other obligation and (ii) covenants and
agrees that during the Term it will not serve as a general
partner or advisor for such a Person (other than a Person
specified in (i) above) or advise or otherwise assist any
Person (other than a Person specified in (i) above or the
Bidder) in acquiring a beneficial interest in Units, unless
(I) the Advisor has first (A) furnished the Bidder with a
written notice setting forth its intention to do so, the
identity of each Person involved and a description of any
proposed or contemplated Acquisition or other transaction
involving such Persons and the Units or the Partnership and
(B) offered the Bidder the exclusive opportunity to engage the
Advisor in connection with such Acquisition or other
transaction, (II) the Bidder has failed to so engage the
Advisor within 10 Business Days after receipt of such written
notice and (III) the Bidder has consented in writing to the
proposed action of the Advisor, which consent shall not
unreasonably be withheld.
3. EXPENSE REIMBURSEMENT. The Bidder will reimburse the Advisor for its
reasonable actual out-of-pocket expenses incurred in connection with
the Acquisition Transaction upon submission of substantiating
documentation.
4. ACQUISITION FEE.
a. If, during the Term, an Acquisition Transaction is
consummated, the Bidder agrees to pay Advisor an acquisition
fee ("Acquisition Fee") calculated as follows:
i. 2.0 percent of the Acquisition Equity of the Bidder
in such Acquisition Transaction until the aggregate
Acquisition Equity of the Bidder and/or its
Affiliates in all Affiliate Acquisition Transactions
theretofore consummated together with the Acquisition
Equity of the Bidder in the Acquisition Transaction
itself equals $15,000,000; then
ii. 1.0 percent of the Acquisition Equity of the Bidder
in such Acquisition Transaction until the aggregate
Acquisition Equity of the Bidder and/or its
Affiliates in all Affiliate Acquisition Transactions
theretofore consummated together with the Acquisition
Equity of the Bidder in the Acquisition Transaction
itself equals $45,000,000; then
iii. 0.5 percent of the Acquisition Equity of the Bidder
in such Acquisition Transaction until the aggregate
Acquisition Equity of the Bidder and/or its
Affiliates in all Affiliate Acquisition Transactions
theretofore consummated together with the Acquisition
Equity of the Bidder in the Acquisition Transaction
itself equals $70,000,000; and then
iv. 0.25 percent of the Acquisition Equity of the Bidder
in such Acquisition Transaction after the aggregate
Acquisition Equity of the Bidder and/or its
Affiliates in all Affiliate Acquisition Transactions
<PAGE> 5
theretofore consummated together with the Acquisition
Equity of the Bidder in the Acquisition Transaction
itself exceeds $70,000,000.
b. At or prior to the closing of the Acquisition Transaction, the
Bidder will notify the Advisor in writing of the amount of the
Bidder's anticipated Acquisition Equity (the "Anticipated
Acquisition Equity") in such Acquisition Transaction as of the
ninetieth date after such closing and at closing the Bidder
will pay to the Advisor an Acquisition Fee based on the amount
of such Anticipated Acquisition Equity. Within 10 days after
the ninetieth day following the closing of such Acquisition
Transaction, a final determination of the Bidder's Acquisition
Equity in such Acquisition Transaction as of the ninetieth day
after the closing date of the Acquisition Transaction will be
made the Bidder and the Advisor. Within 10 days after such
determination, the Bidder will pay to the Advisor any
additional amount of the Acquisition Fee determined to be due
or the Advisor will repay to the Bidder any amount of the
Acquisition Fee determined to have been overpaid.
5. CASH FLOW FEE.
a. In addition to the fee payable pursuant to paragraph 4, the
Bidder will pay the Advisor a fee (the "Cash Flow Fee") based
upon the aggregate cash distributions of the Bidder in
connection with the Acquisition Transaction and the Bidder's
Affiliates in connection with all Affiliate Acquisition
Transactions, calculated and payable as follows:
i. 100 percent to members of the Bidder and its
Affiliates until such time as the Apollo Affiliate
Investors have received cash distributions in an
amount equal to their aggregate Invested Capital plus
a cumulative return of 15 percent per annum
compounded quarterly on their unreturned Invested
Capital; then
ii. 95 percent to members of the Bidder and its
Affiliates and 5 percent to the Advisor until such
time as the Apollo Affiliate Investors have received
cash distributions in an amount equal to their
aggregate Invested Capital plus a cumulative return
of 20 percent per annum compounded quarterly on their
unreturned Invested Capital; and then
iii. 90 percent to members of the Bidder and its
Affiliates and 10 percent to the Advisor.
b. The Advisor covenants and agrees that its interest in the Cash
Flow Fee will not be assigned, pledged, hypothecated or
otherwise transferred to any Person other than its Affiliates.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS.
a. The Advisor hereby represents and warrants to, and covenants
with, the Bidder as follows:
<PAGE> 6
i. the execution and delivery of, and the performance by
the Advisor of its obligations under, this letter
agreement have been duly and validly authorized by
the Advisor, and this letter agreement has been duly
executed and delivered by the Advisor;
ii. the Advisor is duly registered as an investment
adviser under the Investment Advisers Act of 1940, as
amended;
iii. the Advisor does not possess any non-public
information with respect to the operations, assets,
liabilities, financial condition or prospects of the
Partnership;
iv. the Advisor, together with its Affiliates and
Associates, is the beneficial owner of 5 Units and,
except as contemplated hereunder or in the option
agreement dated October 17, 1996 between Liquidity
Financial Group, L.P. and Apollo Real Estate
Investment Fund II, L.P., covenants and agrees that
it will not, and will cause its Affiliates and
Associates not to, acquire, directly or indirectly, a
beneficial interest in any additional Units;
v. the Advisor is not in breach of any covenant or
agreement with the Partnership and will not be in
breach of any covenant or agreement with the
Partnership;
vi. neither the execution, delivery or performance of
this letter agreement by the Advisor, the offer by
the Bidder to acquire the Units nor the consummation
by the Bidder of the Acquisition Transaction
conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, any
agreement or other instrument to which the Advisor or
any Affiliate or Associate of the Advisor is a party
or by which any of them may be bound; and
vii. the information supplied or to be supplied by the
Advisor to the Bidder for inclusion in the Schedule
14D-1 to be filed by the Bidder in connection with
the Acquisition Transaction, the material to be filed
as exhibits thereto and any amendments thereto does
not and will not, to the Advisor's knowledge after
due inquiry, contain any untrue statement of a
material fact or omit to state any material fact
required to be stated therein or necessary in order
to make the statements made therein, in light of the
circumstances under which they were made, not
misleading.
b. The Bidder hereby represents and warrants to the Advisor as
follows:
i. the execution and delivery of, and the performance by
the Bidder of its obligations under, this letter
agreement have been duly and validly authorized by
the Bidder and this letter agreement has been duly
executed and delivered by the Bidder;
<PAGE> 7
ii. neither the execution, delivery or performance of
this letter agreement by the Advisor, the offer by
the Bidder to acquire the Units nor the consummation
by the Bidder of the Acquisition Transaction
conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, any
agreement or other instrument to which the Bidder or
any Affiliate or Associate of the Bidder is a party
or by which any of them may be bound;
iii. the Bidder is not in breach of any covenant or
agreement with the Partnership and will not be in
breach of any covenant or agreement with the
Partnership.
7. OTHER RELATIONSHIPS. The Bidder understands and acknowledges that to
the extent disclosed pursuant to paragraph 2(c) Advisor and/or its
Affiliates serve as general partners or advisors to Partnerships ("LF
Partnerships") that own Units and, accordingly, that Advisor and/or
its Affiliates have fiduciary or other obligations to the LF
Partnerships, limited partners in the LF Partnerships, and, depending
on the circumstances, the Partnership and other holders or beneficial
owners of the Units. Notwithstanding any provision of this letter
agreement to the contrary, the Bidder understands and agrees that, in
providing services to the Bidder hereunder, Advisor will not be
obligated to render any advice or assistance or provide any
information that Advisor believes would be inconsistent with its
obligations to these other Persons. Advisor may disclose to the LF
Partnerships and their limited partners information concerning this
letter agreement and the terms of the transactions contemplated hereby
to the extent Advisor believes the disclosure of such information is
necessary to satisfy its obligations to the LF Partnerships and their
limited partners.
8. INDEMNIFICATION.
a. The Bidder agrees to indemnify the Advisor and its Affiliates
and their respective partners, directors, officers, employees,
agents and controlling persons (each such person being an
"Indemnified Party") from and against any and all losses,
claims, damages and liabilities, joint or several, to which
such Indemnified Party may become subject under any applicable
federal or state law, or otherwise related to or arising out
of (i) the breach by the Bidder of any representation,
warranty or covenant made by the Bidder in this letter
agreement, (ii) the Acquisition Transaction or (iii) the
engagement of the Advisor pursuant to, and the performance by
the Advisor of the services contemplated by, this letter
agreement and will reimburse any Indemnified Party for all
reasonable expenses (including reasonable fees and expenses of
legal counsel) as they are incurred in connection with the
investigation of, preparation for or defense of any pending or
threatened claim or any action or proceeding arising
therefrom, whether or not such Indemnified Party is a party.
The Bidder will not be liable under the preceding sentence to
the extent that any loss, claim, damage, liability or expense
relates to (i) a breach of any representation or warranty made
by the Advisor in this letter agreement or (ii) the Advisor's
bad faith, gross negligence or willful misconduct in the
performance by the Advisor of the services contemplated by
this letter agreement
<PAGE> 8
b. The Advisor agrees to indemnify the Bidder, its members and
their respective Affiliates, partners, directors, officers,
employees, agents and controlling persons (each such person
being an "Indemnified Party") from and against any and all
losses, claims, damages and liabilities, joint or several, to
which such Indemnified Party may become subject under any
applicable federal or state law, or otherwise related to or
arising out of (i) the breach by the Advisor of any
representation, warranty or covenant made by the Advisor in
this letter agreement or (ii) the Advisor's bad faith, gross
negligence or willful misconduct in the performance by the
Advisor of the services contemplated by this letter agreement
and will reimburse any Indemnified Party for reasonable
expenses (including reasonable fees and expenses of legal
counsel) as they are incurred in connection with the
investigation of, preparation for or defense of any pending or
threatened claim or any action or proceeding arising
therefrom, whether or not such Indemnified Party is a party.
9. INDEPENDENT CONTRACTORS; NO JOINT VENTURE. The parties acknowledge
and agree that the relationship between the Advisor and the Bidder is
that of independent contractors. Nothing in this letter agreement is
intended to create or shall be deemed to create or constitute a joint
venture or partnership between the Advisor and the Bidder.
10. ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. Neither party may assign
this letter agreement without the prior written consent of the other
party, and any purported assignment in violation of this provision
will be void. The terms and provisions of this letter agreement are
solely for the benefit of the parties hereto and other Indemnified
Parties and their respective successors, permitted assigns, heirs and
personal representatives, and no other person will acquire or have any
right by virtue of this letter agreement.
11. TERMINATION. This letter agreement shall terminate on the later of
March 1, 1997 and the fifteenth day after either party has given
written notice to the other of the termination thereof. The
provisions of this letter agreement relating to the payment of fees
and indemnification as well as the provisions of paragraphs 2(b),
2(c), 6(a)(iv), 6(a)(v) and 6(b)(iii) will survive the termination of
this letter agreement.
12. NOTICES. All notices or other communications required or permitted
hereunder shall be sufficient if it is in writing and delivered by
hand or sent by prepaid telex, cable or telecopier or sent, postage
prepaid, by registered, certified or express mail, or by recognized
overnight air courier service and shall be deemed given when so
delivered by hand, telex, cable or telecopy or if mailed or sent by
overnight courier service, on the fifth business day after mailing
(one business day in the case of express mail or overnight courier
service) to the parties at the following addresses:
<PAGE> 9
a. If to the Bidder, to:
c/o AP-GP Prom Partners Inc.
Apollo Real Estate Advisors II, L.P.
1301 Avenue of the Americas
38th Floor
New York, New York 10019
Attention: W. Edward Scheetz
Telecopy: (212) 361-4060
and:
c/o AP-GP Prom Partners Inc.
c/o Apollo Real Estate Advisors II, L.P.
1999 Avenue of the Stars
Suite 1900
Los Angeles, California 90067
Attention: Michael D. Weiner
Telecopy: (310) 201-4166
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Peter M. Fass
Telecopy: (212) 856-7822
b. If to the Advisor to:
2200 Powell Street, Suite 700
Emeryville, California 94608
Attention: Brent Donaldson
Telecopy: (510) 596-3299
13. PARAGRAPH HEADINGS. The paragraph headings contained in this letter
agreement are inserted for reference purposes only and shall not
affect the meaning or interpretation hereof.
14. GOVERNING LAW. This letter agreement shall be governed by, and
construed in accordance with, the laws of the State of New York
without regard to conflict of law principles.
15. WAIVERS. The waiver by any party of the breach of any of the terms
and conditions of, or any right under, this letter agreement shall not
be deemed to constitute the waiver of any other breach of the same or
any other term or condition or of any similar right. No such waiver
shall be binding or effective unless expressed in writing and signed
by the party giving such waiver.
<PAGE> 10
16. COUNTERPARTS. This letter agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.
17. ENTIRE AGREEMENT. This letter agreement contains, and is intended as,
a complete statement of all of the terms of the arrangements among the
parties with respect to the matters provided for herein and supersedes
any previous agreements and understandings between the parties with
respect to those matters. No amendment or modification of the terms
of this letter agreement shall be binding or effective unless
expressed in writing and signed by each party.
Please confirm that the foregoing correctly sets forth our
agreement by signing and returning to us the enclosed duplicate copy of this
letter agreement.
Very truly yours,
LIQUIDITY FINANCIAL ADVISORS, INC.
By: /s/ Brent Donaldson
-----------------------------------
Name: Brent Donaldson
Title: President
ACCEPTED AND AGREED TO AS OF
THE DATE FIRST WRITTEN ABOVE:
PROM INVESTMENT PARTNERS L.L.C.
By: AP-GP PROM PARTNERS, INC.,
its Managing Member
By: /s/ Richard Mack
---------------------------
Name: Richard Mack
Title: Vice President
