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EXHIBIT 10.3
RESTRUCTURING AGREEMENT
MORNING VIEW TERRACE TRANSACTION
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RESTRUCTURING AGREEMENT
THIS RESTRUCTURING AGREEMENT, dated as of May 23, 1997 (this
"Agreement"), by and among PGP MORNING VIEW TERRACE HOLDINGS INC., a Delaware
corporation (herein, "PGP-MVT"), PACIFIC GULF PROPERTIES INC., a Maryland
corporation (herein, "PGP"), MORNING VIEW TERRACE, a California general
partnership, and all of the general partners thereof, namely XXXXXX X. SHORT
and XXXXXXX X. SHORT, as trustees of the Short Family Trust under Declaration
of Trust dated May 1, 1989, and SHORT MORNING VIEW LTD., a California limited
partnership (collectively, the "Existing Partners").
WITNESSETH:
WHEREAS, Morning View Terrace is a general partnership formed pursuant
to that certain Partnership Agreement, dated November 6, 1984, as amended, and
existing under the laws of the State of California (the "California General
Partnership");
WHEREAS, the California General Partnership owns and manages a
326-unit apartment complex known as the Morning View Terrace Apartments (the
"Property") in the City of Escondido, County of San Diego, California;
WHEREAS, the California General Partnership desires to convert from a
California general partnership to a Delaware limited partnership (the "Delaware
Limited Partnership");
WHEREAS, Section 17-217 of the Delaware Revised Uniform Limited
Partnership Act, 6 Del.C. Section 17-101, et seq., and Article 9 of the
Uniform Partnership Act of 1994 authorize the conversion of the California
General Partnership to the Delaware Limited Partnership;
WHEREAS, PGP-MVT will be admitted as a general partner of the
California General Partnership upon execution of the California General
Partnership Amendments, and will, upon Conversion, be the sole general partner
of the Delaware Limited Partnership; and
WHEREAS, the Existing Partners of the California General Partnership
will, upon Conversion, be the limited partners of the Delaware Limited
Partnership.
NOW, THEREFORE, the parties hereto hereby agree as follows:
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ARTICLE 1
DEFINITIONS
Certain of the terms used in this Agreement that are not otherwise
defined herein shall have the meanings set forth below.
1.1. "Added Net Value" shall mean an amount computed by dividing
(i) the positive difference, if any, of Available Cash for the period from and
including the Effective Date to and including the Date over $1,930,500,
multiplied by 50%, by (ii) .083.
1.2. "Amended Statement of Partnership" means that certain
amendment to the Statement of Partnership currently on record with the County
Recorder's Office of San Diego County.
1.3. "Approved Title Form" shall mean the Preliminary Report for
the Property in the form of, and containing the exceptions, described on
Exhibit K.
1.4. "Appurtenances" shall mean all rights, privileges, interests,
licenses, claims, easements, benefits, covenants, conditions and servitudes of
any type or nature which are appurtenant to or otherwise benefit a parcel of
Land and/or the Improvements located thereon, including without limitation, all
minerals, oil, gas and other hydrocarbon substances on or under the Land, as
well as all development rights, air rights, water, water rights and water stock
relating to a parcel of Land and any other easements, rights of way or
appurtenances and used in connection with the beneficial operation, use and
enjoyment of such Land and/or Improvements or any other appurtenance, together
with all rights of the California General Partnership in and to streets,
sidewalks, alleys, gores, strips, driveways, parking areas and areas adjacent
thereto or used in connection therewith, and all rights of the California
General Partnership in any land lying in the bed of any existing or proposed
street adjacent to any Land.
1.5. "Bankruptcy Code" shall mean Title 11 of the U.S. Code, as now
constituted or hereafter amended.
1.6. "California General Partnership Amendments" shall mean the
amendments to the general partnership agreement of the California General
Partnership substantially in the form attached hereto as Exhibit G and Exhibit
H.
1.7. "CAL. UPA" shall mean the California Uniform Partnership Act
of 1994, Section 16100 et seq. of the California Corporations Code.
1.8. "Certificate of Limited Partnership" means the Certificate of
Limited Partnership required to be filed with the Secretary of State of the
State of Delaware pursuant to Section 17-217 of the DEL. RULPA.
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1.9. "Closing" shall mean the consummation of the Conversion. The
Conversion shall occur not later than the Closing Deadline.
1.10. "Closing Deadline" shall mean June 16, 1997.
1.11. "Code" shall mean the Internal Revenue Code of 1986, as
amended, including all tax regulations promulgated thereunder.
1.12. "Conditions Precedent" shall mean, collectively, the PGP-MVT
Conditions Precedent and the Existing Partners Conditions Precedent, each set
forth in Article 7 and Article 8, respectively, of this Agreement.
1.13. "Contracts" shall mean all written or oral management,
architectural, engineering, leasing, insurance, bonding, construction,
financing, guarantee, indemnity, service, maintenance, operating, repair,
collective bargaining, employment, employee benefit, equipment leasing, supply,
warranty, purchase, consulting, professional service, advertising, promotion,
public relations and other contracts and commitments (excluding the Leases) in
any way relating to the Property or any part thereof. The foregoing shall not,
however, include any contract of engagement for the legal services of Sheppard,
Mullin, Xxxxxxx & Xxxxxxx.
1.14. "Conversion Agreement" shall mean the Agreement and Plan of
Conversion required to be executed by PGP-MVT and the Existing Partners under
the DEL. RULPA and the CAL. UPA.
1.15. "Conversion" shall mean the conversion of the California
General Partnership to the Delaware Limited Partnership as contemplated under
this Agreement and the other Transaction Documents referred to herein, and
shall also include the refunding of the Tax Exempt Debt, the execution of the
California General Partnership Amendments, the execution of the LP Agreement
and all other transactions related to the foregoing.
1.16. "Date" shall mean the date which is eighteen (18) months after
the Effective Date.
1.17. "Deferred Maintenance" shall mean all costs identified by
PGP-MVT as costs of deferred maintenance to the California General Partnership
assets.
1.18. "Delaware Certificate of Conversion" shall mean the
Certificate of Conversion required to be filed with the Secretary of State of
the State of Delaware pursuant to Section 17-217 of the DEL. RULPA.
1.19. "Delaware Limited Partnership" means Morning View Terrace -
PGP, L.P., a Delaware limited partnership.
1.20. "DEL. RULPA" shall mean the Delaware Revised Uniform Limited
Partnership
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Act, 6 Del.C. Section 17-101, et seq.
1.21. "Deposits and Reimbursements" shall mean (a) deposits made
with or tendered to utility companies to secure service or to permit the
California General Partnership or their predecessors in interest to tie in to
existing service grids or to cause a utility company to install connections or
extensions necessary to provide service, (b) deposits made by the California
General Partnership or their predecessors in interest with any bonding or
surety company or deposits, bonds or other financial security devices posted
with or for the benefit of any governmental or quasi-governmental agency in
connection with subdivision or public improvement bonds obtained by the
California General Partnership or their predecessors in interest or in
connection with any development agreement, subdivision agreement, parcel map or
tract map, and (c) any refundable fees, payments or reimbursements which the
California General Partnership or its predecessors in interest or the
then-current owner or occupant of the Real Property or Improvements is entitled
to receive from any governmental or quasi-governmental or private body in
respect of the ownership and development of the Land or Improvements or any
public improvements made in connection with the Land or Improvements.
1.22. "Effective Date" shall mean the effective date set forth in
the Delaware Certificate of Conversion filed with the Secretary of State of the
State of Delaware.
1.23. "Environmental Requirements" shall mean all applicable
statutes, regulations, rules, ordinances, codes, licenses, permits, orders,
approvals, plans, authorizations, concessions, franchises and similar items, of
all governmental agencies, departments, commissions, boards, bureaus or
instrumentalities of the United States, states and political subdivisions
thereof and all applicable judicial and administrative and regulatory decrees,
judgments and orders relating to the protection of human health or the
environment, including, without limitation: (i) all requirements, including
but not limited to those pertaining to reporting, licensing, permitting,
investigation and remediation of emissions, discharges, releases or threatened
releases of Hazardous Materials, chemical substances, pollutants, contaminants
or hazardous or toxic substances, materials or wastes whether solid, liquid or
gaseous in nature, into the air, surface water, groundwater or land, or
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal transport or handling of chemical substances, pollutants, contaminants
or hazardous or toxic substances, materials, or wastes, whether solid, liquid
or gaseous in nature; and (ii) all requirements pertaining to the protection of
the health and safety of employees or the public.
1.24. "Exchange Rights Agreement" shall mean that certain Exchange
Rights Agreement, in substantially the form attached hereto as Exhibit B.
1.25. "Existing Contracts" shall mean those Contracts identified on
Exhibit I.
1.26. "Existing Partners" shall mean the existing partners of the
California General Partnership and who will, upon Conversion, become the
limited partners of the Delaware
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Limited Partnership pursuant to the LP Agreement.
1.27. "Existing Partners' Conditions Precedent" shall have the
meaning contained in Article 8.
1.28. "Hazardous Materials" shall mean (i) any flammables, explosive
or radioactive materials, contaminants or hazardous or toxic wastes, materials
or substances or related materials whether solid, liquid or gaseous in nature,
including, without limitation, substances defined as "hazardous substances,"
"hazardous materials," "toxic substances" or "solid waste" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Sec. 9601, et seq.; the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801, et seq.; the Toxic Substances Control Act, 15 U.S.C.,
Section 2601 et seq.; the Resource Conservation and Recovery Act of 1976, 42
U.S.C. Section 6901 et seq.; and in the regulations adopted and publications
promulgated pursuant to said laws; (ii) those substances listed in the United
States Department of Transportation Table (49 C.F.R. 172.101 and amendments
thereto) or by the Environmental Protection Agency (or any successor agency) as
hazardous substances (40 C.F.R. Part 302 and amendments thereto); (iii) those
substances defined as "hazardous wastes," "hazardous substances" or "toxic
substances" in any similar federal, state or local laws or in the regulations
adopted and publications promulgated pursuant to any of the foregoing laws or
which otherwise are regulated by any governmental authority, agency,
department, commission, board or instrumentality of the United States of
America, the State of California or any political subdivision thereof; (iv) any
pollutant or contaminant or hazardous, dangerous or toxic chemicals, materials,
or substances within the meaning of any other applicable federal, state, or
local law, regulation, ordinance, or requirement (including consent decrees and
administrative orders) relating to or imposing liability or standards of
conduct concerning any hazardous, toxic, or dangerous waste, substance or
material all as amended; (v) petroleum or any by-products thereof; (vi) any
radioactive material, including any source, special nuclear or by-product
material as defined at 42 U.S.C. Sections 2011 et seq., as amended, and in the
regulations adopted and publications promulgated pursuant to said law; (vii)
asbestos in any form or condition; and (viii) polychlorinated biphenyls.
1.29. "Improvements" shall mean all improvements, structures or
fixtures constructed upon the Land and/or Appurtenances, including without
limitation, all buildings and structures presently located on the Land and/or
Appurtenances, all apparatus, equipment and appliances presently located on the
Land and/or Appurtenances, and used in connection with the operation or
occupancy thereof, such as heating and air conditioning systems and facilities
used to provide any utility services, parking services, refrigeration,
ventilation, garbage disposal, recreation or other services thereto, and all
landscaping and leasehold improvements of tenants, if any, which become the
property of the lessor upon termination of a Lease.
1.30. "Indemnification Agreement" shall mean that certain
indemnification agreement, dated June 12, 1997, by and among PGP, the Delaware
Limited Partnership, Terrace Gardens - PGP, L.P., and Pacific Inland
Communities, LLC.
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1.31. "Insolvency Laws" shall mean any applicable federal or state
bankruptcy law or other similar law.
1.32. "Intangible Personal Property" shall mean all of the
California General Partnership's right, title, claim, interest and estate in,
to and under any and all (i) intangible personal property owned by the
California General Partnership which relates in any manner to or arises from or
in connection with the Real Property and/or Tangible Personal Property and any
and all other property, rights in or to property, general intangibles and
contractual rights which the California General Partnership may have which are
necessary or useful in connection with, or otherwise affect or relate to, the
acquisition, development, improvement, holding, use, operation, maintenance,
leasing or sale of the Real Property and/or Tangible Personal Property,
including, but not limited to, any and all plans, specifications, subdivision
maps and filings with respect thereto, applications, entitlements, Licenses and
Entitlements, subdivision or other bonds, Deposits and Reimbursements,
engineering or soil reports, environmental and hazardous and toxic waste
reports and studies, surveys, maps, correspondence, inspection reports,
management reports, marketing reports, marketing displays and brochures, all
contract rights, warranties from contractors, architects, engineers and
material and labor suppliers whether written or implied, copies of all books
and records (provided all original Leases and Lease files are included in this
definition), all claims, choses in action, judgments, remedies, damages and
causes of action all easements, licenses and rights-of-way, occupancy or use
agreements and all other documents affecting or relating to the Real Property
and/or Tangible Personal Property; (ii) insurance proceeds received after
Closing on account of a pre-Closing event, but only to the extent of costs or
liabilities not covered by the Existing Partners' indemnity; (iii) any
trademark, service xxxx, trade name or name customarily used or associated with
the Real Property and/or Tangible Personal Property, and (iv) any and all other
warranties, guarantees, permits, entitlements and other intangible rights of
any type or nature.
1.33. "Land" shall mean the parcels of real property described on
the Approved Title Form in Exhibit K attached hereto.
1.34. "Law(s)" shall mean all applicable housing and building codes,
environmental, life safety, laws, rules and regulations including without
limitation, those related to handicapped or disabled (including without
limitation ADA and the Fair Housing Amendments Act of 1988) and land use and
zoning laws and regulations, and other applicable local, state and federal laws
and regulations.
1.35. "Leases" shall mean all leases, occupancy agreements and other
similar agreements, together with all modifications, extensions and renewals
thereof, and any guarantees of any of the foregoing with respect to or demising
any part of the Property, which are described on a Rent Roll.
1.36. "Licenses and Entitlements" shall mean all licenses,
franchises, certifications, authorizations, approvals, rights, privileges,
entitlements and permits issued or approved by any
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governmental or quasi-governmental authority or other person or entity having
authority over the Property, and all applications, filings and submittals
therefor, in each case relating to the operation, ownership, subdivision,
development, use or maintenance of the Property or any part thereof, including,
without limitation, construction permits, grading permits, elevator permits,
machinery permits, business licenses, ingress and egress permits, development
agreements, subdivision, parcel and tract maps and approvals thereof, plans
and/or permits required under the applicable zoning regulations, variances,
utility agreements and commitments, improvement agreements, certificates of
occupancy and the like, but excluding therefrom for all purposes of this
Agreement any licenses issued to or solely on behalf of any Tenant.
1.37. "Losses and Liabilities" shall mean any and all obligations,
liabilities, claims, liens or encumbrances, demands, losses, damages, causes of
action, judgments, costs and expenses (including attorneys' fees), whether
direct, contingent or consequential, and no matter how arising, incurred or
suffered by any indemnified party.
1.38. "LP Agreement" shall mean the Limited Partnership Agreement
among PGP-MVT and the Existing Partners governing the Delaware Limited
Partnership, substantially in the form attached hereto as Exhibit A, with such
additions thereto and changes therein as are approved by the parties executing
the same, with such approval to be conclusively evidenced by the execution and
delivery thereof.
1.39. "Net Value" shall mean $15,000,000 minus the outstanding
principal balance of the Tax Exempt Debt as of the Effective Date.
1.40. "Partnership Units" shall mean the partnership units granted
upon execution of the California General Partnership Amendments.
1.41. "Personal Property" shall mean the Tangible Personal Property
and the Intangible Personal Property.
1.42. "PGP" shall mean Pacific Gulf Properties Inc., a Maryland
corporation.
1.43. "PGP-MVT Capital Contribution" shall mean cash to be
contributed at Closing by PGP-MVT to the California General Partnership in the
amount of up to $250,000 to pay Transaction Expenses; provided, however, that,
following a reconcilliation of all Transaction Expenses following closing,
should the Transaction Expenses exceed $250,000, PGP-MVT may contribute such
additional amounts as necessary to pay such Transaction Expenses and will
receive a capital account credit for such amount.
1.44. "PGP-MVT Conditions Precedent" shall mean the conditions
precedent described in Article 7.
1.45. "PGP-MVT" shall mean PGP Morning View Terrace Holdings Inc., a
Delaware
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corporation which will operate as the general partner of the Delaware Limited
Partnership.
1.46. "PGP Share Price" shall mean, with respect to the common stock
of Pacific Gulf Properties Inc., a Maryland corporation, the average closing
price on the New York Stock Exchange for the ten (10) consecutive trading days
immediately preceding the Effective Date.
1.47. "Property" shall mean the Morning View Terrace Apartments
located in the City of Escondido, County of San Diego, California, including
all Real Property and Personal Property.
1.48. "Property Tax Refunds" shall mean all amounts which the
California General Partnership or the Delaware Limited Partnership is entitled
to receive or receives with respect to property taxes, assessments or community
facility district taxes or assessments paid prior to the Effective Date. The
California General Partnership has assigned all right, title and interest in
the Property Tax Refunds to the Existing Partners.
1.49. "Qualified Project Costs" shall mean costs in connection with
the acquisition, construction and installation of the Property financed by Tax
Exempt Debt, but only to the extent that (i) such costs were paid or incurred
by or on account of the California General Partnership or any related person on
or after the applicable inducement date, the date of the first official action
by the issuer of the Tax Exempt Debt expressing its intent to issue revenue
bonds to assist in financing such Property, (ii) such costs are chargeable to
such Property's capital account or would be so chargeable either with a proper
election by the California General Partnership or but for a proper election by
the California General Partnership to deduct such costs, within the meaning of
old Treasury Regulation 1.103-8(a)(1); (iii) if any portion of the Property was
constructed by a related person of the California General Partnership (whether
as a general contractor or a subcontractor), such costs include only the actual
out-of-pocket costs incurred by such related person in constructing the
Property (or any portion thereof) and not, for example, intercompany profits
resulting from members of an affiliated group (within the meaning of Section
1504 of the Code) participating in the construction of the Property or payments
received by such related person due to early completion of the Property (or any
portion thereof); (iv) such costs do not constitute leasing commissions, costs
of advertising for the Property or other cost related to the rental of units in
the Property or management fees for the management and operation of the
Property after the completion date of such Property; and (v) such costs are
used to finance residential rental property described in Section 103(b)(4)(A)
of the Code and Section 1.103-8(b) of the Treasury Regulations.
1.50. "Real Property" shall mean the Land, Improvements and
Appurtenances.
1.51. "Rent Roll" shall mean the current gross rent roll of the
Property, listing for each tenant the (a) name, (b) location of leased
premises, (c) rent, (d) obligation for reimbursement of expenses, (e) amount of
security deposit and rent paid more than thirty (30) days in advance, (f) lease
commencement date, (g) lease termination date, (h) any free rent, or other
unexpired
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concessions, if any, and (i) a description of any uncured defaults, certified
by the California General Partnership as true, complete and correct, and
delivered to PGP-MVT under certificate of authenticity and accuracy by the
California General Partnership concurrently with the execution and delivery
hereof, a copy of which is set forth as Exhibit J. The omission of any item
listed in (a)-(j), inclusive, from the Rent Roll (as certified by the
California General Partnership) shall be deemed to be intentional and shall
constitute a representation that the omitted items are not in existence or are
otherwise inapplicable.
1.52. "Tangible Personal Property" shall mean and include any and
all tangible personal property owned by the California General Partnership
located at, upon or about, or affixed or attached to, or installed in the Real
Property, or used or to be used in connection with or incorporated into or
otherwise relating to the Real Property or its ownership, use, development,
construction, maintenance, management, operation, marketing, leasing,
occupancy, sale or financing, including, but not limited to, fixtures,
furniture, furnishings, tools, machinery, appliances and other apparatus and
equipment, supplies and other inventories, office equipment, communications
equipment, vehicles, storage tanks, spare and replacement parts, fuel plans,
specifications, operational handbooks, machinery and/or equipment operational
instructions and/or specifications, surveys, drawings, and records, files and
papers, whether in hard copy or computer format, including, without limitation,
structural and engineering information, sales and promotional literature,
manuals and data, sales and purchase correspondence, lists of present and
former suppliers, lists of present and former lessees and clients, personnel
and employment records, and any information relating to taxes imposed on the
Real Property.
1.53. "Tax Exempt Debt" shall mean the existing tax exempt financing
encumbering the Property which is to be refunded as a part of the Conversion.
1.54. "Tax Exempt Debt Instruments" shall mean the Tax Exempt Debt
and the agreements and other instruments described on Exhibit C entered into or
evidencing the Tax Exempt Debt.
1.55. "Tax Exempt Debt Refunding Instruments" shall mean the Tax
Exempt Refunding Debt and the agreements and other instruments to be entered
into or otherwise evidencing the Tax Exempt Refunding Debt.
1.56. "Tax Exempt Debt Reserves" shall mean all amounts deposited
with the City of Escondido or Bank of America as a reserve in connection with
the Tax Exempt Debt. The California General Partnership has assigned all right,
title and interest in the Tax Exempt Debt Reserves to the Existing Partners.
1.57. "Tax Exempt Refunding Debt" shall mean the tax exempt
financing which will refund the Tax Exempt Debt and will thereafter encumber
the Property.
1.58. "Tenant" shall mean each lessee or tenant occupying any
portion of the Property.
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1.59. "Term Sheet" shall mean that certain Term Sheet for the
Morning View Terrace Transaction, effective as of April 4, 1997, and executed
by PGP and all Existing Partners.
1.60. "Transaction Documents" shall mean this Agreement, the
Conversion Agreement, the California General Partnership Amendments, the LP
Agreement, the Exchange Rights Agreement, the Tax Exempt Debt Refunding
Instruments and any other document or agreement contemplated by the foregoing.
1.61. "Transaction Expenses" shall mean an amount of cash equal to
the sum of: (i) all fees, costs and expenses incurred in connection with the
negotiation, drafting and completion of the Transaction Documents; (ii) all
fees, costs and expenses incurred in connection with all agreements, documents
and other instruments relating to the admission of PGP-MVT to the California
General Partnership; (iii) all fees, costs and expenses of an audited financial
statement and operating statement for the California General Partnership for
the year 1996 as prepared by Ernst & Young and necessary, in the judgment of
PGP or PGP-MVT, to satisfy all applicable reporting requirements under Federal
securities laws; (iv) all costs of refinancing the outstanding principal
balance of the Tax Exempt Debt with debt that is credit-enhanced by the Federal
National Mortgage Association; and (v) all due diligence expenses, including
out of pocket expenses, of PGP or PGP-MVT for inspection of the California
General Partnership's assets.
ARTICLE 2
AGREEMENTS REGARDING CONVERSION
SECTION 2.1. THE CALIFORNIA GENERAL PARTNERSHIP AMENDMENTS. Subject
to and upon the terms and conditions of this Agreement, at the Closing the
Existing Partners and PGP-MVT do hereby agree to execute and deliver the
California General Partnership Amendments.
SECTION 2.2. THE CONVERSION.
(a) At Closing, after satisfaction or, to the extent permitted
hereunder, waiver by PGP-MVT and the Existing Partners of the Conditions
Precedent and all conditions of the Conversion set forth in the Transaction
Documents, the California General Partnership shall file the following:
1. The Certificate of Limited Partnership with the
Secretary of State of the State of Delaware;
2. The Delaware Certificate of Conversion with the
Secretary of State of the State of Delaware;
3. Registration of Foreign Limited Partnership with the
Secretary of State of the State of California;
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4. The Amended and Restated Statement of Partnership
with the County Recorder of the County of San Diego;
and
5. All other filings or recordings required by either
California law or Delaware law in connection with the
Conversion.
(b) The Conversion shall become effective on the Effective Date.
(c) At the Effective Date, the California General Partnership
shall be converted to the Delaware Limited Partnership in accordance with
Section 17-217 of the DEL. RULPA and Article 9 of the CAL. UPA.
(d) The name of the Delaware Limited Partnership shall be "Morning
View Terrace - PGP, L.P."
(e) The Conversion Agreement shall be made available to PGP-MVT
and any Existing Partner upon request.
(f) An executed copy of the Conversion Agreement shall be kept
permanently at the principal office of the Delaware Limited Partnership.
SECTION 2.3. CONTRIBUTION OF CAPITAL.
(a) At the Closing, PGP shall cause, and PGP-MVT shall contribute,
the PGP-MVT Capital Contribution to the California General Partnership.
SECTION 2.4. CONTINUATION OF INTERESTS.
(a) Upon execution of the California General Partnership
Amendments, the Existing Partners shall own Partnership Units. The number of
Partnership Units owned by Existing Partners shall be equal to the Net Value of
the California General Partnership divided by the PGP Share Price. The total
Partnership Units owned by the Existing Partners shall be allocated among the
individual Existing Partners as set forth in Exhibit N attached hereto. The
"ownership interest" of the individual Existing Partners shall be determined by
dividing the number of Partnership Units owned by such Existing Partner by the
total number of Partnership Units owned by all Existing Partners from time to
time.
(b) At the Date, any Added Net Value shall be ascertained, and if
Added Net Value exists, the Existing Partners shall be deemed to own, pro rata
in accordance with their initial Partnership Units, that additional number of
Partnership Units computed by dividing the Added Net Value by the PGP Share
Price (determined using the Date in lieu of the Effective Date). For any
Existing Partner which exchanges its Partnership Units for cash or PGP common
stock (in PGP's discretion) prior to the Date, (i) the Existing Partner shall
be credited with the number
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of additional Partnership Units that said Existing Partner would have received
had it retained its Partnership Units and (ii) PGP shall remit to said Existing
Partner cash, Partnership Units or PGP common stock (in its sole and absolute
discretion) as if such additional Partnership Units were exchanged pursuant to
the Exchange Rights Agreement on the Date.
(c) In conjunction with the refunding of the Tax Exempt Debt, if
the City of Escondido requires (i) any restrictions on the Property which are
in addition to the restrictions that currently encumber the Property or (ii) a
maturity date for the Tax Exempt Refunding Debt of sooner than the year 2027,
and either of which adversely affects the annual projected gross revenues from
the Property, the Net Value shall be readjusted by subtracting the annual
difference in gross revenue over the life of the Tax Exempt Refunding Debt
divided by .083. The Existing Partners' Partnership Units shall then be
adjusted correspondingly.
(d) The interests of PGP-MVT and the Existing Partners in the
Delaware Limited Partnership shall be equivalent to the interests of PGP-MVT
and the Existing Partners in the California General Partnership prior to the
Conversion but after execution of the California General Partnership
Amendments.
(e) At the Effective Date, distributions from the Delaware Limited
Partnership shall be governed by the provisions set forth in the LP Agreement.
(f) At the Effective Date, allocations of profit and loss shall be
governed by the provisions set forth in the LP Agreement.
SECTION 2.5. EXCHANGE OF PARTNERSHIP INTERESTS. As provided in and
subject to the Exchange Rights Agreement, the Existing Partners of the Delaware
Limited Partnership shall have the right, exercisable in their discretion, to
sell their Partnership Units to PGP for common stock of PGP or cash, at PGP's
election. The Exchange Rights Agreement shall be substantially in the form
attached hereto as Exhibit B, with such additions thereto and changes therein
as are approved by the parties executing the same, with such approval to be
conclusively evidenced by the execution and delivery of the Exchange Rights
Agreement. Notwithstanding any provision herein to the contrary, if the
Property is sold, all Partnership Units held by the Existing Partners shall be
mandatorily converted to the common stock of PGP and shall be automatically
deemed tendered for acquisition by PGP pursuant to Section 4 of the Exchange
Rights Agreement; provided, however, that the immediately preceding sentence
shall not apply in the event the Property is sold for less than its Carrying
Value (as that term is defined in the LP Agreement) or is otherwise sold for a
loss for either book or tax purposes.
SECTION 2.6. SAME ENTITY. Pursuant to the CAL. UPA and for all
purposes, upon Conversion the Delaware Limited Partnership shall be the same
entity that existed before Conversion.
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SECTION 2.7. RIGHTS UPON CONVERSION. At the Effective Date, for all
purposes of the laws of the State of Delaware and the State of California, all
of the rights, privileges and powers of the California General Partnership, and
all of the Property, real and personal and mixed, and all debts due to such
California General Partnership, as well as all other things and causes of
action belonging to the California General Partnership, shall be vested in the
Delaware Limited Partnership and shall thereafter be the Property of the
Delaware Limited Partnership, and the title to any Property vested by deed or
otherwise in the California General Partnership shall not revert or be in any
way impaired by reason of the DEL. RULPA; but all rights of creditors and all
liens upon any Property of the California General Partnership shall be
preserved unimpaired, and all debts, liabilities and duties of the California
General Partnership shall thenceforth attach to the Delaware Limited
Partnership, and may be enforced against it to the same extent as if said
debts, liabilities and duties had been incurred or contracted by it.
SECTION 2.8. PRORATIONS.
(a) Nature and Purpose of Prorations. Even though the California
General Partnership and the Delaware Limited Partnership are the same entity
and the transaction provided herein does not involve the transfer of assets,
the parties have agreed to certain prorations as if assets were being
transferred in order to reflect the economic agreement of the parties. The
prorations shall be between the Existing Partners and the Delaware Limited
Partnership. For the purpose of determining the net proration credit and
debit, the Existing Partners shall be credited with all cash of the California
General Partnership at the Closing. As between the Existing Partners and the
Delaware Limited Partnership, the Delaware Limited Partnership shall be deemed
to be the owner of the assets of the Delaware Limited Partnership on the date
of the Closing. The sum of the amounts prorated to the Delaware Limited
Partnership shall be subtracted from the sum of the amounts prorated to the
Existing Partners, and the difference (if positive) shall be referred to herein
as the "Net Credit to the Existing Partners." The sum of the amounts prorated
to the Existing Partners shall be subtracted from the sum of the amounts
prorated to the Delaware Limited Partnership, and the difference (if positive)
shall be referred to herein as the "Net Credit to the Delaware Limited
Partnership." The California General Partnership has distributed to the
Existing Partners all right, title and interest in and to such Net Credit to
the Existing Partners, and if the prorations result in a Net Credit to the
Existing Partners, the Delaware Limited Partnership shall pay in cash an amount
equal to the Net Credit to the Existing Partners on the Closing. If the
Delaware Limited Partnership does not have sufficient cash to make such a
payment, the Delaware Limited Partnership shall, as soon as possible after the
Closing, pay the deficiency to the Existing Partners. If the prorations result
in a Net Credit to the Delaware Limited Partnership, the Existing Partners
shall contribute cash to the California General Partnership on the Closing in
the amount thereof.
(b) Items to Prorate. All real estate taxes and assessments
levied against the Real Property, all personal property taxes levied with
respect to the Tangible Personal Property, if
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any, rents and other payments then due and payable under any of the Tenant
Leases and all other income from or charges against any of the Property
(including, without limitation, all operating expenses) shall be prorated as of
the Closing in accordance with the principles contained in paragraph (c) below.
(c) Principles of Proration. The prorations shall be made in
accordance with the following principles:
1. The term "Current Month Rents" means Rents which are
payable under the Leases in the month ("Current Month") in which the Closing
occurs. Current Month Rents which have actually been received by the
California General Partnership shall be prorated as of the Closing. All Rents
due prior to the Current Month and unpaid, and the Existing Partners' pro rata
share of any unpaid Rents for the Current Month (collectively "Existing Partner
Rents") shall be the property of the Existing Partners and shall be collected
as provided in paragraph (e) below.
2. As used herein, "Security Deposits" shall means the
amount of all money or other things of value (including without limitation,
certificates of deposit, letters of credit or the like), whether designated as
security deposits, prepaid rents or by some other name, given by tenants under
the Leases and which are conditionally repayable to such tenants or applicable
to future rent obligations under the terms of the Leases. Security Deposits
shall be credited to the Delaware Limited Partnership. The Delaware Limited
Partnership shall assume the Security Deposits to the extent of such credit.
3. Current Month Rents and other payments under the
Leases shall be prorated based only on the current ascertainable amounts of
such rents.
4. Current Month Rents and other payments received that
are due under the Leases for that portion of the Current Month or any other
month which is on or after the date of the Closing shall be credited to the
Delaware Limited Partnership.
5. Any other prorated items shall similarly be prorated
based only on currently ascertainable amounts of such payments and items.
6. If possible, utility charges shall be prorated based
on meter readings taken on the date of the Closing, but if that does not occur,
utility charges will be prorated based on the assumption that utility charges
were uniformly incurred during the billing period.
7. All unpaid expenses associated with services
provided, or goods delivered and consumed, to the California General
Partnership prior to the Closing shall be allocated to the Existing Partners.
8. All costs associated with termite eradication which
shall be credited as an
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expense to the California General Partnership.
(d) Post-Closing Proration Adjustments. As soon after the Closing
as all of the relevant information is available, the Delaware Limited
Partnership and the Existing Partners shall adjust the prorations made on the
date of the Closing to prorate as of date of the Closing any items of proration
as set forth in paragraph (b) above (including subsequent or supplementary real
estate tax bills) if such items of proration relate to events occurring prior
to the date of the Closing.
(e) Post-Closing Collection of Existing Partner Rents. The
Existing Partners hereby appoint the Delaware Limited Partnership as their
agent to collect the Existing Partners' prorated portion of the Rents. The
Delaware Limited Partnership shall not be obligated to pursue any legal remedy
or incur any costs in order to collect the Existing Partners' prorated portion
of the Rents other than the issuance of normal tenant xxxxxxxx. All rents
collected by the Delaware Limited Partnership shall be applied first against
amounts due the Delaware Limited Partnership and then to the Existing Partners'
prorated portion of the Rents. Within twenty (20) days after the end of each
calendar month starting with the month in which the Closing occurs (i) the
Delaware Limited Partnership shall submit to the Existing Partners a statement
showing the amount of the Existing Partners' pro rata portion of the Rents, if
any, collected by the Delaware Limited Partnership during such month, and (ii)
the Delaware Limited Partnership shall remit to Existing Partners all of the
Existing Partners' pro rata portion of the Rents collected by the Delaware
Limited Partnership during such month.
(f) Property Tax Refunds. Property Tax Refunds have been assigned
by the California General Partnership to the Existing Partners. In the event
that the Delaware Limited Partnership should receive any Property Tax Refunds,
it shall promptly, and in no event later than ten (10) days after receipt
thereof, remit the same to the Existing Partners.
(g) Tax Exempt Debt Reserves. Tax Exempt Debt Reserves have been
assigned by the California General Partnership to the Existing Partners. In the
event that the Delaware Limited Partnership should receive any Tax Exempt Debt
Reserves, it shall promptly, and in no event later than ten (10) days after
receipt thereof, remit the same to the Existing Partners.
(h) Remittance to Existing Partners. For all purposes of this
Section 2.8, the obligation of the Delaware Limited Partnership to remit any
funds or submit any reports or statements to the Existing Partners shall be
satisfied by the remittance of funds or the submission of reports or statements
to the person identified in Section 12.3 herein. The Delaware Limited
Partnership shall not be required to distribute funds, reports or statements to
any Existing Partner other than the person identified in Section 12.3 herein.
The Existing Partners acknowledge and agree that (i) the person identified in
Section 12.3 herein shall be solely responsible for distributing all funds,
reports or statements to individual Existing Partners and (ii) the Existing
Partners are responsible for notifying, in writing, the Delaware Limited
Partnership of any change in the identity of the person identified in Section
12.3.
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(i) Fees and Costs. Any fees, costs, or expenses associated with
the withdrawal, return or collection of the Property Tax Refunds and the Tax
Exempt Debt Reserves, including, without limitation, any investment breakage
fees or early withdrawal penalties, shall be borne solely by the Existing
Partners.
SECTION 2.9. CONVERSION NOT A DISSOLUTION. Pursuant to Section
17-217 of the DEL. RULPA and Section 16909 of the CAL. UPA, the Conversion of
the California General Partnership to the Delaware Limited Partnership shall
not constitute a dissolution of the California General Partnership, and the
California General Partnership shall not be required to wind up its affairs or
pay its liabilities and distribute its assets.
SECTION 2.10. MANAGEMENT AND FEES.
(a) PGP shall provide property and entity level management and
services for the Delaware Limited Partnership in accordance with the management
agreement, the form of which is attached hereto as Exhibit M. The management
agreement shall be substantially in the form attached hereto as Exhibit M, with
such additions thereto and changes therein as are approved by the parties
executing the same, with such approval to be conclusively evidenced by the
execution and delivery of the management agreement.
(b) In exercising its management duties, PGP shall not retain the
existing employees and management agents of the California General Partnership
for the Property. Unless PGP-MVT or PGP provides the Existing Partners with
written notice to the contrary, the California General Partnership shall (i)
cause all employment and management agreements respecting the Property to be
terminated effective as of the date of the Closing (but not before), and
deliver evidence of such termination to PGP-MVT, and (ii) remove all employees
and management personnel from the Property on the date of the Closing (but not
before).
SECTION 2.11. THE LP AGREEMENT. At the Closing, the partnership
agreement of the California General Partnership shall be amended and restated
in its entirety by the execution of the LP Agreement. The LP Agreement shall be
the limited partnership agreement of the Delaware Limited Partnership unless
and until further amended in accordance with its terms and applicable law. The
LP Agreement shall be substantially in the form attached hereto as Exhibit A.
At the Closing, the LP Agreement shall be executed by PGP-MVT and all Existing
Partners.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PGP-MVT AND PGP
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF PGP-MVT AND PGP.
PGP-MVT and PGP hereby make the representations, warranties, and covenants, as
applicable, set forth in this Article 3.
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SECTION 3.2. ORGANIZATION, POWER AND AUTHORITY, AND QUALIFICATION.
PGP-MVT is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has the requisite power and
authority to carry on its business as it is now being conducted. PGP is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Maryland, and has the requisite power and authority to
carry on its business as it is now being conducted.
SECTION 3.3. AUTHORITY RELATIVE TO THIS AGREEMENT. PGP-MVT and PGP
have taken all actions necessary to authorize the execution, delivery and
performance by PGP-MVT and PGP of this Agreement, and no other actions on the
part of PGP-MVT or PGP are necessary in this regard.
SECTION 3.4. BINDING OBLIGATION. This Agreement has been duly and
validly executed and delivered by PGP-MVT and constitutes a valid and binding
agreement of PGP-MVT enforceable against PGP-MVT in accordance with its terms.
This Agreement has been duly and validly executed and delivered by PGP and
constitutes a valid and binding agreement of PGP enforceable against PGP in
accordance with its terms.
SECTION 3.5. NO VIOLATION. The execution and delivery by PGP-MVT and
PGP of this Agreement and the consummation of the Conversion will not result in
or constitute any of the following: (i) a default, breach, or violation, or an
event that, with notice or lapse of time or both, would be a default, breach,
or violation, of the corporate organizational documents of PGP-MVT or PGP or
any promissory note, conditional sales contract, commitment, indenture,
mortgage, deed of trust, or other agreement, instrument or arrangement to which
PGP-MVT or PGP is a party; (ii) an event that would permit any party to
accelerate the maturity of any indebtedness or other obligation of PGP-MVT or
PGP; or (iii) a violation or conflict with any term or provision of any
judgment, decree, order, statute, injunction, rule or regulation of a
governmental unit applicable to PGP-MVT or PGP.
SECTION 3.6. BANKRUPTCY. There are no attachments, executions or
assignments for the benefit of creditors, or voluntary or involuntary
proceedings in bankruptcy, or under any other debtor relief laws, contemplated
by or pending or threatened against PGP-MVT or PGP. Without limiting the
generality of the foregoing, none of the following have been done by, against
or with respect to PGP-MVT or PGP: (A) the commencement of a case under Title
11 of the U.S. Code, as now constituted or hereafter amended, or under any
other applicable federal or state bankruptcy law or other similar law; (B) the
appointment of a trustee or receiver of any property interest; (C) an
assignment for the benefit of creditors; (D) an attachment, execution or other
judicial seizure of a substantial property interest; (E) the taking of, failure
to take, or submission to, any action indicating an inability to meet its
financial obligations as they accrue; or (F) a dissolution or liquidation.
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SECTION 3.7. DISCLOSURE. No representation or warranty of PGP-MVT or
PGP in this Agreement, or any information, statement or certificate furnished
or to be furnished by or on behalf of PGP-MVT or PGP pursuant to this Agreement
or any Transaction Documents to which it is a party or in connection with the
Conversion contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained therein not
misleading. All documents delivered by PGP-MVT or PGP to the Existing
Partners, or made available to the Existing Partners for review in connection
with this Agreement and the Conversion, were at the time delivered or made
available, and will be at the time of Closing, true, correct and complete
copies of all such documents in PGP-MVT's or PGP's possession or control.
SECTION 3.8. REPORTS. PGP-MVT and PGP have filed all reports, if
any, required by the Securities Exchange Act of 1934, if any, and the
information contained therein is materially true and correct as of the date of
each such filing. There have been no material adverse developments in the
business and operations of PGP-MVT or PGP since the last of such reports so
filed, if any.
SECTION 3.9. BROKERS. Neither PGP-MVT nor PGP have employed any
broker or finder, or incurred any liability therefor, in connection with the
Conversion.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE EXISTING PARTNERS
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF THE EXISTING PARTNERS.
The Existing Partners hereby make the representations, warranties, and
covenants, as applicable, set forth in this Article 4.
SECTION 4.2. ORGANIZATION, POWER AND AUTHORITY, AND QUALIFICATION.
The California General Partnership is duly organized, validly existing, and in
good standing under the laws of the State of California, and has the power to
own all of the Property and assets and to carry on its business as heretofore
conducted.
SECTION 4.3. AUTHORITY RELATIVE TO THIS AGREEMENT. The California
General Partnership and each Existing Partner have taken all action necessary
to authorize the execution, delivery and performance of this Agreement, and no
other proceedings, consents or approvals on the part of the Existing Partners
are needed to authorize the execution and delivery of this Agreement. Further,
the California General Partnership and each Existing Partner will take all
action necessary to authorize the execution, delivery and performance of the
Transaction Documents to which they are a party and the consummation by the
Existing Partners of the Conversion contemplated hereunder. The parties
executing this Agreement have obtained all consents for such execution and have
been duly authorized to so execute.
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SECTION 4.4. CONSENTS AND APPROVALS. The Existing Partners have
obtained all consents and approvals of third parties necessary for the
consummation of the Conversion and the execution and delivery of this Agreement
and the Transaction Documents to which they are a party.
SECTION 4.5. BINDING OBLIGATION. This Agreement has been duly and
validly executed and delivered by the California General Partnership and the
Existing Partners and constitutes a valid and binding agreement of the
California General Partnership and the Existing Partners enforceable against
the California General Partnership and the Existing Partners in accordance with
its terms.
SECTION 4.6. NO VIOLATION. The execution and delivery by the
California General Partnership and the Existing Partners of this Agreement and
the consummation of the Conversion will not result in or constitute any of the
following: (i) a default, breach, or violation, or an event that, with notice
or lapse of time or both, would be a default, breach, or violation, of any
Contract or any Lease, License or Entitlement, promissory note, conditional
sales contract, commitment, indenture, mortgage, deed of trust, or other
agreement (including partnership agreements), instrument or arrangement to
which the California General Partnership is a party or by which it or the
Property is bound; (ii) an event that would permit any party to terminate any
contract or to accelerate the maturity of any indebtedness or other obligation
of the California General Partnership; (iii) a violation or conflict with any
term or provision of any judgment, decree, order, statute, injunction, rule or
regulation of a governmental unit applicable to the California General
Partnership or the Property; or (iv) the creation or imposition of any lien,
charge or encumbrance on the Property.
SECTION 4.7. ADEQUATE DISCLOSURE. The California General Partnership
and all Existing Partners have been provided with, reviewed, and consented to
this Agreement. All Existing Partners have reviewed all of the facts and
circumstances of this transaction, and on that basis have executed this
Agreement.
SECTION 4.8. ABSENCE OF UNDISCLOSED LIABILITIES. Except for the Tax
Exempt Debt, obligations under any Contracts and Leases, if any, and
liabilities arising in the ordinary course of business, the California General
Partnership has no material liabilities of any nature, whether matured or
unmatured, fixed or contingent, regardless of whether the disclosure thereof
would otherwise be required by generally accepted accounting principles, which
liabilities could or would remain with the Property or be binding on the
Delaware Limited Partnership upon Conversion or which would have an adverse
effect upon the Delaware Limited Partnership or the Property.
SECTION 4.9. COMPLIANCE WITH LAWS. The use and operation of the
Property now is, and at the time of Closing will be, in compliance with all
Laws which are material to the ownership and operation of the Property. There
are no facts which would prevent the Delaware Limited Partnership from using
and operating the Property after Closing in the manner in which
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it is intended to be operated.
SECTION 4.10. RENT CONTROL. Except for certain regulatory
restrictions pertaining to the Tax Exempt Debt, the Property is not subject to
any applicable rent control ordinance or law and, to the knowledge of the
Existing Partners, no such ordinance or law is pending or threatened by any
governmental authority, agency or quasi-governmental entity with jurisdiction
over the Property.
SECTION 4.11. LICENSES, PERMITS, CERTIFICATES OF OCCUPANCY, ZONING,
ETC. All Licenses and Entitlements required in connection with the
construction, use, or occupancy of the Property have been obtained and are in
full force and effect and in good standing. Neither the California General
Partnership nor the Existing Partners have taken any action or failed to take
any action that would result in the revocation of such Licenses and
Entitlements nor have they received written notice that any governmental entity
has revoked or intends to revoke any of them due to a violation that has not
been cured or otherwise resolved to the complete satisfaction of such
governmental entity. The California General Partnership has obtained all
necessary easements and approvals to insure vehicular and pedestrian ingress to
and egress from the Property. The California General Partnership and Property
are in compliance with the terms and provisions of all of the covenants,
conditions, restrictions, rights-of-way or easements affecting the Property
which are material to the ownership and operation of the Property.
SECTION 4.12. ENVIRONMENTAL MATTERS. (i) Neither the California
General Partnership nor, to the knowledge of the Existing Partners, any
previous owner, tenant, occupant, user of the Property, or any other person,
has engaged in or permitted any operations or activities upon, or any use or
occupancy of the Property, or any portion thereof, for the purpose of or in any
way involving the handling, manufacture, treatment, storage, use, generation,
release, discharge, refining, dumping or disposal of any Hazardous Materials
(whether legal or illegal, accidental or intentional) on, under, in or about
the Property, or transported any Hazardous Materials to, from or across the
Property, except in all cases in compliance with Environmental Requirements;
and (ii) to the knowledge of the Existing Partners, no Hazardous Materials are
presently constructed, deposited, stored, or otherwise located on, under, in or
about the Property, except in all cases in compliance with Environmental
Requirements. To the knowledge of the Existing Partners, no real estate within
2,000 feet of the Property is in material violation of Environmental
Requirements.
SECTION 4.13. TAXES AND ASSESSMENTS. Neither the California General
Partnership nor the Existing Partners have received notice of and do not have
any knowledge of (i) any proposed increase in the assessed valuation of the
Property, or (ii) any existing or proposed assessment that has or may become a
lien on the Property.
SECTION 4.14. PHYSICAL CONDITION. To the knowledge of the Existing
Partners, there are no structural defects or deficiencies in the Improvements
which individually or in the aggregate would have a material adverse effect on
the California General Partnership or on the
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value of the Property. To the knowledge of the Existing Partners, the
Improvements and Tangible Personal Property (including, without limitation,
plumbing equipment, HVAC, electric wiring and fixtures, gas distribution
system, and water and sewage systems presently on or in the Property) are in
good working order and condition and are sufficient to serve the needs of the
Property. To the knowledge of the Existing Partners, all water, sewer, gas,
electric, telephone, and drainage facilities and all other utilities required
by law or by the normal use and operation of the Property, including, without
limitation, cable television service, and waste water treatment facilities
permanently dedicated to and reserved for the Property, are and at the time of
Closing will be installed to the property lines of the Land, are and at the
time of Closing will be connected pursuant to valid unconditional permits, and
are and at the time of Closing will be adequate to service the Property and to
permit compliance with all Laws.
SECTION 4.15. LEASES. The Rent Roll for the Property is true,
complete and accurate. Except for the Leases and the Tax Exempt Debt
Instruments, there are no other leases, licenses or other agreements affecting
the occupancy of the Property which would become an obligation of the Delaware
Limited Partnership after the Closing. There is no default by the California
General Partnership under any Lease.
SECTION 4.16. NO LITIGATION OR ADVERSE EVENTS. There are no
investigations, actions, suits, proceedings or claims pending or, to the
knowledge of the Existing Partners, threatened against or affecting the
California General Partnership or the Property, at law or in equity or before
or by any federal, state, municipal or other governmental department,
commission, board, agency, or instrumentality, domestic or foreign. Neither
the California General Partnership nor the Existing Partners have received
notice of any, and to the knowledge of the Existing Partners are not subject to
any, order, writ, injunction or decree of any court or federal, state,
municipal or other governmental agency or department, commission, board, agency
or instrumentality.
SECTION 4.17. CONTRACTS AND AGREEMENTS. On the Effective Date, there
will be no outstanding written or oral Contracts made by the California General
Partnership in connection with the Property which in any way binds or affects
the Property or the Delaware Limited Partnership other than the Existing
Contracts and Leases. There are no Contracts for any improvements to the
Property which have not been fully paid for, and the California General
Partnership shall cause to be discharged all mechanics' and materialmen's
liens, if any, arising from any labor or materials furnished to the Property
prior to the Effective Date. With respect to each Existing Contract: (i) it
has been duly and validly executed and delivered by the California General
Partnership; (ii) it is in full force and effect; (iii) the copy of the
Existing Contract delivered by the California General Partnership to PGP-MVT is
true and accurate and is unmodified; and (iv) the California General
Partnership is not in default under any Existing Contract and no event exists
which, with the passage of time or the giving of notice or both, would become a
default thereunder on the part of the California General Partnership, and (v)
to the knowledge of the Existing Partners, no other party to any Existing
Contract is in default under the Existing Contract and nor has any event
occurred which, with the passage of time or
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the giving of notice or both, would become a default thereunder.
SECTION 4.18. NO OTHER AGREEMENTS. To the knowledge of the Existing
Partners, there are no obligations in connection with the Property which will
be binding upon the Delaware Limited Partnership or affect the Property after
Closing and there are no assessments or bonds assessed or proposed to be
assessed, against the Property, except: (i) matters which are set forth in the
Approved Title Form; (ii) Existing Contracts; (iii) the Leases; and (iv) the
Tax Exempt Debt Refunding Instruments. To the knowledge of the Existing
Partners there are no existing or proposed easements, covenants, restrictions,
agreements or other documents which affect title to the Property and which are
not disclosed by the Approved Title Form or described in the Tax Exempt Debt
Refunding Instruments.
SECTION 4.19. NON-FOREIGN PERSON. No Existing Partner is a "foreign
person" as such term is defined in Section 1445(f) of the Internal Revenue Code
of 1986, as amended, the California General Partnership is not subject to
withholding under Section 26131 of the California Revenue and Taxation Code,
and each Existing Partner is a resident of California.
SECTION 4.20. EMPLOYEES. No employee of the California General
Partnership in connection with the Property is covered by a collective
bargaining agreement and there are no retroactive increases or other accrued
and unpaid sums owed to any such employee. There is no labor trouble, dispute,
grievance, controversy or strike pending or, to the knowledge of the Existing
Partners, threatened against the California General Partnership and the
Existing Partners do not know of any basis for any such trouble, dispute,
grievance, controversy or strike.
SECTION 4.21. BROKERS. Neither the California General Partnership
nor the Existing Partners have employed any broker or finder, or incurred any
liability therefor, in connection with the Conversion.
SECTION 4.22. OPERATING STATEMENTS. All operating statements and
other financial statements filed with any state or federal authority and
provided by the Existing Partners to PGP-MVT fully reflect the matters stated
therein, including operation of the Property for the periods covered and, in
all material respects, accurately reflect all rents and other gross receipts,
and all amounts paid by the California General Partnership for electricity,
water, sewer, other utility services, insurance, fuel, maintenance and repairs
(whether capitalized or expensed), real estate taxes, payroll and payroll taxes
and all other operating and other expenses associated with the Property. Since
the end of the latest period covered by such financial statements, there have
been no transactions or occurrences materially affecting the operating expenses
(or items thereof) associated with the Property. The foregoing does not
constitute a representation and warranty as to future income or expenses of the
Property.
SECTION 4.23. EXISTING DEBT. The only tax exempt debt encumbering
the Property is the Tax Exempt Debt. All Tax Exempt Debt Instruments are
reflected on Exhibit C. All of the information contained on the foregoing
Exhibit is true, accurate, and complete in all material
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respects.
SECTION 4.24. SECURITY DEPOSITS. All Tenant security deposits are
reflected on the Rent Roll. There are no other deposits held by the California
General Partnership, nor any of the Existing Partners, in connection with the
Property.
SECTION 4.25. DEPOSITS AND REIMBURSEMENTS. Except for the Property
Tax Refunds and the Tax Exempt Debt Reserves, all Deposits and Reimbursements
are the property of the California General Partnership and shall, by operation
of law, become the property of the Delaware Limited Partnership, and the
Existing Partners shall not be entitled to any such Deposits and
Reimbursements. The California General Partnership has assigned all right,
title and interest in the Property Tax Refunds and the Tax Exempt Debt Reserves
to the Existing Partners and the same are not now the property of the
California General Partnership and will not become the property of the Delaware
Limited Partnership.
SECTION 4.26. BANKRUPTCY. There are no attachments, executions or
assignments for the benefit of creditors, or voluntary or involuntary
proceedings in bankruptcy, or under any other debtor relief laws, contemplated
by or pending or threatened against the California General Partnership or any
Existing Partner. Without limiting the generality of the foregoing, none of
the following have been done by, against or with respect to the California
General Partnership or any Existing Partner or as concerns any right, claim or
interest of such California General Partnership or Existing Partner in or to
any assets or property of the California General Partnership as concerns any
right, claim or interest of such affiliate in or to any assets or property of
the California General Partnership: (A) the commencement of a case under the
Bankruptcy Code or any Insolvency Laws; (B) the appointment of a custodian,
agent, trustee or receiver of any property interest; (C) an assignment for the
benefit of creditors; (D) an attachment, execution or other judicial seizure of
a substantial property interest; (E) the taking of, failure to take, or
submission to, any action indicating an inability to meet its financial
obligations as they accrue; (F) a dissolution or liquidation; or (G) any
property transferred, concealed, or removed with intent to hinder, delay, or
defraud creditors.
SECTION 4.27. DISCLOSURE. No representation or warranty of the
Existing Partners in this Agreement, or any information, statement or
certificate furnished or to be furnished by or on behalf of the Existing
Partners pursuant to this Agreement or in connection with the Conversion
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained therein not misleading. All
documents delivered by the Existing Partners to PGP-MVT or PGP, or made
available to PGP-MVT or PGP for review in connection with the Conversion, were
at the time delivered or made available, and will be at the time of Closing,
true, correct and complete copies of all such documents in the California
General Partnership's or the Existing Partners' possession or control. To the
Existing Partners' knowledge, all of the California General Partnership's files
in connection with the Property in its possession or control were delivered to
or made available to PGP-MVT or PGP for its review and there are no documents
required for a complete understanding of or which are otherwise of
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significance in evaluating the Property which are not contained in the
California General Partnership's files or which have not been delivered or made
available to PGP-MVT or PGP.
SECTION 4.28. SOLVENCY AND EQUIVALENCY OF VALUE REPRESENTATIONS.
(a) The California General Partnership is not or, by
virtue of the transactions contemplated by this Agreement, will not be,
rendered any of the following:
1. insolvent, as that term is used or defined
under any applicable Insolvency Law;
2. possessed of debts greater than the fair or
salable value of all of its Property;
3. generally not paying or unable to pay its
debts as they become due or mature; or
4. engaged in any business or transaction, or is
about to engage in any business or transaction, for which any
Property remaining with it after the Conversion is
unreasonably small capital.
SECTION 4.29. EXISTENCE OF TAX EXEMPTION; GOOD COSTS/BAD COSTS DURING
CONSTRUCTION. Nothing has come to the attention of the Existing Partners, and
the Existing Partners have no knowledge of any facts or claims which would lead
them to believe, that interest on the Tax Exempt Debt has at any time, or will
prior to, the Closing (i) not been excluded from gross income for federal
income tax purposes, and (ii) is an item of tax preference for purposes of the
federal alternative minimum tax imposed on individuals and corporations, and
(iii) is further not exempt from personal income taxation imposed by the State
of California. The California General Partnership has complied with all
covenants contained in any and all documents and laws required to be complied
with to ensure that such interest payable with respect to the Tax Exempt Debt
is and continues to be excluded from gross income for federal income tax
purposes. At least ninety percent (90%) of the proceeds of the Tax Exempt Debt
have been expended to pay for Qualified Project Costs.
SECTION 4.30. INDEPENDENT TAX ADVICE. Each and every Existing
Partner does hereby represent that said Existing Partner has sought, or
knowingly declined, independent tax advice and has not relied upon PGP,
PGP-MVT, or their counsel for evaluating the merits of this transaction. Among
other things, it is acknowledged that all state and federal income tax
considerations and consequences relevant to the California General Partnership
and/or the Existing Partners are not the responsibility of PGP or PGP-MVT, and
neither the California General Partnership nor the Existing Partners have
relied or will rely on PGP or PGP-MVT with regard thereto, but instead will
rely on their own tax, business and legal advisors therefor and with respect
thereto. Each and every Existing Partner does hereby acknowledge and agree that
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PGP and PGP-MVT shall have no liability, obligation, duty, or responsibility to
the California General Partnership or the Existing Partners for any tax
consequence, impact, or affect resulting, directly or indirectly, from any of
the transactions contemplated by this Agreement. In addition, the parties
hereto have mutually agreed upon the Net Value and PGP and PGP-MVT shall have
no liability, obligation, duty or responsibility to the General Partnership or
the Existing Partners for any tax, economic, contractual, or other consequence,
impact, or affect resulting, directly or indirectly, from the foregoing
valuation. All such liability, obligation, duty, and responsibility for the tax
consequences and the valuation of the Property shall be that of the California
General Partnership and the Existing Partners, and the California General
Partnership shall indemnify, defend, save, and hold harmless PGP, PGP-MVT and
their officers, directors, employees, agents, attorneys, advisors, and the like
with respect thereto.
ARTICLE 5
COVENANTS AND AGREEMENTS OF PGP-MVT
SECTION 5.1. NO TAX TERMINATION OR DISSOLUTION. As set forth in the
LP Agreement, PGP-MVT and PGP hereby covenant and agree that for the five (5)
year period immediately following the Closing, PGP-MVT and PGP will be
restricted in their ability to (i) sell, transfer or otherwise dispose of the
Property, (ii) pay down the Tax Exempt Refunding Debt, and (iii) in the case of
PGP-MVT, dispose of its general partnership interest.
ARTICLE 6
COVENANTS AND AGREEMENTS OF THE EXISTING PARTNERS
SECTION 6.1. EXISTENCE OF TAX EXEMPTION; GOOD COSTS/BAD COSTS DURING
CONSTRUCTION. Prior to the Closing, the Existing Partners shall provide a
certificate regarding Qualified Project Costs substantially in the form of
Exhibit F attached hereto, with such back-up materials as requested by PGP-MVT,
certifying that at least ninety percent (90%) of the proceeds of the Tax Exempt
Debt were expended to pay for Qualified Project Costs.
SECTION 6.2. ACTIONS AFFECTING ASSETS. The California General
Partnership shall not sell, assign, lease, pledge, transfer or encumber any of
the Property, or enter into any other consent, commitment, understanding or
other agreement, or incur any obligation or liability (contingent or absolute)
with respect to the Property or merge or consolidate with or into any other
entity or enter into any agreements relating thereto. The California General
Partnership and the Existing Partners shall use diligent efforts to avoid
knowingly committing or permitting to occur, any action which will result in a
violation of any Law between the date hereof and the Closing.
SECTION 6.3. ACCESS TO PROPERTY AND RECORDS. Upon reasonable notice
and during regular business hours, the California General Partnership shall
give PGP-MVT, and its authorized representatives, full access to the California
General Partnership's personnel, properties, documents, contracts, facilities,
books, equipment and records and to the Property.
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SECTION 6.4. LICENSE AND ENTITLEMENTS. Through the Closing, the
California General Partnership shall maintain all Licenses and Entitlements in
full force and effect, shall file timely all reports, statements, renewal
applications and other filings, and shall pay timely all fees and charges in
connection therewith that are required to keep the Licenses and Entitlements in
full force and effect.
SECTION 6.5. NO EXTRAORDINARY TRANSACTIONS. Until the Closing the
California General Partnership will conduct its business in the ordinary and
usual course as such business was conducted prior to the date hereof and not
engage in any extraordinary transactions without PGP-MVT's prior written
consent. Extraordinary transactions shall include, without limitation, the
sale of any real property or any material asset, increase in compensation of
any employees, implementation, modification or termination of any plan for the
benefit of employees, issuance of any options, warrants or securities,
borrowing of any funds under existing credit arrangements or otherwise,
entering into any new contract or agreement (or extending any existing contract
or agreement) unless such is cancelable by the California General Partnership
(and after the Closing, by the Delaware Limited Partnership) in their
discretion on a maximum of thirty (30) days' notice.
SECTION 6.6. SOLICITATION OR NEGOTIATION. Neither the California
General Partnership nor any of the Existing Partners shall initiate or solicit
any inquiries or offers with respect to, and shall not agree to, any merger,
acquisition or other offer involving the California General Partnership, any
interest in the California General Partnership, or any of its Property or
securities.
SECTION 6.7. INSURANCE. Through the Closing, the California General
Partnership shall maintain in full force and effect substantially the same
public liability and casualty insurance coverage now in effect with respect to
the Property, at its own expense.
SECTION 6.8. TAXES AND ASSESSMENTS. Except as otherwise provided in
this Agreement, the California General Partnership shall pay or discharge
before delinquent all tax liabilities and obligations, including, without
limitation, those for federal, state or local income, property, unemployment,
withholding, sales, use and other taxes that are payable prior to the date of
the Closing.
SECTION 6.9. BINDING COMMITMENTS. The California General Partnership
shall not make any material commitments or representations to any applicable
government authorities, any adjoining or surrounding property owners, any civic
association, any utility or any other similar person or entity that would in
any manner be binding upon the Delaware Limited Partnership or the Property
without PGP-MVT's prior written consent in each case.
SECTION 6.10. OPERATION OF PROPERTY. The California General
Partnership shall continue to operate and maintain the Property in the ordinary
course of its business, consistent with past practice, and will maintain the
Property in substantially its present order and condition
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(and make all emergency repairs and replacements), and the Property on the date
of the Closing shall be in substantially the same condition it was on the date
this Agreement was executed by PGP-MVT, reasonable wear and tear excepted.
Without limiting the generality of the foregoing, no fixtures, equipment or
other Personal Property shall be removed from the Property unless prior to the
date of the Closing the same are replaced with similar items of at least equal
quality and value.
SECTION 6.11. CLOSING INFORMATION. Five (5) business days prior to
Closing the California General Partnership shall deliver to PGP-MVT a current
Rent Roll for the Property.
ARTICLE 7
PGP-MVT'S CONDITIONS PRECEDENT
SECTION 7.1. PGP-MVT'S CONDITIONS PRECEDENT. The obligation of
PGP-MVT to consummate the Conversion shall be subject to fulfillment (or
waiver) at or prior to the Closing Deadline of the following conditions
precedent (the "PGP-MVT Conditions Precedent"):
(a) Representations, Warranties and Covenants. The
representations, warranties and covenants made in this Agreement or in any
other Transaction Document by any person or entity other than PGP-MVT shall be
true and correct in all material respects when made and on and as of the
Effective Date as though such representations, warranties and covenants were
made on and as of the Effective Date.
(b) No Material Adverse Change. None of the following shall have
occurred: (i) any actual, pending, or threatened taking of any portion of the
Property by condemnation or eminent domain; (ii) subject to Section 12.11,
destruction of any portion of the Property regardless of cause; (iii) the
discovery of any Hazardous Materials on the Property other than as disclosed in
writing by the Existing Partners to PGP-MVT or PGP prior to the date hereof or
discussed in any environmental audit approved by PGP-MVT for the Property prior
to the date hereof; (iv) if any data, information, facts or material provided
to or obtained by PGP-MVT or PGP regarding the California General Partnership,
the Existing Partners, the Property, the Leases, the Rent Roll, the Transaction
Documents or the Tax Exempt Debt proves to be false or misleading in any
material respect, or if any new material adverse fact concerning the same comes
to the attention of PGP-MVT, (v) significant adverse or worsening local,
regional, national or international business conditions, including without
limitation, rising interest rates; or (vi) any of the Existing Partners fail to
comply with the provisions of this Agreement or any other Transaction Document.
(c) PGP-MVT Board Approval. The Board of Directors of PGP-MVT
shall have approved this Agreement and the other Transaction Documents to which
it is a party and the Conversion.
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(d) PGP Board Approval. The Board of Directors of PGP shall have
approved the Exchange Rights Agreement and any other Transaction Documents to
which it is a party.
(e) Delivery of Closing Requirements. Prior to or concurrently
with the Closing, the Existing Partners shall have executed and delivered, or
caused to be executed and delivered, each of the documents and items identified
in Article 10, below to be executed and delivered by it.
(f) No Order or Injunction; Governmental Filings. The
consummation of the Conversion shall not have been restrained, enjoined or
prohibited by any order or injunction of any court or governmental authority of
competent jurisdiction. All actions by or in respect of or filings with any
governmental body, agency, official or authority required to permit the
consummation of the Conversion shall have been obtained.
(g) PGP-MVT's Approval of Tax Exempt Debt Refunding Instruments.
PGP-MVT shall have received all of the Tax Exempt Debt Refunding Instruments
and approved the terms thereof.
(h) Contingent Upon Closing Terrace Gardens Transaction. The
performance of the Conversion is contingent upon the closing of the
"Conversion" described in the Restructuring Agreement, dated as of May 23,
1997 for Terrace Gardens Apartments, a California general partnership.
ARTICLE 8
EXISTING PARTNERS' CONDITIONS PRECEDENT
SECTION 8.1. EXISTING PARTNERS' CONDITIONS PRECEDENT. The obligation
of the Existing Partners to consummate the Conversion shall be subject to
fulfillment (or waiver) at or prior to the Closing Deadline of the following
conditions precedent (the "Existing Partners' Conditions Precedent"):
(a) Representations, Warranties and Covenants. The
representations, warranties and covenants made by PGP-MVT in this Agreement or
in any other Transaction Document, and the representations, warranties and
covenants made by PGP-MVT in the Exchange Rights Agreement or in any other
Transaction Document to which it is a party, shall be true and correct in all
material respects when made and on and as of the Effective Date as though such
representations, warranties and covenants were made on and as of the Effective
Date.
(b) Delivery of Closing Requirements. Prior to or concurrently
with Closing, PGP-MVT shall have executed and delivered, or caused to be
executed and delivered, each of the documents and items identified in Article
10, below to be executed and delivered by it.
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(c) No Order or Injunction; Governmental Filings. The
consummation of the Conversion shall not have been restrained, enjoined or
prohibited by any order or injunction of any court or governmental authority of
competent jurisdiction. All actions by or in respect of or filings with any
governmental body, agency, official or authority required to permit the
consummation of the Conversion shall have been obtained.
(d) PGP-MVT Capital Contribution. Concurrently with Closing,
PGP-MVT shall contribute cash to the Delaware Limited Partnership in the amount
of the PGP-MVT Capital Contribution.
(e) Refunding of Tax Exempt Debt. The refunding of the Tax Exempt
Debt shall have been consummated and all guarantees (or the equivalent) of the
Tax Exempt Debt or the credit enhancement relating to the Tax Exempt Debt shall
have been released.
(f) Contingent Upon Closing Terrace Gardens Transaction. The
performance of the Conversion is contingent upon the closing of the
"Conversion" described in the Restructuring Agreement, dated as of May 23,
1997 for Terrace Gardens Apartments, a California general partnership.
ARTICLE 9
INDEMNITY
SECTION 9.1. INDEMNITY OF PGP-MVT AND THE DELAWARE LIMITED
PARTNERSHIP. The Existing Partners jointly and severally shall save, hold
harmless, indemnify and defend PGP-MVT and the Delaware Limited Partnership,
their successors and assigns and their officers, directors, employees,
partners, agents and representatives, from and against any Losses and
Liabilities: (i) resulting from the ownership or operation of the Property or
the business affairs and transactions of the California General Partnership or
the Existing Partners, prior to the Closing; (ii) resulting from any
misrepresentation or inaccuracy in or breach of any representation, warranty or
covenant by the California General Partnership or any of the Existing Partners
in this Agreement or in the Transaction Documents; or (iii) resulting from any
claim, cause of action, or the like, by the Existing Partners, the partners of
Short Morning View Ltd., a California limited partnership, or by any
representative, successor or assign of any such party (whether made
individually, as a class, or derivatively, or any other way) as a result of
this Agreement, the Transaction Documents or the Conversion, other than a claim
for direct breach of an express representation, warranty or covenant by
PGP-MVT, PGP or the Delaware Limited Partnership hereunder or under the other
Transaction Documents.
SECTION 9.2. INDEMNITY OF THE EXISTING PARTNERS. Except for Losses
and Liabilities covered by Section 9.1, PGP, PGP-MVT or the Delaware Limited
Partnership, as the case may be, shall save, hold harmless, indemnify and
defend the Existing Partners, their respective successors and assigns and their
respective officers, directors, employees, partners, agents and
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representatives from and against any and all Losses and Liabilities in any way
resulting from (i) any misrepresentation or inaccuracy in or breach of any
representation, warranty or covenant of PGP-MVT, PGP or the Delaware Limited
Partnership in this Agreement or the Transaction Documents, or (ii) the failure
of the Delaware Limited Partnership to perform the obligations of the landlord
under the Leases (including, without limitation, the obligation to properly
apply the Security Deposits) and the Existing Contracts.
SECTION 9.3. OFFSET. Any Losses and Liabilities arising under
Section 9.1 may be offset against all distributions and any other payments by
the Delaware Limited Partnership on account of (i) the Partnership Units held
by the Existing Partners or by the Short Family Trust (whether as an Existing
Partner or as a partner (or former partner) of an Existing Partner), and (ii)
in the case of Losses and Liabilities attributable to a breach of any
representation, warranty or covenant relating to the Tax Exempt Debt or the Tax
Exempt Debt Instruments (including, but not limited to, those set forth in
Sections 4.23 and 4.29), all Partnership Units regardless of who holds the
same. Neither PGP, PGP-MVT or the Delaware Limited Partnership shall seek to
impose liability or recovery against any partner (each an "Other Partner") of
Short Morning View Ltd. other than the Short Family Trust, nor seek offset or
recovery against any Other Party for any breaches of representations,
warranties, covenants, or indemnities hereunder, other than those relating to
or described in paragraph (ii) above; and, as to those relating to or described
in paragraph (ii) above, such offset and liability shall be limited to offsets
against all rights to distributions and stock upon exchange of Partnership
Units for common stock in PGP. Any amounts recoverable with respect to
Partnership Units held by the Other Partners (or their successors and assigns)
shall be recoverable by offset from such Other Limited Partners pro rata based
on the relative number of Partnership Units distributed to the Other Partners.
Subject to the foregoing limitations on remedies for Losses and
Liabilities, PGP, PGP-MVT and the Delaware Limited Partnership may pursue any
right hereunder against the Existing Partners, the Short Family Trust, or any
other person or entity in any order or priority, and no such action shall be a
waiver or release of any rights, claims, or causes of action of PGP-MVT or the
Delaware Limited Partnership against any person or entity.
Each Existing Partner hereby unconditionally and irrevocably grants a
security interest in its Partnership Units to secure the foregoing obligations,
and agrees to deliver such documentation as PGP-MVT and the Delaware Limited
Partnership reasonably deems necessary or appropriate to perfect such security
interest. Any distribution or other transfer of any Partnership Units by the
Existing Partners (including to the partners of Short Morning View Ltd.) shall
be made subject to such security interest, and any transferee of such
Partnership Units shall, as a condition precedent to receiving such Partnership
Units, be obligated to acknowledge the existence of and take subject to such
security interest. The power of attorney provisions contained in Section 2.4 of
the LP Agreement shall apply with regard to the grant of the security interest
herein. The liability for Losses and Liabilities arising under Section 9.1
shall be joint and several. PGP-MVT and the Delaware Limited Partnership shall
be entitled
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to the offset described herein upon its reasonable determination of the
existence and amount of the Losses and Liabilities described in Section 9.1.
Upon liquidation of the Losses and Liabilities, any offset in excess of such
liquidated amount shall promptly be distributed to the Existing Partners
affected by the offset, pro-rata.
Notwithstanding the limitations on liability for Losses and
Liabilities, the Existing Partners shall have personal liability for the legal
fees and other costs and expenses described in Section 12.6 hereof if either
the action or proceeding which resulted in same was brought against the
Existing Partner on account of acts or omissions of such persons or entities
(other than their indemnity agreements as hereinabove provided), or such action
or proceeding was brought by such Existing Partners.
SECTION 9.4. EXCHANGE NOTICE. In the event any Losses and
Liabilities are outstanding at any time, if any party liable for such Losses
and Liabilities delivers an Exchange Notice pursuant to the terms of the
Exchange Rights Agreement, PGP-MVT and the Delaware Limited Partnership will
automatically obtain a lien on the "Common Stock" (as defined in the Exchange
Rights Agreement) and any other securities received by the party delivering the
Exchange Notice for and to the extent of any such outstanding Losses and
Liabilities. Any cash that would have been received by the party delivering
the Exchange Notice shall be offset by PGP-MVT and/or the Delaware Limited
Partnership, as the case may be, against any outstanding Losses and Liabilities
of such party. Such party agrees to take such actions and to execute any
additional documentation that PGP-MVT deems appropriate or necessary to create,
evidence or perfect such lien.
SECTION 9.5. SURVIVAL OF PROVISIONS. No payments made pursuant to
any of the provisions of this Article 9 shall entitle the paying parties to any
repayment or reimbursement from, or any capital account credit in, the Delaware
Limited Partnership. The provisions of this Article 9 shall survive the
Closing.
ARTICLE 10
THE CLOSING
SECTION 10.1. THE CLOSING. Subject to the terms and conditions of
this Agreement, the Closing shall take place promptly after satisfaction or
waiver of the conditions set forth in Articles 7 and 8 and this Article 10.
SECTION 10.2. DELIVERIES BY THE EXISTING PARTNERS. At Closing, the
Existing Partners shall deliver or cause to be delivered (except where
specified to remain at the management office of the Property) the following:
(a) The duly executed California General Partnership
Amendments;
(b) The duly executed Conversion Agreement;
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(c) The duly executed LP Agreement;
(d) The duly executed Exchange Rights Agreement;
(e) The duly executed Indemnification Agreement;
(f) A duly executed affidavit by each Existing Partner
that he, she or it is not a "foreign person" within the meaning of Section
1445(f)(3) of the Code in the form of Exhibit L;
(g) A duly executed Withholding Exemption Certificate
(Form 590) for each Existing Partner;
(h) A "bring-down" certificate of the Existing Partners
and the California General Partnership certifying that the representations,
warranties and covenants made by the Existing Partners, individually and/or
collectively, in this Agreement or in any other Transaction Document were true
and correct in all material respects when made and are true and correct in all
material respects on and as of the date of the Closing as though such
representations, warranties and covenants were made on and as of the date of
the Closing;
(i) A duly executed legal opinion from Sheppard, Mullin,
Xxxxxxx & Xxxxxxx expressing the opinions described in Exhibit D attached
hereto;
(j) Such other documents and instruments as are necessary
or appropriate to consummate the Conversion in accordance with the Transaction
Documents;
(k) Such other documents and instruments as are necessary
or appropriate to consummate the refunding of the Tax Exempt Debt;
(l) All Tax Exempt Debt Refunding Instruments;
(m) The "good costs/bad costs" certificate described in
Section 6.1 hereof;
(n) All keys to the Property that are not in possession
of Tenants and originals of all Existing Contracts and all Leases (each of
which may be left at the applicable Property's management office);
(o) A duly executed UCC-1 Financing Statement in form and
content reasonably satisfactory to PGP-MVT in connection with the grant of the
security interest in the Partnership Units contained in Article 9; and
(p) The amount of $44,602.74 (or such other amount as
determined by the trustee of the Tax Exempt Debt) shall be paid to the trustee
of the Tax Exempt Debt, which
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amount represents the accrued, but unpaid, interest on the Tax Exempt Debt to
and including the date of the refunding of the Tax Exempt Debt.
SECTION 10.3. DELIVERIES BY PGP-MVT. At Closing, PGP-MVT, as the
newly constituted general partner of the Delaware Limited Partnership, shall
deliver the following:
(a) The duly executed California General Partnership
Amendments;
(b) The duly executed Conversion Agreement;
(c) The duly executed LP Agreement;
(d) The duly executed Indemnification Agreement;
(e) The Tax Exempt Debt Refunding Instruments to which it
is a party;
(f) A duly executed legal opinion from counsel to PGP-MVT
expressing the opinions described in Exhibit E attached hereto;
(g) Such other documents and instruments as are necessary
or appropriate to consummate the Conversion in accordance with the Transaction
Documents; and
(h) A duly executed Exchange Rights Agreement.
SECTION 10.4. DELIVERIES BY PGP. At Closing, PGP shall deliver, or
cause to be delivered, the following:
(a) The duly executed Indemnification Agreement by PGP
and by Terrace Gardens - PGP, L.P., a Delaware limited partnership; and
(b) A duly executed Exchange Rights Agreement.
SECTION 10.5. AUTHORIZED EXISTING PARTNERS SIGNATORY. The Existing
Partners do hereby authorize Xxxxxx X. Short, as trustee of the Short Family
Trust, to execute on behalf of all of the Existing Partners any and all
documents necessary to consummate the Conversion and the execution of the
Transaction Documents. Provided, however, that the California General
Partnership Amendments, the Conversion Agreement, the Delaware Certificate of
Conversion, and any other document which by law requires the signature of all
Existing Partners, must be signed by all of the Existing Partners.
SECTION 10.6. PAYMENT OF TRANSACTION EXPENSES AND DEFERRED
MAINTENANCE. The parties agree that if the Conversion is consummated,
commencing from the effective date of the Term Sheet, the Delaware Limited
Partnership shall bear all Transaction Expenses and Deferred
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Maintenance.
ARTICLE 11
TERMINATION
SECTION 11.1. TERMINATION. This Agreement may be terminated and the
Conversion may be abandoned at any time prior to the Effective Date:
(a) by mutual written consent of PGP-MVT and all of the Existing
Partners; or
(b) by PGP-MVT and the Existing Partners if there shall be any law
or regulation that makes consummation of the Conversion illegal or otherwise
prohibited, or if any judgment, injunction, order or decree enjoining the
California General Partnership from consummating the Conversion is entered and
such judgment, injunction, order or decree shall become final and
nonappealable.
(c) if the Closing does not occur on or before the Closing
Deadline.
SECTION 11.2. EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 11.1, this Agreement shall become void and of no effect
with no liability on the part of any party hereto.
SECTION 11.3. PAYMENT OF TRANSACTION EXPENSES UPON TERMINATION.
Except as provided below, if this Agreement is terminated pursuant to Section
11.1, PGP-MVT and the Existing Partners shall split 50/50 the Transaction
Expenses, except Transaction Expenses relating to the refinancing of the Tax
Exempt Debt which shall be paid fully by the California General Partnership.
The foregoing 50/50 split of Transaction Expenses assumes neither party has a
cause of action for its expense reimbursement due to the breach of the other
party, as described in Section 11.4. If the Existing Partners terminate this
Agreement due to adverse tax ramifications caused by the Conversion, and
PGP-MVT consents to such termination, the Existing Partners or the California
General Partnership shall pay all Transaction Expenses.
SECTION 11.4. UNILATERAL TERMINATION. In the event that PGP-MVT or
any of the Existing Partners fails to perform or observe any of the covenants,
agreements or conditions on its or their part contained in this Agreement or
other Transaction Documents, said party shall be considered in default under
this Agreement.
If an event of default shall occur, any of the non-defaulting parties
may, in their discretion, proceed to protect or enforce their rights under this
Agreement and any of the other Transaction Documents by a suit in equity or
action at law, either for the specific performance of any covenant or agreement
contained herein or therein, or in aid of the execution of any power herein or
therein granted, or by mandamus or other appropriate proceeding for the
enforcement of any other legal or equitable remedy as the aggrieved party or
parties shall deem
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most effectual in support of any of their rights or duties hereunder.
No delay or omission of any party to exercise any right or power
arising from any default shall impair any such right or power or shall be
construed to be a waiver of any such default or acquiescence therein, and every
power and remedy given by this Article 11 to the parties to this Agreement may
be exercised from time to time and as often as shall be deemed expedient. In
case any party shall have proceeded to enforce any right under this Agreement,
and such proceedings shall have been discontinued or abandoned because of
waiver or for any other reason, or shall have been determined adversely to said
party, then and in every such case all of the parties to this Agreement,
severally and respectively, shall be restored to their former positions and
rights hereunder; and all remedies, rights and powers of the parties shall
continue as though no such proceedings had been taken.
No remedy herein conferred upon or reserved to any party hereunder is
intended to be exclusive of any other remedy, but each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
following provisions shall survive the Closing: (i) all representations and
warranties contained in this Agreement, (ii) any indemnification provisions of
this Agreement, including, but not limited to, those set forth in Section 4.30
and Article 9, and (iii) any provision in this Agreement which states that it
shall survive the Closing or a merger of this Agreement in any judgment.
SECTION 12.2. AMENDMENTS; NO WAIVERS.
(a) Any provision of this Agreement may, subject to applicable
law, be amended or waived prior to the Effective Date if, and only if, such
amendment or waiver is in writing and signed by PGP-MVT and the Existing
Partners.
(b) No failure or delay by any party hereto in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 12.3. NOTICES. Any notice, consent or approval required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given upon (i) hand delivery, (ii) one (1) business day
after being deposited with Federal Express or another
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reliable overnight courier service or next day delivery or transmitted by
facsimile telecopy, or (iii) two (2) business days after being deposited in the
United States mail, registered or certified mail, postage prepaid, return
receipt required, and addressed as follows:
If to any of the
Existing Partners: The Existing Partners
c/o Xxxxxx X. Short
000 Xxxxxxx Xxxxxx, Xxxxx 0
Xxxxxxxxx, XX 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
With a copy to: Sheppard, Mullin, Xxxxxxx & Xxxxxxx
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxx X. Xxxxx, Esq.
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
If to the Delaware
Limited Partnership : Pacific Gulf Properties Inc.
000 Xxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxxx
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
With a copy to: Xxx, Castle & Xxxxxxxxx LLP
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
or such other address as either party may from time to time specify in writing
to the other.
SECTION 12.4. INTEGRATION. All prior or contemporaneous agreements,
contracts, promises, representations, and statements, if any, among PGP-MVT and
the Existing Partners, or their representatives, are merged into this
Agreement, and this Agreement shall constitute the entire understanding between
the General Partners with respect to the subject matter hereof. Provided,
however, any agreement, contract, or document dated subsequent to the date of
this Agreement (whether or not executed contemporaneously with this Agreement)
shall not be merged into this Agreement, including, without limitation the
Conversion Agreement, the
36
38
California General Partnership Amendments, the LP Agreement, the Exchange
Rights Agreement, and the Tax Exempt Debt Refunding Instruments.
SECTION 12.5. SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto.
SECTION 12.6. ENFORCEMENT. If any party hereto institutes any action
or proceeding to interpret or enforce any provision of this Agreement or for an
alleged breach of any provision of this Agreement, the prevailing party shall
be entitled to recover its actual attorneys' fees and all fees, costs and
expenses incurred in connection with such action or proceeding. Such
attorneys' fees, fees, costs and expenses shall include post judgment
attorneys' fees, fees, costs and expenses incurred on appeal or in collection
of any judgment. This provision is separate and several and shall survive the
merger of this provision into any judgment on this Agreement. No person or
entity other than the parties hereto is or shall be entitled to bring any
action to enforce any provision of this Agreement against any of the parties
hereto, and the covenants and agreements set forth in this Agreement shall be
solely for the benefit of, and shall be enforceable only by, the parties hereto
or their respective successors and assigns as permitted hereunder.
SECTION 12.7. CONFIDENTIALITY. The California General Partnership
and the Existing Partners agree to maintain as confidential and, except as
required by law, to not disclose to any third parties, other than to
themselves, attorneys, and accounting and business advisors, all information in
their possession concerning the Conversion. None of the Existing Partners
shall make any public announcement by way of press release or otherwise of the
Conversion, but they shall be entitled to describe the Conversion contemplated
hereunder amongst themselves and any constituent partners. PGP-MVT shall have
the right to disclose any and all information in its possession (confidential
or otherwise) concerning the California General Partnership and/or the
Conversion for purposes of making any press release concerning the Conversion
as PGP- MVT deems necessary or appropriate in its sole and absolute discretion
to comply with laws, whether securities, real estate or otherwise.
SECTION 12.8. SEVERABILITY. If any provision of this Agreement, or
the application thereof to any person, place, or circumstance, shall be held by
a court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other persons,
places and circumstances shall remain in full force and effect.
SECTION 12.9. EXHIBITS. All exhibits attached hereto are
incorporated herein as though fully set forth herein.
SECTION 12.10. FURTHER ASSURANCES. Each party agrees to cooperate
fully with the other parties and to prepare, execute, and deliver any further
required instruments, and shall take or cause to be taken such other or further
action as either party shall reasonably request at any
37
39
time or from time to time in order to consummate the terms and provisions and
to carry into effect the intents and purposes of this Agreement and the
Transaction Documents.
SECTION 12.11. RISK OF LOSS. In the event of any of loss or damage
to all or any part of the Property by fire or other casualty prior to the
Closing that PGP or PGP-MVT reasonably believes could be in excess of $200,000
on the Property, or which materially impedes access to such Property, then
notwithstanding the existence of any casualty insurance, PGP or PGP-MVT shall
have the option in their sole discretion to: (i) terminate this Agreement and
any other Transaction Document to which it is a party in their entirety; or
(ii) continue this Agreement and any Transaction Document to which it is a
party, whereupon all available insurance will be used to repair the damage
(with appropriate adjustments to the value of the Property to account for any
deductible). The provisions of subsection (ii) above shall apply (and survive
Closing) in the event of any loss or damage in an amount less than $200,000
provided that (a) said loss is an insurable loss, (b) the California General
Partnership is actually insured against such loss, and (c) any proceeds of said
insurance are assigned to the Delaware Limited Partnership to be used to repair
the damage at the discretion of PGP or PGP-MVT. PGP or PGP-MVT may terminate
this Agreement and any other Transaction Document to which it is a party in
their entirety for a loss of less than $200,000 which does not meet the
conditions set forth in paragraphs (a), (b) and (c) above.
SECTION 12.12. LEGAL REPRESENTATION. Each party has been represented
by legal counsel in connection with the negotiation of the Conversion herein
contemplated and the drafting and negotiation of this Agreement and the
Transaction Documents. Xxx, Castle & Xxxxxxxxx LLP ("CCN") has represented
solely PGP, and Sheppard, Mullin, Xxxxxxx & Hampton ("SMRH") has represented
solely the California General Partnership, in connection with the negotiation,
drafting, transactions and matters contemplated under this Agreement and any
other Transaction Documents relating to the transactions or matters covered
hereby, the LP Agreement and all matters, things, documents and transactions
contemplated under the LP Agreement and under this Agreement or the other
Transaction Documents. CCN has not provided legal services to or been legal
counsel for the California General Partnership, the Existing Partners, and none
of the foregoing has relied on CCN in that regard. SMRH has not provided legal
services to or been legal counsel for PGP or PGP-MVT and none of the foregoing
has relied on SMRH in that regard. The normal rule of construction that
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement or any other Transaction Documents.
SECTION 12.13. TIME OF THE ESSENCE. Time is of the essence of this
Agreement.
SECTION 12.14. GOVERNING LAW. This Agreement shall be construed in
accordance with and government by the laws of the State of California, without
giving effect to principles of conflicts of law.
38
40
SECTION 12.15. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. The signature of each Existing Partner constitutes execution as an
Existing Partner on its own behalf and as a partner of the California General
Partnership.
IN WITNESS WHEREOF, the parties hereto have caused this Restructuring
Agreement to be duly executed by their respective authorized representatives as
of the day and year first-above written.
MORNING VIEW TERRACE,
A CALIFORNIA GENERAL PARTNERSHIP
THE SHORT FAMILY TRUST
By: _______________________________
Xxxxxx X. Short, Trustee
By: ________________________________
Xxxxxxx X. Short, Trustee
SHORT MORNING VIEW LTD.,
A CALIFORNIA LIMITED PARTNERSHIP
By: The Short Family Trust
By: _______________________________
Xxxxxx X. Short, Trustee
By: ________________________________
Xxxxxxx X. Short, Trustee
PGP MORNING VIEW TERRACE HOLDINGS INC.,
A DELAWARE CORPORATION
By: _____________________
Name:
Title:
39
41
PACIFIC GULF PROPERTIES INC.,
A MARYLAND CORPORATION
By: _____________________
Name:
Title:
40
42
EXHIBIT A
LP AGREEMENT
43
EXHIBIT B
EXCHANGE RIGHTS AGREEMENT
44
EXHIBIT C
TAX EXEMPT DEBT INSTRUMENTS
1. Indenture of Trust, dated as of February 1, 1985, as amended
by Supplemental Indenture No. 1, dated as of April 1, 1988,
between the Issuer and the Trustee;
2. Loan Agreement, dated as of February 1, 1985, among the
Issuer, the Trustee and the Developer;
3. Regulatory Agreement and Declaration of Restrictive Covenants,
dated as of February 1, 1985, among the Issuer, the Trustee
and the Developer;
4. Letter of Credit No. LASB-216457 (formerly Security Pacific
National Bank No. 100-0063), dated February 15, 1985, as
amended December 28, 1994, issued by the Credit Bank;
5. Reimbursement Agreement, dated as of February 1, 1985, between
the Credit Bank and the Developer; and
For purposes of this Exhibit, the following terms have the following
definitions:
"Issuer" shall mean the City of Escondido.
"Trustee" shall mean First Trust of California, National Association.
"Developer" shall mean Morning View Terrace, a California general
partnership.
"Credit Bank" shall mean Bank of America National Trust and Savings
Association.
45
EXHIBIT D
CALIFORNIA GENERAL PARTNERSHIP LEGAL OPINION
At the Closing, the California General Partnership shall cause to be
delivered to PGP-MVT an opinion of counsel, in form and substance reasonably
acceptable to PGP-MVT, containing the legal opinion that: (i) each Existing
Partner has the power and authority to enter into and perform its obligations
under the Transaction Documents to which they are a party; (ii) all partners of
the Existing Partners (and all of the partners of Short Morning View Ltd., a
California limited partnership) have consented to the Conversion and the
execution of the Transaction Documents; (iii) the Transaction Documents to
which they are a party have been duly authorized by all necessary action on the
part of each Existing Partner, and have been duly executed and delivered by
each Existing Partner; and (iv) the Transaction Documents to which they are a
party constitute the legally valid and binding obligations of the Existing
Partners, enforceable in accordance with their respective terms, except as
enforcement may be limited by bankruptcy laws or the laws affecting the rights
of creditors generally. Additionally, in rendering the enforceability opinion
described in clause (iv) above, counsel for the Existing Partners shall be
entitled to rely on the representation of the Existing Partners, without
further investigation, that the solicitation materials utilized by the Existing
Partners to obtain the approval of the constituents of the Existing Partners to
the Transaction Documents to which they are a party and the transactions herein
contemplated did not misstate or omit to state any material fact, and were
otherwise accurate and complete in all material respects.
46
EXHIBIT E
LEGAL OPINION OF PGP-MVT
At the Closing, the PGP-MVT shall cause to be delivered to the Existing
Partners an opinion of counsel, in form and substance reasonably acceptable to
the Existing Partners, containing the legal opinion that: (i) PGP-MVT has the
power and authority to enter into and perform its obligations under the
Transaction Documents to which it is a party; (ii) the Transaction Documents to
which it is a party have been duly authorized by all necessary action on the
part of PGP-MVT, and have been duly executed and delivered by PGP-MVT; (iii)
the Transaction Documents to which it is a party constitute the legally valid
and binding obligations of PGP-MVT, enforceable in accordance with their
respective terms, except as enforcement may be limited by bankruptcy laws or
the laws affecting the rights of creditors generally.
47
EXHIBIT F
QUALIFIED PROJECT COSTS
Total "Proceeds"
Par Amount
Cost on Issuance
Paydown on Bonds
Investment Earnings
Total "Proceeds"
Project "Good Costs"
Land (Title and Closing)
Construction Costs
Interest/Taxes During Construction
Supervisor's and Contractor's Fees
Total "Good Costs"
Percentage of "Good Costs" to "Proceeds"
48
EXHIBIT G
CALIFORNIA GENERAL PARTNERSHIP AMENDMENT NO. 1
49
EXHIBIT H
CALIFORNIA GENERAL PARTNERSHIP AMENDMENT NO. 2
50
EXHIBIT I
EXISTING CONTRACTS
1. Vendor: Xxxxx Pest Control Co.
Date of Contract: 2/28/96
Term/Cancellation: 12 months, thereafter 30 days written
Services: Pest Control
2. Vendor: Xxxxx Fargo Guard Services
Date of Contract: 3/1/97
Term/Cancellation: 30 days written notice
Services: Security Services
3. Vendor: Xxxxxx Pacific Cablevision, Inc.
Date of Contract: 1/1/89
Term/Cancellation: 12/31/98 (with automatic renewal for 5-year period)
Services: Cable Television Service
51
EXHIBIT J
RENT ROLL
52
EXHIBIT K
APPROVED TITLE FORM
53
EXHIBIT L
CERTIFICATION OF NON-FOREIGN STATUS
The undersigned hereby certifies the following:
1. The undersigned is not a foreign corporation, foreign
partnership, foreign trust, foreign estate or foreign person (as those terms
are defined in the Internal Revenue Code of 1986, as amended (the "Code") and
the Income Tax Regulations promulgated thereunder);
2. The undersigned's U.S. employer or tax (social security)
identification number is ____________________.
The undersigned understands that this Certification of Non-Foreign
Status may be disclosed to the Internal Revenue Service by PGP Morning View
Terrace Holdings Inc., a Delaware corporation, general partner of Morning View
Terrace - PGP, L.P., a Delaware limited partnership (the "General Partner"),
and that any false statement contained herein could be punished by fine,
imprisonment, or both.
The undersigned hereby agrees to indemnify, defend and hold the
General Partner harmless from and against any and all obligations, liabilities,
claims, losses, actions, causes of action, rights, demands, damages, costs and
expenses of every kind, nature or character whatsoever (including, without
limitation, reasonable attorneys' fees and court costs) incurred by the General
Partner as a result of: (i) the undersigned's failure to pay U.S. Federal
income tax which the undersigned is required to pay under applicable U.S. law;
or (ii) any false or misleading statement contained herein.
Under penalty of perjury I declare that I have examined this
Certification of Non-Foreign Status and to the best of my knowledge and belief
it is true and correct and complete, and I further declare that I have
authority to sign this document.
Date: June 12, 1997
____ , a
-----------------------------
By: ________________________
________________________
(Print Name and Title)
54
EXHIBIT M
PROPERTY MANAGEMENT AGREEMENT
55
EXHIBIT N
INTEREST OF EXISTING PARTNERS
EXISTING PARTNER INTEREST
---------------- --------
Short Family Trust 49%
Short Morning View Ltd. 51%
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TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2
AGREEMENTS REGARDING CONVERSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.1. THE CALIFORNIA GENERAL PARTNERSHIP AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.2. THE CONVERSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.3. CONTRIBUTION OF CAPITAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.4. CONTINUATION OF INTERESTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.5. EXCHANGE OF PARTNERSHIP INTERESTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.6. SAME ENTITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.7. RIGHTS UPON CONVERSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.8. PRORATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.9. CONVERSION NOT A DISSOLUTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.10. MANAGEMENT AND FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.11. THE LP AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PGP-MVT AND PGP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF PGP-MVT AND PGP. . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.2. ORGANIZATION, POWER AND AUTHORITY, AND QUALIFICATION . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.3. AUTHORITY RELATIVE TO THIS AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.4. BINDING OBLIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.5. NO VIOLATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.6. BANKRUPTCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.7. DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.8. REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.9. BROKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE EXISTING PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF THE EXISTING PARTNERS. . . . . . . . . . . . . . . . . . . . 18
SECTION 4.2. ORGANIZATION, POWER AND AUTHORITY, AND QUALIFICATION . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.3. AUTHORITY RELATIVE TO THIS AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.4. CONSENTS AND APPROVALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.5. BINDING OBLIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.6. NO VIOLATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.7. ADEQUATE DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.8. ABSENCE OF UNDISCLOSED LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.9. COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.10. RENT CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.11. LICENSES, PERMITS, CERTIFICATES OF OCCUPANCY, ZONING, ETC . . . . . . . . . . . . . . . . . . 20
SECTION 4.12. ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.13. TAXES AND ASSESSMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.14. PHYSICAL CONDITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.15. LEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.16. NO LITIGATION OR ADVERSE EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.17. CONTRACTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.18. NO OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.19. NON-FOREIGN PERSON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.20. EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
57
SECTION 4.21. BROKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.22. OPERATING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.23. EXISTING DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.24. SECURITY DEPOSITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.25. DEPOSITS AND REIMBURSEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.26. BANKRUPTCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.27. DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.28. SOLVENCY AND EQUIVALENCY OF VALUE REPRESENTATIONS. . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.29. EXISTENCE OF TAX EXEMPTION; GOOD COSTS/BAD COSTS DURING CONSTRUCTION. . . . . . . . . . . . . 24
SECTION 4.30. INDEPENDENT TAX ADVICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 5
COVENANTS AND AGREEMENTS OF PGP-MVT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.1. NO TAX TERMINATION OR DISSOLUTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 6
COVENANTS AND AGREEMENTS OF THE EXISTING PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.1. EXISTENCE OF TAX EXEMPTION; GOOD COSTS/BAD COSTS DURING CONSTRUCTION. . . . . . . . . . . . . 25
SECTION 6.2. ACTIONS AFFECTING ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.3. ACCESS TO PROPERTY AND RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.4. LICENSE AND ENTITLEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.5. NO EXTRAORDINARY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.6. SOLICITATION OR NEGOTIATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.7. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.8. TAXES AND ASSESSMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.9. BINDING COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.10. OPERATION OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.11. CLOSING INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 7
PGP-MVT'S CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 7.1. PGP-MVT'S CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 8
EXISTING PARTNERS' CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 8.1. EXISTING PARTNERS' CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 9
INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 9.1. INDEMNITY OF PGP-MVT AND THE DELAWARE LIMITED PARTNERSHIP. . . . . . . . . . . . . . . . . . . 29
SECTION 9.2. INDEMNITY OF THE EXISTING PARTNERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 9.3. OFFSET. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 9.4. EXCHANGE NOTICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 9.5. SURVIVAL OF PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 10
THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 10.1. THE CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 10.2. DELIVERIES BY THE EXISTING PARTNERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 10.3. DELIVERIES BY PGP-MVT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
58
SECTION 10.4. DELIVERIES BY PGP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 10.5. AUTHORIZED EXISTING PARTNERS SIGNATORY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 10.6. PAYMENT OF TRANSACTION EXPENSES AND DEFERRED MAINTENANCE. . . . . . . . . . . . . . . . . . . 33
ARTICLE 11
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 11.1. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 11.2. EFFECT OF TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 11.3. PAYMENT OF TRANSACTION EXPENSES UPON TERMINATION. . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 11.4. UNILATERAL TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 12
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 12.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 12.2. AMENDMENTS; NO WAIVERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 12.3. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 12.4. INTEGRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 12.5. SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 12.6. ENFORCEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 12.7. CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 12.8. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 12.9. EXHIBITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 12.10. FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 12.11. RISK OF LOSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 12.12. LEGAL REPRESENTATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 12.13. TIME OF THE ESSENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 12.14. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 12.15. COUNTERPARTS; EFFECTIVENESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
EXHIBIT A - LP AGREEMENT
EXHIBIT B - EXCHANGE RIGHTS AGREEMENT
EXHIBIT C - TAX EXEMPT DEBT INSTRUMENTS
EXHIBIT D - CALIFORNIA GENERAL PARTNERSHIP LEGAL OPINION
EXHIBIT E - LEGAL OPINION OF PGP
EXHIBIT F - QUALIFIED PROJECT COSTS
EXHIBIT G - CALIFORNIA GENERAL PARTNERSHIP AMENDMENT NO. 1
EXHIBIT H - CALIFORNIA GENERAL PARTNERSHIP AMENDMENT NO. 2
EXHIBIT I - EXISTING CONTRACTS
EXHIBIT J - RENT ROLL
EXHIBIT K - APPROVED TITLE FORM
EXHIBIT L - CERTIFICATION OF NON-FOREIGN STATUS
EXHIBIT M - PROPERTY MANAGEMENT AGREEMENT
EXHIBIT N - INTERESTS OF EXISTING PARTNERS
