Exhibit 10.13
AGREEMENT TO CONTRIBUTE
AMONG
NORTHLAND PORTFOLIO L.P., a Delaware limited
partnership,
NORTHLAND FUND L.P., a Delaware limited partnership
NORTHLAND FUND II, L.P., a Delaware limited
partnership
NORTHLAND FUND III, L.P., a Delaware limited
partnership
NORTHLAND INVESTMENT CORPORATION, a Massachusetts
corporation
NORTHLAND AUSTIN INVESTORS LLC, a Delaware limited liability
company
AUSTIN INVESTORS L.P., a Delaware limited partnership
DRAKE INVESTORS L.P., a Delaware limited partnership
TATSTONE INVESTORS L.P., a Delaware limited
partnership
TARRAGON CORPORATION, a Nevada corporation
AND
ANSONIA LLC, a Delaware limited liability company
AGREEMENT TO CONTRIBUTE
This AGREEMENT TO CONTRIBUTE (this
“ Agreement ”) is entered into as of this 31st
day of March, 2008, by and among NORTHLAND PORTFOLIO L.P., a
Delaware limited partnership (“ Northland Portfolio
”), NORTHLAND FUND L.P., a Delaware limited partnership
(“ Northland Fund I ”), NORTHLAND FUND II, L.P.,
a Delaware limited partnership (“ Northland Fund II
”), NORTHLAND FUND III, L.P., a Delaware limited partnership
(“ Northland Fund III ”), NORTHLAND INVESTMENT
CORPORATION, a Massachusetts corporation (“ NIC
”), NORTHLAND AUSTIN INVESTORS LLC, a Delaware limited
liability company (“ Northland Austin ”), AUSTIN
INVESTORS L.P., a Delaware limited partnership (“ Austin
Investors ”), DRAKE INVESTORS L.P., a Delaware limited
partnership (“ Drake ”), TATSTONE INVESTORS
L.P., a Delaware limited partnership company (“
Tatstone ” and together with Northland Portfolio,
Northland Fund I, Northland Fund II, Northland Fund III, NIC,
Northland Austin, Austin Investors and Drake, collectively, “
Northland ”), TARRAGON CORPORATION, a Nevada
corporation (“ Tarragon Corporation ”), ANSONIA
LLC, a Delaware limited liability company (“ Ansonia
”, together with Tarragon Corporation, collectively, “
Tarragon ”).
RECITALS
WHEREAS, each of Northland Portfolio,
Northland Fund I, Northland Fund II, Northland Fund III, NIC,
Northland Austin, Austin Investors, Drake, Tatstone, Tarragon
Corporation and Ansonia (each a “ Contributor ”)
wishes to cause a new Delaware limited liability company to be
known as Northland Properties LLC (the “ New Company
”) to be formed on or before the First Closing (as defined
below), and having (pursuant to the First Closing and/or pursuant
to one or more of the subsequent Closings contemplated hereby) each
of Northland Portfolio, Northland Fund I, Northland Fund II,
Northland Fund III, NIC, Northland Austin, Austin Investors, Drake,
Tatstone, Tarragon Corporation, or to the extent Tarragon SPE is
formed to hold the Common Units (hereinafter defined) issuable to
Tarragon Corporation by the New Company, Tarragon SPE, and Ansonia
as members (each, a “ Member ”, and
collectively, the “ Members ”) and have fully
negotiated the form of limited liability company operating
agreement of the New Company attached hereto as
Exhibit A (the “ Limited Liability
Company Agreement ”) and the documents related thereto,
which include a tax matters agreement (the “ Tax Matters
Agreement ”) in the form of Exhibit D
and an interim management agreement (the “ Interim
Management Agreement ”) in the form of
Exhibit B , as more fully described below;
WHEREAS, Northland Portfolio is the
owner, directly or indirectly, of certain membership and/or limited
partnership interests and/or 100% of the stock in those entities
identified on Schedule A-1 , representing the
economic, voting and other rights in such entities (collectively,
the “ Northland Portfolio Companies ”), as more
particularly set forth in those certain Operating Agreements and
Limited Partnership Agreements of the Northland Portfolio Companies
identified on Schedule A-1 (as the same may be
amended or modified, collectively, the “ Northland
Portfolio Operating Agreements ”);
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WHEREAS, Northland Fund I is the
owner, directly or indirectly, of certain membership and/or limited
partnership interests in those entities identified on
Schedule A-2 , representing the economic, voting
and other rights in such entities (collectively, the “
Northland Fund I Companies ”), as more particularly
set forth in those certain Operating Agreements and Limited
Partnership Agreements of the Northland Fund I Companies identified
on Schedule A-2 (as the same may be amended or
modified, collectively, the “ Northland Fund I Operating
Agreements ”);
WHEREAS, Northland Fund II is the
owner, directly or indirectly, of certain membership and/or limited
partnership interests and/or 100% of the stock in those entities
identified on Schedule A-3 , representing the
economic, voting and other rights in such entities (collectively,
the “ Northland Fund II Companies ”), as more
particularly set forth in those certain Operating Agreements and
Limited Partnership Agreements of the Northland Fund II Companies
identified on Schedule A-3 (as the same may be
amended or modified, collectively, the “ Northland Fund II
Operating Agreements ”);
WHEREAS, Northland Fund III is the
owner of certain membership and/or limited partnership interests in
those entities identified on Schedule A-4 ,
representing the economic, voting and other rights in such entities
(collectively, the “ Northland Fund III Companies
”), as more particularly set forth in those certain Operating
Agreements and Limited Partnership Agreements of the Northland Fund
III Companies identified on Schedule A-4 (as the
same may be amended or modified, collectively, the “
Northland Fund III Operating Agreements ”);
WHEREAS, NIC is the owner of certain
membership interests in those entities identified on
Schedule A-5 , representing the economic, voting
and other rights in such entities (collectively, the “ NIC
Companies ” and together with the Northland Portfolio
Companies, the Northland Fund I Companies, the Northland Fund II
Companies, and the Northland Fund III Companies, collectively, the
“ Northland Companies ”, and, each a “
Northland Company ”), as more particularly set forth
in those certain Operating Agreements of the NIC Companies
identified on Schedule A-5 (as the same may be
amended or modified, collectively, the “ NIC Operating
Agreements ” and together with the Northland Portfolio
Operating Agreements, the Northland Fund I Operating Agreements,
the Northland Fund II Operating Agreements, and the Northland Fund
III Operating Agreements, collectively, the “ Northland
Operating Agreements ”);
WHEREAS, Northland Austin is the
owner of certain limited partnership interests in Northland Austin
Portfolio L.P., which is one of the Northland Fund I
Companies;
WHEREAS, Austin Investors is the
owner of certain limited partnership interests in Northland Austin
Portfolio L.P., which is one of the Northland Fund I
Companies;
WHEREAS, Drake is the owner of
certain membership interests in Northland Memphis Portfolio LLC,
which is one of the Northland Fund I Companies;
WHEREAS, Tatstone is the owner of
certain membership interests in Northland Tatnuck LLC, which is one
of the Northland Fund II Companies;
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WHEREAS, the Contribution Percentage
of each of the Northland Contributors in the Northland Companies
and the Northland Properties is set forth in
Schedule F-1 ;
WHEREAS, Tarragon Corporation,
directly or indirectly, is the owner of the membership and/or
limited partnership interests in those entities identified on
Schedule A-6 , representing certain economic,
voting and other rights in such entities (collectively, the “
Tarragon Companies ”), as more particularly set forth
in those certain Operating Agreements and Limited Partnership
Agreements of the Tarragon Companies as identified on
Schedule A-6 (as the same may be amended or
modified, collectively, the “ Tarragon Operating
Agreements ”);
WHEREAS, Ansonia is the owner of
certain limited partnership interests in Ansonia Apartments, L.P.,
which is one of the Tarragon Companies;
WHEREAS, the Contribution Percentage
of each of the Tarragon Contributors in the Tarragon Companies and
the Tarragon Properties is set forth in
Schedule F-2 ;
WHEREAS, prior to each Closing
affecting a transfer of interests in any of the Tarragon Companies,
Tarragon Corporation and Ansonia intend to restructure the Tarragon
Companies and their ownership in the Tarragon Companies as
described in more detail in Schedule G attached
hereteo (the “ Tarragon Restructuring ”), such
that Tarragon and Ansonia will after giving effect to the Tarragon
Restructuring own, directly or indirectly through one or more of
the Tarragon Companies, certain membership and/or limited
partnership interests in those certain entities identified on
Schedule A-7 , representing certain economic,
voting and other rights in such entities (and, after giving effect
to the Tarragon Restructuring, all references in this Agreement or
in Related Document to the “Tarragon Companies” or the
“Tarragon Company Interests” shall be deemed to be a
reference to the entities and interests identified on
Schedule A-7 , and not to the entities and
interests identified on Schedule A-6 );
WHEREAS, the Northland Portfolio
Companies are the owners of the Real Property (defined below)
described on Schedule B-1 attached hereto;
WHEREAS, the Northland Fund I
Companies are the owners of the Real Property described on
Schedule B-2 attached hereto;
WHEREAS, the Northland Fund II
Companies are the owners of the Real Property described on
Schedule B-3 attached hereto;
WHEREAS, the Northland Fund III
Companies are the owners of the Real Property described on
Schedule B-4 attached hereto;
WHEREAS, the NIC Companies are the
owners of the Real Property described on Schedule B-5
attached hereto;
WHEREAS, the Tarragon Companies are
the owners of the Real Property described on Schedule
B-6 attached hereto;
WHEREAS, upon one or more Closings,
Northland Portfolio wishes to contribute to the New Company all of
Northland Portfolio’s right, title and interest in and to the
Northland
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Portfolio Companies under the Northland Portfolio Operating
Agreements (the “ Northland Portfolio Company
Interests ”), and the New Company shall (i) accept
contribution of the Northland Portfolio Company Interests, and
(ii) issue to Northland Portfolio Common Units in the New
Company in exchange for such contribution, as more fully described
below;
WHEREAS, upon one or more Closings,
Northland Fund I wishes to contribute to the New Company all of
Northland Fund I’s right, title and interest in and to the
Northland Fund I Companies under the Northland Fund I Operating
Agreements (the “ Northland Fund I Company Interests
”), and the New Company shall (i) accept contribution of
the Northland Fund I Company Interests, and (ii) issue to
Northland Fund I Common Units in the New Company in exchange for
such contribution, as more fully described below;
WHEREAS, upon one or more Closings,
Northland Fund II wishes to contribute to the New Company all of
Northland Fund II’s right, title and interest in and to the
Northland Fund II Companies under the Northland Fund II Operating
Agreements (the “ Northland Fund II Company Interests
”), and the New Company shall (i) accept contribution of
the Northland Fund II Company Interests, and (ii) issue to
Northland Fund II Common Units in the New Company in exchange for
such contribution, as more fully described below;
WHEREAS, upon one or more Closings,
Northland Fund III wishes to contribute to the New Company all of
Northland Fund III’s right, title and interest in and to the
Northland Fund III Companies under the Northland Fund III Operating
Agreements (the “ Northland Fund III Company Interests
”), and the New Company shall (i) accept contribution of
the Northland Fund III Company Interests, and (ii) issue to
Northland Fund III Common Units in the New Company in exchange for
such contribution, as more fully described below;
WHEREAS, upon one or more Closings,
NIC wishes to contribute to the New Company all of NIC’s
right, title and interest in and to the NIC Companies under the NIC
Operating Agreements (the “ NIC Company Interests
”), and the New Company shall (i) accept contribution of
the Northland Fund III Company Interests, and (ii) issue to
NIC Common Units in the New Company in exchange for such
contribution, as more fully described below;
WHEREAS, upon one or more Closings,
Northland Austin wishes to contribute to the New Company all of
Northland Austin’s right, title and interest in and to
Northland Austin Portfolio L.P. (the “ Northland Austin
Company Interests ”), and the New Company shall
(i) accept contribution of the Northland Austin Company
Interests, and (ii) issue to Northland Austin Common Units in
the New Company in exchange for such contribution, as more fully
described below;
WHEREAS, upon one or more Closings,
Austin Investors wishes to contribute to the New Company all of
Austin Investors’s right, title and interest in and to
Northland Austin Portfolio L.P. (the “ Austin Investors
Company Interests ”), and the New Company shall
(i) accept contribution of the Austin Investors Company
Interests, and (ii) issue to Austin Investors Common Units in
the New Company in exchange for such contribution, as more fully
described below;
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WHEREAS, upon one or more Closings,
Drake wishes to contribute to the New Company all of Drake’s
right, title and interest in and to Northland Memphis Portfolio
L.P. (the “ Drake Company Interests ”), and the
New Company shall (i) accept contribution of the Drake Company
Interests, and (ii) issue to Drake Common Units in the New
Company in exchange for such contribution, as more fully described
below;
WHEREAS, upon one or more Closings,
Tatstone wishes to contribute to the New Company all of
Tatstone’s right, title and interest in and to Northland
Tatnuck LLC (the “ Tatstone Company Interests
”), and the New Company shall (i) accept contribution of
the Tatstone Company Interests, and (ii) issue to Tatstone
Common Units in the New Company in exchange for such contribution,
as more fully described below;
WHEREAS, upon one or more Closings,
Tarragon Corporation wishes to contribute to the New Company all of
Tarragon Corporation’s right, title and interest in and to
the Tarragon Companies under the Tarragon Company Operating
Agreements (the “ Tarragon Corporation Company
Interests ”), and the New Company shall (i) accept
contribution of the Tarragon Corporation Company Interests, and
(ii) issue to Tarragon Corporation Common Units in the New
Company in exchange for such contribution, as more fully described
below;
WHEREAS, upon one or more Closings,
Ansonia wishes to contribute to the New Company all of
Ansonia’s right, title and interest in and to the Tarragon
Companies under the Tarragon Company Operating Agreements (the
“ Ansonia Company Interests ” and, together with
the Tarragon Corporation Company Interests, the “ Tarragon
Company Interests ”), and the New Company shall
(i) accept contribution of the Ansonia Company Interests, and
(ii) issue to Ansonia Common Units in the New Company in
exchange for such contribution, as more fully described
below.
NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, and in reliance on all representations, warranties
and covenants made by each of the parties hereto, Northland and
Tarragon agree as follows:
DEFINITIONS
The following terms as used in this
Agreement will have the meanings ascribed to them as set forth
below unless the context clearly requires another meaning. The
terms set forth below do not constitute all defined terms set forth
in this Agreement. Such other defined terms shall have the meanings
ascribed to them elsewhere in this Agreement.
“ Act ” means the
Securities Act of 1933.
“ Action ” shall
mean any claim, suit, litigation, injunction, stay, labor dispute,
arbitration, investigation, audit or other action or proceeding,
including, without limitation, any condemnation action.
“ Affiliate ”
shall mean any entity in which the Person in question owns directly
or indirectly more than fifty percent (50%) of the voting stock or
similar interests issued by such entity or any entity controlling,
controlled by or under common control with the Person in
question.
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“ Affiliate Management
Agreement ” has the meaning set forth in
Section 1.4.
“ Agreement ” has
the meaning set forth in the Recitals.
“ Ansonia ” has
the meaning set forth in the introductory paragraph.
“ Ansonia Company
Interests ” has the meaning set forth in the
Recitals.
“ Assumed Debt ”
shall mean one or more, as the case may be, of the Northland
Assumed Debt and the Tarragon Assumed Debt.
“ Austin Investors
” has the meaning set forth in the introductory
paragraph.
“ Austin Investors Company
Interests ” has the meaning set forth in the
Recitals.
“ Authority ”
shall mean a governmental body or agency having jurisdiction over
Northland, Tarragon, or the Properties.
“ Bermuda Island Purchase
Agreement ” has the meaning set forth in
Section 1.2.
“ Business Day ”
means any weekday that is not an official holiday in the State of
New York.
“ Cash ” means
cash and monetary equivalents, including money funds and other
short-term investments, but excluding tenant security deposits,
escrow balances and reserves held by a lender for the account of a
Contributed Company.
“ Casualty ” has
the meaning set forth in Section 8.1.
“ Casualty Sum ”
has the meaning set forth in Section 8.1.
“ Closing ” and
“ Closing Date ” have the meaning set forth in
Section 1.3.
“ Closing Notice ”
has the meaning set forth in Section 1.3.
“ Closing Conditions
” shall mean one or more, as the case may be, of the
Northland Closing Conditions or the Tarragon Closing
Conditions.
“ Code ” shall
mean the Internal Revenue Code of 1986, as amended, and applicable
rules and regulations thereunder. Any reference herein to a
specific section or sections of the Code shall be deemed to include
a reference to any corresponding provision of future law.
“ Common Units ”
means the units of membership interest in the New Company to be
issued to the Contributors hereunder, and having the designations,
preferences, rights, powers and duties as set forth in the Limited
Liability Company Agreement.
“ Companies ”
shall mean one ore more, as the case may be, of the Northland
Companies and the Tarragon Companies.
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“ Company Interests
” shall mean one or more, as the case may be, of the
Northland Company Interests and the Tarragon Company
Interests.
“ Competing Transaction
” has the meaning set forth in Section 9.2.
“ Condemnation ”
has the meaning set forth in Section 8.2.
“ Condemnation Sum
” has the meaning set forth in Section 8.2.
“ Contracts ”
shall mean one or more, as the case may be, of the Northland
Contracts or the Tarragon Contracts.
“ Contributed Companies
” has the meaning set forth in Section 1.1(a).
“ Contributed Properties
” has the meaning set forth in Section 1.1(a).
“ Contributing Group
” shall mean one or more, as the case may be, of the
Northland Contributors or the Tarragon Contributors.
“ Contribution
Percentage ” shall mean, for each Contributor in respect
of each of its Contributed Companies or Contributed Properties, as
the case may be, the direct or indirect ownership interest of such
Contributor in such Contributed Company or Contributed Property, in
each case as specified in Schedule F-1 with
respect to the Northland Contributors and
Schedule F-2 with respect to the Tarragon
Contributors.
“ Contributor ”
shall mean any of Northland Portfolio, Northland Fund I, Northland
Fund II, Northland Fund III, NIC, Northland Austin, Austin
Investors, Drake, Tatstone, Tarragon Corporation and Ansonia, as
applicable.
“ Drake ” has the
meaning set forth in the introductory paragraph.
“ Drake Company
Interests ” has the meaning set forth in the
Recitals.
“ Equity Value ”
has the meaning set forth in Section 1.1(a).
“ Excess Gain ”
means with respect to any (i) interest (an
“Interest”) in an entity treated as a partnership for
U.S. federal tax purposes that is contributed to the New Company on
an applicable Closing Date if such entity remains as a partnership
for U.S. federal tax purposes immediately after such contribution
(a “ Northland Partnership ”), and (ii) any
property (including partnership interests) owned directly or
indirectly by such Northland Partnership, (collectively, any
Interest, any such partnership interest and other property being
referred to as the “ Deemed Contributed Property
”) the excess of (A) the amount of income and gain
allocated to the Tarragon Contributors (and their Affiliates) for
federal income tax purposes upon the sale or other disposition of
such Deemed Contributed Property over (B) the amount of income
and gain for federal income tax purposes that would have been
allocated to the Tarragon Contributors (and their Affiliates) upon
the sale or other disposition of such Deemed Contributed Property,
if (x) such Deemed Contributed Property (or the portion of
such Deemed Contributed Property based on portion of such income
and gain from such disposition allocated to New
8
Company,
if the New Company does not own for federal income tax purposes a
direct 100% interest in such Deemed Contributed Property) had been
contributed directly to the New Company on the relevant Closing
Date by the contributor(s) of the Interest in the Northland
Partnership that owned a direct or indirect interest in such Deemed
Contributed Property, (y) Code Section 704(c) had applied to
such contribution and (z) the Section 704(c) allocation method
actually adopted or selected pursuant to Section 6.3(b) of the
Limited Liability Company Agreement with respect to the
“section 704(c) property” (as defined in Treasury
Regulations Section 1.704-3(a)(3)(i)) attributable to such
Deemed Contributed Property applied to such contribution.
“ Executive Order
” has the meaning set forth in Section 3.2(t).
“ Final Closing Date
” has the meaning set forth in Section 1.3.
“ First Closing ”
and “ First Closing Date ” have the meaning set
forth in Section 1.3.
“ GE Lender ” has
the meaning set forth in Section 2.1(a).
“ Hazardous Substances
” and “ Hazardous Wastes ” shall mean any
substance, chemical, waste or material that is or becomes regulated
by any federal, state or local Authority because of its toxicity,
infectiousness, radioactivity, explosiveness, ignitability,
corrosiveness or reactivity, including, without limitation,
asbestos, the group of compounds known as polychlorinated
biphenyls, flammable explosives, oil, petroleum or any refined
petroleum product.
“ Income Taxes ”
means any Tax based upon or measured by reference to net income,
including any such Tax imposed on a Person pursuant to Treasury
Regulations Section 1.1502-6 or any analogous or similar
state, local, or foreign law or regulation, as transferee or
successor, by contract or otherwise.
“ Indemnitee ” has
the meaning set forth in Section 5.1(a).
“ Indemnitor ” has
the meaning set forth in Section 5.1(a).
“ Intangibles ”,
with respect to each of the Properties shall mean all intangible
property owned or used by the Contributor of such Property (or its
Affiliate) exclusively in connection with the ownership, use,
operation or development of the Property, including, without
limitation: (i) the right to use the applicable name listed on
Schedules C-1 and C-2 and any other trade names used
in connection with the Property, (ii) the Contracts,
(iii) the Tenant Leases, all guaranties of the Tenant Leases,
all security deposits under the Tenant Leases (unless such
Contributor elects instead to have them credited to the New
Company), all other security, if any, under the Tenant Leases and
any rent prepaid under the Tenant Leases and (iv) all
Northland Licenses and/or Tarragon Licenses and any warranties,
guaranties and other rights relating exclusively to the ownership,
use, operation or development of the Property to the extent
transferable, but excluding the Northland Excluded Property and the
Tarragon Excluded Property.
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“ Interim Management
Agreement ” shall mean that certain Management Agreement
by and between each Contributor, as owner, and the Management JV,
as manager, in the form attached hereto as
Exhibit B .
“ Law ” or “
Laws ” has the meaning set forth in
Section 3.2(e) and 3.3(e).
“ Lender Consents
” shall mean the Tarragon Lender Consents or the Northland
Lender Consents, as applicable.
“ Limited Liability Company
Agreement ” shall mean the Limited Liability Company
Agreement of the New Company to be dated as of the First Closing
Date by and among the Members in the form attached hereto as
Exhibit A .
“ Loss ” or
“ Losses ” shall mean any and all claims,
losses, damages, costs, liabilities, Taxes, causes of action and
expenses, including, without limitation, attorney’s fees and
disbursements, whether direct, contingent or consequential.
“ Management Agreement :
has the meaning set forth in Section 1.4.
“ Management JV ”
has the meaning set forth in Section 1.4.
“ Material Adverse
Effect ” shall mean any circumstance, event, occurrence,
change or effect that is, or would be, or would reasonably be
expected to have a material adverse effect on the Companies, the
Real Properties, Personal Property or Intangibles being contributed
by the Northland Contributors or the Tarragon Contributors, as the
case may be, or the use, operation or value thereof, in each case
taken as a whole.
“ Material Casualty
” has the meaning set forth in Section 8.1.
“ Material Condemnation
” has the meaning set forth in Section 8.2.
“ Members ” has
the meaning set forth in the Recitals.
“ New Company ”
has the meaning set forth in the Recitals.
“ NIC ” has the
meaning set forth in the introductory paragraph.
“ NIC Companies ”
has the meaning set forth in the Recitals.
“ NIC Company Interests
” has the meaning set forth in the Recitals.
“ NIC Operating
Agreements ” has the meaning set forth in the
Recitals.
“ New Company ”
has the meaning set forth in the Recitals.
“ Northgate Purchase
Agreement ” has the meaning set forth in
Section 1.2.
“ Northland ” has
the meaning set forth in the introductory paragraph.
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“ Northland Austin
” has the meaning set forth in the introductory
paragraph.
“ Northland Austin Company
Interests ” has the meaning set forth in the
Recitals.
“ Northland Assumed Debt
” shall mean the existing mortgage and/or mezzanine financing
encumbering the Northland Company Interests or the Northland
Property as of the date of this Agreement as described in
Schedule E-1 hereto.
“ Northland Closing
Conditions ” shall have the meaning set forth in
Section 2.1
“ Northland Companies
” has the meaning set forth in the Recitals.
“ Northland Company
Interests ” shall mean, collectively, the Northland
Portfolio Company Interests, the Northland Fund I Company
Interests, the Northland Fund II Company Interests, the NIC Company
Interests, the Northland Austin Company Interests, the Austin
Investors Company Interests, the Drake Company Interests and the
Tatstone Company Interests.
“ Northland Consents
” has the meaning set forth in Section 2.2(c).
“ Northland 2/3s Consent
” has the meaning set forth in Section 2.2(a).
“ Northland Contracts
” shall mean, subject to the terms of this definition below,
all contracts, undertakings, commitments, agreements, obligations,
guarantees and warranties (i) relating to the Northland Property,
(ii) to which any of the Northland Companies are a party or
(iii) by which any of the Northland Companies or the Northland
Property is bound, including, without limitation, utility
contracts, management contracts, construction contracts,
maintenance and service contracts, parking contracts, equipment
leases and brokerage and leasing agreements, but excluding
(i) except as provided in Section 1.4, any Affiliate
Management Agreements, (ii) the Northland Leases and
(iii) the Northland Debt Instruments.
“ Northland Contributor
” shall mean any of Northland Portfolio, Northland Fund I,
Northland Fund II, Northland Fund III, NIC, Northland Austin,
Austin Investors, Drake, and Tatstone, as applicable.
“ Northland Debt
Instruments ” shall mean all agreements and other
instruments securing or evidencing the Northland Assumed Debt or
otherwise executed and delivered in connection therewith.
“Northland Excluded
Property ” shall mean: (i) all Cash of the Northland
Companies as of the Prorations Date that is distributed to the
Northland Companies at Closing pursuant to Section 1.1,
(ii) the name “Northland” and all permutations
thereof and all related tradenames, trademarks, service marks and
logos incorporating any thereof and all pending applications and
registrations thereof, (iii) the Northland web site located at
http://www.northland.com/ (and all sub-pages thereunder) and all
related domain names, internet registrations and copyrights therein
used to market, advertise or promote the “Northland”
name generally, (iv) any assets which Northland or its
Affiliates contribute to the Management JV, and (v) licenses
or other rights to computer software, programs or other information
technology or accounting or property management systems.
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“ Northland Fund I
” has the meaning set forth in the introductory
paragraph.
“ Northland Fund I
Companies ” has the meaning set forth in the
Recitals.
“ Northland Fund I Company
Interests ” has the meaning set forth in the
Recitals.
“ Northland Fund I Operating
Agreements ” has the meaning set forth in the
Recitals.
“ Northland Fund II
” has the meaning set forth in the introductory
paragraph.
“ Northland Fund II
Companies ” has the meaning set forth in the
Recitals.
“ Northland Fund II Company
Interests ” has the meaning set forth in the
Recitals.
“ Northland Fund II
Operating Agreements ” has the meaning set forth in the
Recitals.
“ Northland Fund III
” has the meaning set forth in the introductory
paragraph.
“ Northland Fund III
Companies ” has the meaning set forth in the
Recitals.
“ Northland Fund III Company
Interests ” has the meaning set forth in the
Recitals.
“ Northland Fund III
Operating Agreements ” has the meaning set forth in the
Recitals.
“ Northland Leases
” shall mean all leases, tenancy and occupancy agreements
affecting the Northland Property (including, without limitation,
all amendments, modifications, agreements, records, substantive
correspondence and other documents affecting in any way a right to
occupy any portion of the Northland Property).
“ Northland Lender
Consents ” shall mean, collectively, all approvals,
consents, acknowledgments, agreements and authorizations to the
transaction contemplated hereby from the holders of the Northland
Assumed Debt required under the Northland Debt Instruments or as
otherwise reasonably requested by Tarragon.
“ Northland Licenses
” has the meaning set forth in Section 3.3(c).
“ Northland Operating
Agreements ” has the meaning set forth in the
Recitals.
“ Northland Portfolio
” has the meaning set forth in the introductory
paragraph.
“ Northland Portfolio
Companies ” has the meaning set forth in the
Recitals.
“ Northland Portfolio
Company Interest s” has the meaning set forth in the
Recitals.
“ Northland Portfolio
Operating Agreements ” has the meaning set forth in the
Recitals.
“ Northland Property
” shall mean, collectively and individually, all
(A) Real Property of (i) the Northland Portfolio Companies as
described on Schedule B-1 attached hereto,
(ii) the Northland Fund I Companies as described on
Schedule B-2 attached hereto, (iii) the
Northland
12
Fund II
Companies as described on Schedule B-3 attached
hereto, (iv) the Northland Fund III Companies as described on
Schedule B-4 attached hereto, and (v) the
NIC Companies as described on Schedule B-5
attached hereto (each of items A(i), (ii), (iii), (iv) and
(v), collectively, the “ Northland Real Property
”), (B) Personal Property of (i) the Northland
Portfolio Companies as described on Schedule D-1
attached hereto, (ii) the Northland Fund I Companies as
described on Schedule D-2 attached hereto,
(iii) the Northland Fund II Companies as described on
Schedule D-3 attached hereto, (iv) the
Northland Fund III Properties as described on
Schedule D-4 attached hereto, and (v) the
NIC Properties as described on Schedule D-5
attached hereto (each of items B(i), (ii), (iii), (iv) and
(v), collectively, the “ Northland Personal Property
”), and (C) Intangibles owned by Northland. All
references in this Agreement to the Northland Property shall be
deemed to refer to all or any portion of the Northland
Property.
“ Northland Rent Roll
” has the meaning set forth in
Section 2.2(h)(iii).
“ Northland
Restructuring ” has the meaning set forth in
Section 1.2.
“ Notice ” has the
meaning set forth in Section 5.3(a).
“ OFAC ” and
“ OFAC Lists ” have the meaning set forth in
Section 3.2(t).
“ Permitted Exceptions
” shall mean and include all of the following items:
(a) applicable zoning and building ordinances and land use
regulations, as of the date of this Agreement and as of the date of
each Closing, (b) any deed, easement, restriction, covenant or
other matter affecting title to the Northland Property or Tarragon
Property that would be disclosed by a title report, title policy or
title commitment of the Northland Property or Tarragon Property, as
the case may be, on the date of this Agreement, (c) such state
of facts as would be disclosed by a physical inspection of the
Northland Property or the Tarragon Property, as the case may be, as
of the date of this Agreement, (d) the lien of taxes and
assessments not yet due and payable, as of the date of this
Agreement and as of the date of Closing, and (e) liens
securing the payment of the Assumed Debt. Permitted Exceptions
shall not include any lien that secures the payment of money (other
than the Assumed Debt), including, without limitation, mechanics
liens, which the Contributor contributing such Property shall
remove or cure on or before Closing.
“ Person ” shall
mean any individual, corporation, partnership, joint venture,
association, joint-stock company, business trust, limited liability
company, trust, unincorporated organization or government or a
political subdivision, agency or instrumentality thereof or other
entity or organization of any kind.
“ Personal Property
” shall mean all tangible personal property owned by a
Contributor located on or in or used exclusively in connection with
the Real Property of such Contributor as of the date of this
Agreement or on the applicable the Closing Date with respect to
such Real Property, including, without limitation, all equipment,
systems and appliances relating to the Property and other items
listed in Schedules D-1 through D-6
attached hereto, but excluding the Northland Excluded Property and
the Tarragon Excluded Property. Personal Property shall in no event
include personal property owned by tenants of such Real
Property.
13
“ Post-Closing Straddle
Period ” is defined in Section 4.11.
“ Pre-Closing Straddle
Period ” is defined in Section 4.11.
“ Pre-Closing Tax
Period” means any Tax period (or portion thereof) ending
on or before the relevant Prorations Date or Closing Date (as
determined in accordance with Section 4.11).
“ Property ” shall
mean one or more, as the case may be, of the Northland Property or
the Tarragon Property.
“ Property Value ”
has the meaning set forth in Section 8.1.
“ Prorations Date
” has the meaning set forth in Section 4.1.
“ Real Property ”
shall mean, individually for each parcel and collectively for all
parcels, the land (the “ Land ”), together with
all rights, licenses, privileges and easements appurtenant thereto,
including, without limitation, all minerals, oil, gas and other
hydrocarbon substances on and under and that may be produced from
the Land, as well as all development rights and land use
entitlements benefiting the Land and the right, title and interest
in off-site facilities and amenities servicing the Land or any
improvements located thereon, including, without limitation,
building permits and other governmental licenses, permits and
certificates, utilities commitments, air rights, water, water
rights, riparian rights and water stock relating to the Land and
any rights-of-way or other appurtenances used in connection with
the beneficial use and enjoyment of the Land and all of right,
title and interest in and to all roads, easements, rights of way,
strips or gores, alleys and other appurtenances adjoining or
servicing the Land (collectively, the “ Appurtenances
”) and all improvements and fixtures located on the Land or
the Appurtenances, and all apparatus and equipment used in
connection with the operation or occupancy of the Land, such
improvements or the Appurtenances, including, without limitation,
heating and air conditioning systems and facilities used to provide
any services on the Land or the Appurtenances or for the
improvements, and all parking and related facilities and amenities
(collectively, the “ Improvements ”).
“ Reference Rate ”
has the meaning set forth in Section 5.1(b).
“ Related Documents
” means, collectively, all documents to be executed and
delivered by the Contributors pursuant to this Agreement,
including, without limitation, the Limited Liability Company
Agreement and all other documents referred to in
Sections 2.1(h) and 2.2(h) required to be executed and
delivered by the Contributors in connection with any Closing.
“ Straddle Period
” is defined in Section 4.11.
“ Tarragon ” has
the meaning set forth in the introductory paragraph.
“ Tarragon Assumed Debt
” shall mean the existing mortgage and/or mezzanine financing
encumbering the Tarragon Company Interests or the Tarragon Property
as of the date of this Agreement as described in
Schedule E-2 hereto.
14
“ Tarragon Closing
Conditions ” shall have the meaning set forth in
Section 2.2.
“ Tarragon Company
Interests ” has the meaning set forth in the
Recitals.
“ Tarragon Companies
” has the meaning set forth in the Recitals.
“ Tarragon Consents
” has the meaning set forth in Section 2.1(c).
“ Tarragon Contracts
” shall mean, subject to the terms of this definition below,
all contracts, undertakings, commitments, agreements, obligations,
guarantees and warranties (i) relating to the Tarragon
Property, (ii) to which any of the Tarragon Companies are a
party or (iii) by which any of the Tarragon Companies or the
Tarragon Property is bound, including, without limitation, utility
contracts, management contracts, construction contracts,
maintenance and service contracts, parking contracts, equipment
leases and brokerage and leasing agreements, but excluding
(i) except as provided in Section 1.4, any Affiliate
Management Agreement, (ii) the Tarragon Leases and
(iii) the Tarragon Debt Instruments.
“ Tarragon Contributor
” shall mean any of Tarragon Corporation and Ansonia, as
applicable.
“ Tarragon Corporation
” has the meaning set forth in the introductory
paragraph.
“ Tarragon Corporation
Company Interests ” has the meaning set forth in the
Recitals.
“ Tarragon Debt
Instruments ” shall mean all agreements and other
instruments securing or evidencing the Tarragon Assumed Debt or
otherwise executed and delivered in connection therewith.
“ Tarragon Excluded
Property ” shall mean: (i) all Cash of the Tarragon
Companies as of the Prorations Date that is distributed to the
Tarragon Companies at Closing pursuant to Section 1.1,
(ii) the names “Tarragon” and
“Vintage” and all permutations thereof and all related
tradenames, trademarks, service marks and logos incorporating any
thereof and all pending applications and registrations thereof,
(iii) the Tarragon web site located at
http://www.tarragon.com/ (and all sub-pages thereunder) and all
related domain names, internet registrations and copyrights therein
used to market, advertise or promote the “Tarragon”
name generally, (iv) any assets which Tarragon or its
Affiliates contribute to the Management JV, and (v) licenses
or other rights to computer software, programs or other information
technology or accounting or property management systems.
“ Tarragon GE Assumed
Debt ” has the meaning set forth in
Section 2.1(a).
“ Tarragon GE Consent
” has the meaning set forth in Section 2.1(a).
“ Tarragon GE Property
” shall mean that portion of the Tarragon Property that is
encumbered or otherwise subject to the Tarragon GE Assumed
Debt.
“ Tarragon Leases
” shall mean all leases, tenancy and occupancy agreements
affecting the Tarragon Property (including, without limitation, all
amendments, modifications, agreements,
15
records,
substantive correspondence and other documents affecting in any way
a right to occupy any portion of the Tarragon Property).
“ Tarragon Lender
Consents ” shall mean, collectively, all approvals,
consents, acknowledgments, agreements and authorizations to the
transaction contemplated hereby from the holders of the Tarragon
Assumed Debt required under the Tarragon Debt Instruments or as
otherwise reasonably requested by Northland.
“ Tarragon Licenses
” has the meaning set forth in Section 3.2(e).
“ Tarragon Operating
Agreements ” has the meaning set forth in the
Recitals.
“ Tarragon Property
” shall mean, collectively and individually, all
(A) Real Property of Tarragon as described on
Schedule B-6 attached hereto (collectively, the
“ Tarragon Real Property ”), (B) Personal
Property of Tarragon as described on
Schedule D-6 attached hereto (collectively, the
“ Tarragon Personal Property ”), and
(C) Intangibles owned by Tarragon. All references in this
Agreement to the Tarragon Property shall be deemed to refer to all
or any portion of the Tarragon Property.
“ Tarragon Rent Roll
” has the meaning set forth in Section 2.1(h)(iv).
“ Tarragon Restructuring
” has the meaning set forth in the Recitals.
“ Tarragon SPE ”
has the meaning set forth in Section 1.1(g).
“ Tatstone ” has
the meaning set forth in the introductory paragraph.
“ Tatstone Company
Interests ” has the meaning set forth in the
Recitals.
“ Tax ” or “
Taxes ” shall mean any federal, state, local or
foreign income, gross receipts, capital gains, franchise,
alternative or add-on minimum, estimated, sales, use, goods and
services, transfer, registration, value added, excise, natural
resources, severance, stamp, occupation, premium, windfall profit,
environmental, customs, duties, real property, special assessment,
personal property, capital stock, social security, unemployment,
employment, disability, payroll, license, employee or other
withholding, contributions or other tax, of any kind whatsoever,
including any interest, penalties or additions to tax or additional
amounts in respect of the foregoing.
“ Tenant Leases ”
shall mean one or more, as the case may be, of the Northland Leases
or the Tarragon Leases.
“ Third Party ”
has the meaning set forth in Section 9.2.
“ Vintage/Aldridge Purchase
Agreements ” shall mean the Agreements of Purchase and
Sale dated the date hereof between the New Company, as buyer, and
Morningside National, Inc. and Tarragon Corporation as seller, as
applicable, for the sale to the New Company of the “Aldridge
at Gateway” and “Vintage at the Grove”
properties.
16
ARTICLE 1 — CONTRIBUTION OF INTERESTS
1.1 Contribution of the
Interests.
(a)
Equity Value and Issuance of Common Units . At each Closing,
subject to the terms and conditions of this Agreement, each
Contributor agrees to contribute and convey to the New Company the
Company Interests directly owned by it and reflecting the same
direct and indirect ownership in the Companies shown on the
applicable Schedules A-1 through A-7 , except as
otherwise modified by the Tarragon Restructuring or the Northland
Restructuring, as applicable (as to such Contributor, the “
Contributed Companies ”) which hold the Properties for
which the necessary Lender Consents have been obtained (as to such
Contributor, the “ Contributed Properties ”).
Each Contributor shall, through its contribution of the Company
Interests, contribute the Contributed Properties subject only to
the Permitted Exceptions, the Leases, the Contracts, the Licenses
and such other leases, contracts and licenses as may be permitted
to be entered into hereafter in accordance with Section 7.1.
To the extent more than one Contributor owns interests in the same
Company, then, at Closing, all of the Company Interests in such
Company that will be contributed to the New Company must be
contributed at the same Closing. In consideration of such
contribution and conveyance and in reliance on the representations
and warranties of such Contributor contained in or made pursuant to
the terms of this Agreement, the parties hereto agree to cause the
New Company to issue at such Closing to such Contributor a Common
Unit for each ten dollars ($10.00) of Equity Value so contributed
by it. Each Contributor shall be admitted as a member of the New
Company upon the initial issuance to such Contributor of Common
Units under and in accordance with the terms of the Limited
Liability Company Agreement. The term “ Equity Value
” means, for each Contributor on each Closing Date, the sum
of the following values for each Contributed Property of such
Contributor on such Closing Date: (i) the net asset value of
such Contributed Property, (as shown in the column labeled
“Market Value Equity” on Schedule 1.1), multiplied
by (ii) the Contribution Percentage of such Contributor in
such Contributed Property, subject to adjustment as provided in
Section 1.1(b), (c) and (d).
(b)
Adjustment for Debt . At each Closing, with respect to each
Contributor and each Company Interest in a Contributed Company
being contributed by it on such Closing, if the aggregate principal
amount of indebtedness, and all accrued and unpaid interest, owed
by the Contributed Company or otherwise encumbering the Contributed
Property owned by such Contributed Company exceeds as of the
Prorations Date the estimated amount of Assumed Debt (as shown in
the columns labeled “Mortgage Balance at 2/29/08” and
“Mezzanine Financing at 2/29/08” on
Schedule 1.1 ) for such Contributed Property,
then the Equity Value of such Contributor will be reduced by the
product of (x) the amount of such excess and (y) the
Contribution Percentage of such Contributor in the Contributed
Company; and (ii) if the estimated amount of Assumed Debt (as
shown in the columns labeled “Mortgage Balance at
2/29/08” and “Mezzanine Financing at 2/29/08” on
Schedule 1.1 ) for such Contributed Property
exceeds the aggregate principal amount of indebtedness, and all
accrued and unpaid interest, owed by such Contributed Company or
otherwise encumbering its Contributed Property on the Prorations
Date, then the Equity Value of such Contributor shall be increased
by the product of (x) the amount of such excess and
(y) the Contribution Percentage of such Contributor in such
Contributed Company. On each Closing Date, the increases or
reductions in a Contributor’s Equity Value for all
Contributed Properties being contributed by it on such Closing Date
will be
17
aggregated, and the net increase or reduction, as applicable, will
adjust such Contributor’s Equity Value for purposes of
determining the number of Common Units to be issued to it pursuant
to Section 1.1(a).
(c)
Adjustment for Cash . It is the intention of the
Contributors that Cash of each Contributed Company held on the
Prorations Date shall be distributed to the applicable Contributed
Companies on or before Closing, and Cash of each Contributed
Company held after the Prorations Date shall be contributed to the
New Company at Closing without adjustment in any
Contributor’s Equity Value. Consequently, each Contributor
shall use diligent efforts to distribute Cash held by each of its
Contributed Companies as of the Prorations Date on or prior to the
Closing Date. If, despite using such diligent efforts, any Cash
held by a Contributed Company as of the Prorations Date is not so
distributed on or prior to the Closing Date, then the Equity Value
of the Contributors of such Contributed Company will increase, pro
rata in proportion to their respective Contribution Percentages.
Each Contributor is hereby prohibited from distributing any Cash of
a Contributed Company held after the Prorations Date following the
delivery of a Closing Notice in which it is anticipated that the
Company Interests in the applicable Contributed Companies will be
contributed at Closing; and in that case any Cash so distributed in
excess of Cash held by the Contributed Company as of the Prorations
Date will reduce the Equity Value of the Contributors of such
Contributed Company, pro rata in proportion to their respective
Contribution Percentages.
(d)
Adjustment for Net Prorations . At each Closing, the net
proration amount for each Contributed Property, computed pursuant
to Section 4.11 , will adjust the Equity Value
of each Contributor contributing a Company Interest (directly or
indirectly) in such Contributed Property, pro rata, in proportion
to their respective Contribution Percentages. If such net proration
amount is a positive credit in favor of the Contributors of such
Contributed Property, such adjustment will increase the Equity
Value of such Contributors; and if such net proration amount is a
negative debit owed to the New Company by such Contributors of such
Contributed Property, such adjustment will reduce the Equity Value
of such Contributors. On each Closing Date, the increases or
reductions in a Contributor’s Equity Value for all
Contributed Properties being contributed by it on such Closing Date
under this Section 1.1(d) will be aggregated, and the net
increase or reduction, as applicable, will adjust such
Contributor’s Equity Value for purposes of determining the
number of Common Units to be issued to it pursuant to
Section 1.1(a).
(e) The
provisions of this Section 1.1 shall survive each
Closing.
1.2 Certain Changes in the
Contribution Transactions .
(a)
Northland Restructuring . Notwithstanding anything herein to
the contrary, Northland Portfolio may restructure its contribution
of the Northland Portfolio Company Interests to the New Company on
any basis so long as the restructuring has the same overall
economic effect as the contributions and other transactions
otherwise contemplated by this Agreement (the “Northland
Restructuring”). Tarragon shall have the right to review and
approve the Northland Restructuring, which approval shall not be
unreasonably withheld, conditioned or delayed; provided,
however , that such approval may be withheld if, in the
reasonable, good faith
18
business
judgment of Tarragon, the Northland Restructuring will have a
material adverse tax or other economic consequence for the New
Company or any Tarragon Contributor.
(b)
Tarragon Restructuring . Tarragon shall complete the
Tarragon Restructuring on or before the applicable Closing Date in
which such Tarragon Company Interests are to be contributed to the
New Company, in whole, or with respect to a Closing at which less
than all of the Tarragon Company Interests are being contributed to
the New Company, in respect of the Tarragon Company Interests being
contributed at such Closing. Tarragon shall have the right to
change the Tarragon Restructuring from time to time so long as the
Tarragon Restructuring has the same overall economic effect as the
contributions and other transactions otherwise contemplated by this
Agreement, subject Northland’s right to review and approve
the Tarragon Restructuring, which approval shall not be
unreasonably withheld, conditioned or delayed; provided,
however , that such approval may be withheld if, in the
reasonable, good faith business judgment of Northland, such change
in the Tarragon Restructuring will have a material adverse tax or
other economic consequence for the New Company or any Northland
Contributor.
(c)
Tarragon SPE Sub . Tarragon Corporation may at any time form
a special-purpose wholly owned subsidiary for the purpose of
holding the Common Units issuable to it by the New Company
hereunder (the “ Tarragon SPE ”), and
thereafter, the obligations of Tarragon Corporation hereunder may
be performed by Tarragon SPE. Notwithstanding anything herein to
the contrary, Tarragon Corporation shall not be relieved of any of
its obligations or liabilities under this Agreement by reason of
forming such Tarragon SPE or causing such Tarragon SPE to hold
Tarragon Corporation’s Common Units.
(d)
Northgate and Bermuda Island . Northland and Tarragon
acknowledge and agree that the Properties identified on
Schedule 1.1 as Northgate and Bermuda Island are
currently the subject of (i) that certain Purchase and Sale
Agreement dated as of March 5, 2008 by and between Middletown
Tarragon LLC and Northland Fund III (the “ Northgate
Purchase Agreement ”) pursuant to which Middletown
Tarragon LLC has agreed to sell and Northland Fund III has agreed
to purchase the Northgate property, and (ii) that certain
Membership Interest Purchase and Sale Agreement dated as of
March 5, 2008 by and between Tarragon Corporation and
Northland Fund II (the “ Bermuda Island Purchase
Agreement ”) pursuant to which Tarragon Corporation has
agreed to sell and Northland Fund II has agreed to purchase the
membership interests in Bermuda Island Tarragon, LLC. Northland and
Tarragon further agree that, to the extent either of the closings
on Northgate and/or Bermuda Island occur on or prior to the Final
Closing Date hereunder, (i) such closed property shall
thereafter constitute a “Northland Property” hereunder,
other than as provided in Section 3.6 of this Agreement,
(ii) Middletown Tarragon LLC will constitute a
“Northland Company” hereunder, other than as provided
in Section 3.6 of this Agreement, (iii) the membership
interests in such additional Northland Company shall constitute
“Northland Company Interests” hereunder to be
contributed to the New Company on the next Closing, other than as
provided in Section 3.6 of this Agreement, and
(iv) Northland Fund III and Northland Fund II will receive the
Equity Value attributed to such Property as provided in
Schedule 1.1. , subject to adjustment as
provided herein.
(e) The
provisions of this Section 1.2 shall survive each
Closing.
19
1.3 Closing .
(a) The
initial closing of the transactions contemplated under this
Agreement (the “ First Closing ”) will take
place as promptly as possible but in no event later than the first
(1 st )
Business Day of the first month immediately following the month in
which the Tarragon GE Consent and the Northland 2/3s Consent are
both obtained (the “ First Closing Date
”).
(b) To
the extent that fewer than all of the Company Interests have been
contributed to the New Company on the First Closing Date, then
subsequent closings (together with the First Closing, each a
“ Closing ”) will occur on the first (1
st )
Business Day of each month immediately following the month in which
either the Northland Contributing Group or the Tarragon
Contributing Group delivers to the other party written notice (each
a “ Closing Notice ”) that its Contributing
Group has received additional Lender Consents and is prepared to
satisfy the Closing Conditions applicable to its Contributing Group
at Closing as to one or more Properties and the related Company
Interests not previously contributed (together with the First
Closing Date, each a “ Closing Date ”). On each
Closing Date, each Contributing Group will contribute to the New
Company all of the Company Interests with respect to which (and to
the extent not previously contributed) its Closing Conditions have
been satisfied or waived by the other Contributing Group.
Notwithstanding anything in the foregoing to the contrary, if
either Contributing Group believes or has knowledge that the other
Contributing Group has received additional Lender Consents, then a
Closing Notice may be sent by either of the Contributing Groups
hereunder.
(c) Notwithstanding
the foregoing, (i) no Closing Notice may be given later than
December 22, 2008, (ii) if a Closing Notice is delivered
during the last five (5) Business Days of any calendar month
(other than the month of December 2008), the Closing with
respect to such Closing Notice shall occur on the first (1
st )
Business Day of the second calendar month following delivery of
such Closing Notice, (iii) if a Closing Notice is delivered
during the month of December 2008, the Closing with respect to
such Closing Notice will occur on December 31, 2008 (the
“ Final Closing Date ”), and (iv) no
Closing will occur later than the Final Closing Date. If on the
Final Closing Date, fewer than all of the Company Interests have
been contributed to the New Company, then, other than those Company
Interests that have not been contributed to the New Company as a
result of a breach or default hereunder, with respect to which the
non-breaching and/or non-defaulting parties shall retain any and
all rights and remedies related thereto under this Agreement, the
remaining uncontributed Company Interests, Companies and Properties
shall not be contributed to the New Company, whereupon this
Agreement shall be deemed to have been terminated as to such
Company Interests, Companies and Properties (but not as to any
other Company Interests, Companies or Properties) and the parties
hereto shall have no further obligations or liabilities in respect
thereof hereunder, other than with respect to provisions hereof
which expressly survive termination.
(d) Each
Closing shall occur in the offices of Goodwin Procter LLP, 620
Eighth Avenue, New York, NY 10018 on the Closing Date, unless
otherwise agreed in writing by Tarragon Corporation and NIC. Each
Closing shall occur pursuant to closing arrangements reasonably
satisfactory to Tarragon Corporation and NIC.
20
1.4 Management JV .
Simultaneously with the execution and delivery of this Agreement,
(i) Tarragon Corporation and NIC will form Northland
Properties Management LLC (the “ Management JV
”) and will execute and deliver the Limited Liability Company
Agreement of the Management JV in the form attached hereto as
Exhibit E , and (ii) the applicable
Tarragon Contributors, the applicable Northland Contributors and
the Management JV shall enter into the Interim Management
Agreement, which will govern the management of the Tarragon
Properties and the Northland Properties prior to contribution to
the New Company. At each Closing, the applicable Contributors and
the New Company will execute and deliver partial terminations of
the Interim Management Agreement with respect to the Contributed
Properties. At each Closing, the Board of Managers (as defined in
the Limited Liability Company Agreement) on behalf of the New
Company will enter into a new management agreement with Management
JV on substantially the same economic terms as the Interim
Management Agreement to govern the management of the Contributed
Properties from time to time.
1.5 Other Affiliate Management
Agreements . Except as provided in Section 1.4, the
Contributed Companies and the Contributed Properties will at their
respective Closings be subject to no property management,
construction management, development, leasing, brokerage or similar
agreement with any Affiliate of the Contributor (each an “
Affiliate Management Agreement ”), and the Contributor
will cause any Affiliate Management Agreements to be terminated at
Closing for each Contributed Company and each Contributed Property
at its sole expense.
1.6 Tarragon Company Names .
Immediately following each Closing, Northland will cause the New
Company to change the name of any Contributed Company which uses
the name “Tarragon” or any other name comprising part
of the Tarragon Excluded Property to another name which does not
include “Tarragon” or any other such name.
ARTICLE 2 — CERTAIN COVENANTS AND CONDITIONS TO
CLOSING
2.1 Covenants and Conditions to
Northland’s Obligation to Closing. The obligation of
Northland to consummate the transactions contemplated hereunder on
each Closing Date shall be subject to the satisfaction or waiver by
Northland of each of the conditions set forth below (collectively,
the “ Northland Closing Conditions ”).
(a)
Minimum Lenders’ Approval at First Closing . As a
condition to the First Closing, Northland shall have obtained the
Northland 2/3s Consent. As an additional condition to the First
Closing, Tarragon shall have obtained and delivered to Northland,
and Northland shall cooperate to the extent reasonably necessary
with Tarragon at no additional cost or expense to Northland, to
obtain, all approvals, consents, acknowledgments, agreements and
authorizations to the transaction contemplated hereby, including,
without limitation, to the Tarragon Restructuring, required from
the General Electric Capital Corporation (“ GE Lender
”) or reasonably requested by Northland (collectively, the
“ Tarragon GE Consent ”), which is the holder of
that portion of the Tarragon Assumed Debt (the “ Tarragon
GE Assumed Debt ”) identified on
Schedule 2.1(a) . It shall be a condition to
Northland’s obligations under this Agreement that the
Tarragon GE Consent shall be in form and substance reasonably
satisfactory
21
to
Northland and shall be executed and delivered by all applicable
parties thereto at the First Closing.
(b)
Other Lender Consents . On each Closing on which Northland
Company Interests that are not subject to the Northland 2/3s
Consent are contributed to the New Company, then with respect to
such contribution, Northland shall have obtained the Northland
Lender Consents. As a further condition to each Closing on which
Tarragon Company Interests that are not subject to the Tarragon GE
Consent are contributed to the New Company, then with respect to
such contribution, Tarragon shall have obtained and delivered to
Northland, and Northland shall cooperate to the extent reasonably
necessary with Tarragon at no additional cost or expense to
Northland to obtain, the Tarragon Lender Consents. It shall be a
condition to Northland’s obligations under this Agreement
that the Tarragon Lender Consents shall be in form and substance
reasonably satisfactory to Northland and shall be executed and
delivered by all applicable parties thereto at such Closing.
(c)
Tarragon Consents . On or before the date hereof, each of
the Tarragon Contributors and the Tarragon Companies has obtained
the requisite corporate consents and/or approvals to the
transaction contemplated by this Agreement and to the terms and
conditions of this Agreement and the Related Documents, which
consents are listed on Schedule 2.1(c)
(collectively, the “ Tarragon Consents ”), other
than consents required with respect to the Tarragon Restructuring,
which consents are under the control of Tarragon and will be
obtained in due course prior to Closing. On or before the date
hereof, Northland has received copies of the Tarragon Consents or
other evidence of such Tarragon Consents satisfactory to it.
(d)
Accuracy of Representations and Warranties . The
representations and warranties of each of the Tarragon Contributors
contained herein shall be true and correct in all material respects
as of the date of this Agreement and at the time of each Closing,
other than any of the foregoing which alone or together do not
constitute a Material Adverse Effect.
(e)
Authority . Each of the Tarragon Contributors and the
Tarragon Companies shall have delivered to Northland evidence of
its authority to execute and deliver this Agreement and all Related
Documents and to consummate the transaction which is the subject of
this Agreement and the particular Closing and to perform its
obligations hereunder and under the Related Documents. All such
evidence shall be in form and substance reasonably satisfactory to
Northland and shall include, without limitation, organizational
documents of the Tarragon Companies and their respective general
partners or managing members, certified by the Secretary of State
of the state(s) in which they are organized, certificates of legal
existence and good standing, qualifications to do business, if
applicable, and secretary’s certificates as to resolutions
and incumbency.
(f)
Absence of Litigation . Other than as disclosed on
Schedule 2.1(f) , no Action shall be pending or
threatened against any Tarragon Contributor, any of the Tarragon
Companies or any Tarragon Property, which (i) questions or
could reasonably be expected to question the validity or legality
of the transaction contemplated under this Agreement or the Related
Documents or (ii) affects or could reasonably be expected to
affect any Tarragon Property which alone or together with Actions
affecting or reasonably expected to affect other Tarragon
Properties constitutes a Material Adverse Effect.
22
(g)
Absence of Material Change and Default . Since the date of
this Agreement, there shall not have been any material adverse
change in the condition, financial or otherwise, of any Tarragon
Company or any Tarragon Property, which shall constitute a Material
Adverse Effect. Tarragon shall have complied in all material
respects with all of its obligations hereunder, other than any
failures to comply which alone or together do not constitute a
Material Adverse Effect.
(h)
Delivery of Tarragon Documents . At each Closing, each
Tarragon Contributor shall execute and deliver to Northland and/or
the New Company, as applicable, the following, in form and
substance satisfactory to Northland:
(i) Assignment of Interests .
An assignment to the New Company of Company Interests to be
assigned by such Tarragon Contributor on such Closing Date, in the
form attached hereto as Exhibit C ;
(ii) Entity Transfer
Certificate(s) . Entity transfer certification in the form
described in United States Treasury
Regulation Section 1.1445-2(b)(2) confirming that each
applicable transferor of Tarragon Property (as determined for
purposes of Section 1445 of the Code) that are the subject of
the applicable Closing is not a “foreign person” as
defined in Section 1445(f)(3) of the Code;
(iii) Original Documents and
Files . To the extent not previously delivered to the New
Company or the Manager and in Tarragon’s possession or under
its control, originals of any of the Tarragon Contracts, Tarragon
Leases and Tarragon Licenses with respect to the Tarragon
Properties that are the subject of the applicable Closing, or if
the original is not in Tarragon’s possession or control,
copies thereof. The obligations under this item (iii) may be
satisfied by delivery of such original documents and files to the
Management JV;
(iv) Rent Roll . An updated
Tarragon Rent Roll for each Tarragon Property that is the subject
of the applicable Closing dated no later than five (5) days prior
to Closing, which updated Tarragon Rent Roll will be used to
identify all Tarragon Leases of space at the Tarragon Property that
is the subject of the applicable Closing for purposes of this
Agreement as of the Closing Date and shall reflect no material
adverse changes from the Tarragon Rent Roll attached hereto as
Schedule 2. 1(h)(iv) (the “
Tarragon Rent Roll ”), other than any such changes
which alone or together do not constitute a Material Adverse
Effect. Each Tarragon Contributor shall deliver a certificate dated
as of the applicable Closing Date certifying that the Tarragon Rent
Roll applicable to its Contributed Properties is true, complete and
correct (including, without limitation, the amount of security
deposits and description of uncured tenant defaults and
delinquencies listed thereon);
(v) Debt Instruments .
Originals of all of the Tarragon Debt Instruments that are the
subject of the applicable Closing. The obligations under this item
(v) may be satisfied by delivery of such original documents and
files to the Manager;
23
(vi) Limited Liability Company
Agreement . At the First Closing, a counterpart original of the
Limited Liability Company Agreement executed by each Tarragon
Contributor;
(vii) Management Agreement. At
each Closing, each Tarragon Contributor will deliver any documents
necessary to evidence the termination of any Affiliate Management
Agreements as to its Contributed Properties and Contributed
Companies. In addition, each Tarragon Contributor will execute and
deliver such other documents as may be necessary to evidence the
termination of the Interim Management Agreement and the
effectiveness of the Management Agreement as to such Contributed
Property;
(viii) Title Matters .
Customary affidavits sufficient for a title company to issue any
non-imputation endorsements as part of, or to delete any exceptions
for parties in possession (other than tenants under Tenant Leases),
mechanic’s or materialmen’s liens from any new title
policy or date-down to existing policies obtained in connection
with any Tarragon Property, to the extent such new policy or
date-down is required by any lender in connection with obtaining
any of the Lender Consents;
(ix) Closing Statement . A
counterpart original of a closing statement setting forth the
closing adjustments and any applicable adjustment to any
Contributor’s Equity Value, as applicable;
(x) Transfer Tax Returns . Any
and all transfer tax returns, declarations of value or other
documents required under applicable law or as necessary in
connection with the transactions contemplated hereunder;
(xi) Vintage . On each Closing
at which any Tarragon Property using the tradename
“Vintage” is contributed, Tarragon Corporation will
execute and deliver to the Contributed Company holding such
Tarragon Property a fully paid, nonexclusive license to use such
tradename, in the form attached hereto as
Exhibit F ;
(xii) Other . Such other
documents, instruments, consents, authorizations or approvals as
may be required by, and reasonably satisfactory to, Northland or
its counsel or any lender or its counsel and that may be reasonably
necessary or desirable to consummate the transactions that are the
subject of this Agreement and the Related Documents and to
otherwise effect the agreements of the parties hereto, including,
without limitation, as required under this Section.
(i)
Accuracy of Documents . Each Tarragon Contributor shall have
certified to Northland, severally and not jointly, at each
applicable Closing as to which it has Contributed Properties that
all materials delivered pursuant to Section 2.1(h)(iii) and
2.1(h)(v) are true, correct and complete copies of all such
documents in such Tarragon Contributor’s possession or under
its control and, to such Tarragon Contributor’s knowledge,
there are no other material
24
agreements or documents relating to the subject matter thereof in
such Tarragon Contributor’s possession or under its
control.
2.2 Certain Covenants and
Conditions to Tarragon’s Obligation to Close . The
obligation of Tarragon to consummate the transactions contemplated
hereunder shall be subject to the satisfaction or waiver by
Tarragon of each of the conditions set forth below (collectively,
the “ Tarragon Closing Conditions ”).
(a)
Minimum Lenders’ Approval . As a condition to the
First Closing, the Tarragon GE Consent shall have been obtained. As
an additional condition to the First Closing, Northland shall have
(i) obtained and delivered to Tarragon, and Tarragon shall
cooperate to the extent reasonably necessary with Northland at no
additional cost or expense to Tarragon, to obtain, all approvals,
consents, acknowledgments, agreements and authorizations to the
transaction contemplated hereby from the holders of the Northland
Assumed Debt or (ii) determined in its reasonable judgment
that no such approval, consent, acknowledgement, agreement or
authorization is required in connection with the transactions
contemplated hereunder from such holders, with respect to at least
two-thirds of the net asset value of the Northland Properties as
set forth on Schedule 1.1 hereto (collectively,
the “ Northland 2/3s Consent ”). It shall be a
condition to Tarragon’s obligations under this Agreement that
the Northland 2/3s Consent shall be in form and substance
reasonably satisfactory to Tarragon and shall be executed and
delivered by all applicable parties at the First Closing. In
addition, to the extent required in connection with the Northland
Company Interests being contributed at the First Closing, Northland
shall have obtained the consent of Sovereign Bank under the
Northland Portfolio L.P. Credit Facility.
(b)
Other Lender Consents . On each Closing on which Tarragon
Company Interests that are not subject to the Tarragon GE Consent
are contributed to the New Company, then with respect to such
contribution, the Tarragon Lender Consents shall have been
obtained. As a further condition to each Closing on which Northland
Company Interests that are not the subject of the Northland 2/3s
Consent are contributed to the New Company, then with respect to
such contribution, Northland shall have (i) obtained and
delivered to Tarragon, and Tarragon shall cooperate to the extent
reasonably necessary with Northland at no additional cost or
expense to Tarragon, to obtain the Northland Lender Consents and,
to the extent required, consent of Sovereign Bank under the
Northland Portfolio L.P. Credit Facility, or (ii) determined
in its reasonable judgment that no such additional Northland Lender
Consents are required in connection with the transactions
contemplated hereunder. It shall be a condition to Tarragon’s
obligations under this Agreement that the Northland Lender Consents
shall be in form and substance reasonably satisfactory to Tarragon
and shall be executed and delivered by all applicable parties at
such Closing.
(c)
Northland Consents . On or before the date hereof, each of
the Northland Contributors and the Northland Companies has obtained
the requisite corporate consents and/or approvals to the
transaction contemplated by this Agreement and to the terms and
conditions of this Agreement and the Related Documents, which
consents are listed on Schedule 2.2(c)
(collectively, the “ Northland Consents ”), and
Tarragon has received copies thereof or other evidence of such
Tarragon Consents satisfactory to it.
25
(d)
Accuracy of Representations and Warranties . The
representations and warranties of each of the Northland
Contributors contained herein shall be true and correct in all
material respects as of the date of this Agreement and at the time
of each Closing, other than any of the foregoing which alone or
together do not constitute a Material Adverse Effect.
(e)
Authority . Each of the Northland Contributors shall have
delivered to Tarragon evidence of its authority to execute and
deliver this Agreement and all Related Documents and to consummate
the transaction which is the subject of this Agreement and the
particular Closing and to perform its obligations hereunder and
under the Related Documents. All such evidence shall be in form and
substance reasonably satisfactory to Tarragon and shall include,
without limitation, organization documents of the Northland
Companies and their respective general partners or managing
members, certified by the Secretary of State of the state(s) in
which they are organized, certificates of legal existence and good
standing, qualifications to do business, if applicable, and
secretary’s certificates as to resolutions and
incumbency.
(f)
Absence of Litigation . Other than as disclosed on
Schedule 2.2(f) , no Action shall be pending or
threatened against any Northland Contributor, any of the Northland
Companies or any Northland Property, which (i) questions or
could reasonably be expected to question the validity or legality
of the transaction contemplated under this Agreement or the Related
Documents or (ii) affects or could reasonably be expected to
affect any Northland Property which alone or together with Actions
affecting or reasonably expected to affect other Northland
Properties constitutes a Material Adverse Effect.
(g)
Absence of Material Change and Default . Since the date of
this Agreement, there shall not have been any material adverse
change in the condition, financial or otherwise, of any Northland
Company or any Northland Property, which shall constitute a
Material Adverse Effect. Northland shall have complied in all
material respects with all of its obligations hereunder, other than
any failures to comply which alone or together do not constitute a
Material Adverse Effect.
(h)
Delivery of Northland Documents . At each Closing, each
Northland Contributor shall execute and deliver to Tarragon and/or
the New Company, as applicable, the following, in form and
substance satisfactory to Tarragon:
(i) Assignment of Interests .
To the extent not previously assigned to the New Company, an
assignment to the New Company of the interests in the Northland
Companies with respect to which Northland Lender Consents have been
obtained, in the form attached hereto as
Exhibit C , or to the extent that any such
Company Interests are shares, duly executed stock powers effecting
an assignment of such
shares;
(ii) Entity Transfer
Certificate(s) . Entity transfer certification in the form
described in United States Treasury
Regulation Section 1.1445-2(b)(2) confirming that each
applicable transferor of Northland Property (as determined for
purposes of Section 1445 of the Code) is not a “foreign
person” as defined in Section 1445(f)(3) of the Code;
26
(iii) Original Documents and
Files . To the extent not previously delivered to the New
Company or the Manager and in Northland’s possession or under
its control, originals of any of the Northland Contracts, Northland
Leases and Northland Licenses with respect to the Northland
Properties that are the subject of the applicable Closing, or if
the original is not in Northland’s possession or control,
copies thereof. The obligations under this item (iv) may be
satisfied by delivery of such original documents and files to the
Management JV under the Management Agreement;
(iv) Rent Roll . An updated
Northland Rent Roll for each Northland Property that is the subject
of the applicable Closing dated no later than five (5) days
prior to Closing, which updated Northland Rent Roll will be used to
identify all Northland Leases of space at the Northland Property
that is the subject of the applicable Closing for purposes of this
Agreement as of the Closing Date and shall reflect no material
adverse changes from the Northland Rent Roll attached hereto as
Schedule 2. 2(h)(iv) (the “
Northland Rent Roll ”), other than any such changes
which alone or together do not constitute a Material Adverse
Effect. Each Northland Contributor shall deliver a certificate
dated as of the applicable Closing Date certifying that the
Northland Rent Roll applicable to Contributed Properties is true,
complete and correct (including, without limitation, the amount of
security deposits and description of uncured tenant defaults and
delinquencies listed thereon) and stating whether there exist any
events which with the passage of time and/or the giving of notice
would constitute a tenant default under any Northland Lease;
(v) Debt Instruments .
Originals of all of the Northland Debt Instruments that are the
subject of the applicable Closing. The obligations under this item
(v) may be satisfied by delivery of such original documents
and files to the Manager;
(vi) Limited Liability Company
Agreement . At the First Closing, a counterpart original of the
Limited Liability Company Agreement executed by the applicable
Northland Contributors contributing Northland Company Interests to
the New Company at the First Closing and then, thereafter, with
respect to those entities that have not executed the Limited
Liability Company Agreement, on the applicable Closing Date, if
any, in which such entity contributes Northland Company Interests;
and
(vii) Management Agreement .
At each Closing, each Northland Contributor will deliver any
documents necessary to evidence the termination of any Affiliate
Management Agreements as to its Contributed Properties and
Contributed Companies. In addition, each Northland Contributor will
execute and deliver such other documents as may be necessary to
evidence the termination of the Interim Management Agreement and
the effectiveness of the Management Agreement as to such
Contributed Property;
27
(viii) Tax Matters Agreement .
At the First Closing, Northland will cause the New Company to
execute and deliver a counterpart original of the Tax Matters
Agreement to each Tarragon Contributor;
(ix) Title Matters . Customary
affidavits sufficient for a title company to issue any
non-imputation endorsements as part of, or to delete any exceptions
for parties in possession (other than tenants under Tenant Leases),
mechanic’s or materialmen’s liens from any new title
policy or date-down to existing policies obtained in connection
with any Northland Property, to the extent such new policy or
date-down is required by any lender in connection with obtaining
any Lender Consents;
(x) Closing Statement . A
counterpart original of a closing statement setting forth the
closing adjustments and any applicable adjustment to any
Contributor’s Equity Value, as applicable;
(xi) Transfer Tax Returns .
Any and all transfer tax returns, declarations of value or other
documents required under applicable law or as necessary in
connection with the transactions contemplated hereunder; and
(xii) Other . Such other
documents, instruments, consents, authorizations or approvals as
may be required by, and reasonably satisfactory to, Tarragon or its
counsel or any lender or its counsel and that may be reasonably
necessary or desirable to consummate the transactions that are the
subject of this Agreement and the Related Documents and to
otherwise effect the agreements of the parties hereto, including,
without limitation, as required under this Section.
(i)
Accuracy of Documents . Each Northland Contributor shall
have certified to Tarragon, severally and not jointly, that all
materials delivered pursuant to Section 2.2(h)(iii) and
2.2(h)(v) are true, correct and complete copies of all such
documents in such Northland Contributor’s respective
possession or under its control and, to the knowledge of such
Northland Contributor, as applicable, there are no other material
agreements or documents relating to the subject matter thereof in
such Northland Contributor’s possession or under its
control.
(j)
Tarragon Restructuring . The Tarragon Restructuring shall
have been completed in whole or, with respect to a Closing at which
less than all of the Tarragon Company Interests are being
contributed to the New Company, in respect of the Tarragon Company
Interests being contributed at such Closing; provided,
however , that the completion, in whole or in part, of the
Tarragon Restructuring shall only be a condition to
Tarragon’s obligation to close hereunder if the Tarragon
Restructuring is not consented to by GE Lender.
(k)
Financing . For the avoidance of doubt, it shall not be a
condition to Tarragon’s obligations to close the transaction
contemplated in this Agreement and contribute the Tarragon Company
Interests to the New Company if the Financing (as defined in that
certain Loan Commitment Letter of even date herewith issued by NIC
in favor of Tarragon Corporation) is not consummated.
2.3 Efforts to Satisfy Closing
Conditions .
28
(a) Each
Contributor shall use its best efforts to obtain the Lender
Consents applicable to the Company Interests being contributed by
it and otherwise to satisfy the Closing Conditions applicable to
its obligation to consummate the transaction contemplated
hereunder. In furtherance of the foregoing, each Contributing Group
shall deliver to the other Contributing Group any and all
correspondence relating in any way to the Lender Consents
simultaneously upon receipt or delivery thereof. Each Contributing
Group shall provide reasonable advance notice to the other
Contributing Group of, and an opportunity for such other
Contributing Group to participate in, any calls and/or meetings
relating to obtaining the Lender Consents.
(b) Tarragon
and Northland hereby acknowledge and agree that in the event that
the granting of any Tarragon GE Consent and/or Tarragon Lender
Consent is conditioned upon the satisfaction of certain conditions
by Tarragon or the New Company, Northland shall have the right, but
not the obligation, to take any action Northland deems necessary to
satisfy such conditions provided that such action would be
permitted to be undertaken by a Majority of the Board of Managers
(as defined in the Limited Liability Company Agreement) as if the
Limited Liability Company Agreement were in effect and the Company
Interests and/or Properties that are the subject of the Tarragon GE
Consent were owned by the New Company. Notwithstanding anything in
Section 9.4 to the contrary, any costs incurred by Northland
in exercising its rights under this Section 2.3(b) shall be
borne by the New Company and Northland’s proportionate share
thereof shall be paid or reimbursed to Northland by the New Company
at the First Closing. Nothing contained in this Section 2.3(b)
shall be construed to relieve Tarragon from its best efforts
obligation as described in Section 2.3(a) above, including,
without limitation, any action or inaction on the part of Northland
or the Board of Managers of the New Company under this
Section 2.3(b).
(c) If
requested by Tarragon in order to obtain the Tarragon GE Consent,
(i) the New Company will in connection with the First Closing
form a New Company wholly owned subsidiary to hold direct or
indirect interests in the Tarragon Companies owning the Tarragon GE
Properties and (ii) such New Company wholly owned subsidiary
will grant the GE Lender cross-collateralization through guarantees
and pledges on the same terms and conditions as the Tarragon
Companies have granted currently in connection with the Tarragon GE
Assumed Debt.
2.4 Termination Right . In the
event that, despite such best efforts, the Tarragon GE Consent and
the Northland 2/3s Consent have not been obtained (unless all
parties have waived obtaining the Tarragon GE Consent and the
Northland 2/3s Consent as a condition to the First Closing) by
September 30, 2008, then on or after such date, Northland and
Tarragon shall each have the right to terminate this Agreement by
delivery of notice thereof to the other, and upon any such
termination the parties hereto shall have no further obligations
hereunder other than those obligations that expressly survive
termination; provided, however, that neither Northland nor Tarragon
shall be entitled to issue a termination notice hereunder if at
such time any member of its Contributing Group is in material
default of its obligations under this Agreement, in which event the
non-defaulting party shall have the rights and remedies set forth
below in Article 6.
29
ARTICLE 3 — REPRESENTATIONS AND
WARRANTIES
3.1 Disclaimers of Tarragon and
Northland . (a) Except as expressly set forth in this
Agreement, including Sections 3.2 and 3.3, each party hereto
and the New Company acknowledges and agrees that each other party
or any member, shareholder, partner, director, officer, manager,
person, firm, agent, employee or representative of, or acting or
purporting to act on behalf of, such other party has not made, does
not make and specifically negates and disclaims any
representations, warranties, promises, covenants, agreements or
guaranties of any kind or character whatsoever, whether express or
implied, oral or written, past, present or future, of, as to,
concerning or with respect to the Company Interests or the
Properties. None of the parties is liable or bound in any manner by
any verbal or written statements, representations or information
pertaining to the Company Interests or the Properties, or the
operation thereof, furnished by any real estate broker or any agent
or employee of such party (other than as expressly set forth in the
Agreement). The New Company and each party further acknowledges and
agrees that, except as expressly set forth in this Agreement, to
the maximum extent permitted by law, that should any Closing occur,
then the contribution of the Company Interests and the Properties
as provided for herein to the New Company will be made on an
“AS IS” condition and basis “WITH ALL
FAULTS”. It is understood and agreed that the Equity Value of
each Contributor has been adjusted by prior negotiation to reflect
that the Company Interests are being acquired by the New Company
subject to the foregoing disclaimer and limitation.
(b) Except
as expressly set forth in Sections 3.2 and 3.3, none of the
parties makes any representations or warranties as to the truth,
accuracy or completeness of any materials, data or other
information supplied to the other parties or their agents,
employees or representatives in connection with their inspection of
the Company Interests or the Properties. It is the parties’
express understanding and agreement that such materials are
provided only for the convenience of the other parties in making
their own examination and determination as to whether they wish to
contribute their Company Interests to the New Company, and, in
doing so, each party shall rely exclusively on its own independent
investigation and evaluation of every aspect of the Company
Interests and the Properties and not on any materials supplied by
any other party, except as may be expressly set forth below in
Sections 3.2 and 3.3.
(c) Except
as otherwise expressly provided in Sections 3.2 and 3.3, each
party acknowledges that any information of any type which such
party has received or may receive from any other party, including,
without limitation, any environmental reports and surveys, is
furnished on the express condition that each party shall make an
independent verification of the accuracy of such information, all
such information being furnished without any representations or
warranty of the other party whatsoever, whether as to the
completeness of such information, its accuracy or otherwise.
(d) THE
PROVISIONS OF THIS SECTION ARE A MATERIAL PART OF THE CONSIDERATION
FOR EACH PARTY’S ENTERING INTO THIS AGREEMENT, AND SHALL
SURVIVE CLOSING.
3.2 Representations, Warranties
and Covenants of Tarragon . Each Tarragon Contributor, each
solely for itself and with respect to the Tarragon Company
Interests owned by it and the Tarragon Companies and Tarragon
Property that is the subject of such Tarragon
30
Company
Interests, hereby represents, warrants and covenants to each
Northland Contributor and the New Company as of the date of this
Agreement and as of each Closing Date as follows:
(a)
Existence and Power . Such Tarragon Contributor and each of
the Tarragon Companies has been duly formed and is a validly
existing corporation, limited partnership or limited liability
company under the laws of the jurisdiction in which it was formed.
Such Tarragon Contributor and each of the Tarragon Companies has
all power and authority to enter into this Agreement and all other
documents to be executed and delivered in connection with the
transactions that are the subject of this Agreement, including,
without limitation, all Related Documents, to the extent they are
to be executed by such Tarragon Contributor, and to enter into and
deliver and to perform its obligations hereunder and under the
Related Documents executed by such Tarragon Contributor.
(b)
Authorization; No Contravention . The execution and delivery
of this Agreement, the Limited Liability Company Agreement, and the
Related Documents executed by such Tarragon Contributor and the
performance of its respective obligations under all of the
foregoing constitutes, and have been duly authorized by all
requisite organizational action, including, without limitation, by
obtaining the approvals and consents described in
Section 2.1(c) . This Agreement constitutes, and, the
Limited Liability Company Agreement when executed will constitute,
and the Related Documents executed by such Tarragon Contributor
when executed will constitute, the valid, legal and binding
obligation of such Tarragon Contributor. None of this Agreement,
the Limited Liability Company Agreement, or the Related Documents
executed by such Tarragon Contributor will violate any term of any
agreement, order or decree to which it is a party or by which such
Tarragon Contributors is bound or to which any Tarragon Property is
subject. Except for the Tarragon Lender Consents and the Tarragon
Consents, no consent of any lender, partner, shareholder,
beneficiary, tenant, creditor, investor, Authority or other Person
is required in order for such Tarragon Contributor to enter into
this Agreement and consummate the transactions contemplated herein;
provided, however , that the representation and warranty
contained in this sentence with respect to Ansonia only, shall be
limited to Ansonia’s knowledge. No vote or consent of the
shareholders of Tarragon Corporation is required to be obtained by
Tarragon Corporation in order to consummate the transactions
contemplated in this Agreement, the Limited Liability Company
Agreement or any Related Documents; provided, however , that
the representation and warranty contained in this sentence with
respect to Ansonia only, shall be limited to Ansonia’s
knowledge.
(c)
Descriptive Information; Diligence . All documents delivered
by or on behalf of Tarragon to Northland, or made available to
Northland for review in connection with the transactions
contemplated by this Agreement and the Related Documents,
including, without limitation, all Tarragon Contracts and Tarragon
Leases, are true, correct and complete copies of all such
documents, as amended or modified, in Tarragon’s possession
or control, and there are no other documents relating to the
subject matter thereof. Except as disclosed to Northland in
writing, Tarragon has delivered or made available to Northland all
of the material books, records and files of or relating to the
Tarragon Companies and Tarragon Property. The representations and
warranties contained in this Section 3.2(c) with respect to
Ansonia only, shall be limited to Ansonia’s knowledge.
31
(d)
Defaults and Assumed Debt . Except to the extent disclosed
on Schedule 3.2(d) , neither such Tarragon
Contributor nor any Tarragon Company is in monetary or material
nonmonetary default under any of the documents, recorded or
unrecorded, encumbering or affecting the Tarragon Property,
including without limitation, the Tarragon Licenses, the Tarragon
Debt Instruments, the Tarragon Leases and the Tarragon Contracts.
Tarragon has delivered or made available to Northland true,
complete and accurate copies of all of the material documents
evidencing, securing and otherwise executed in connection with all
or any portion of the Tarragon Assumed Debt. None of the Tarragon
Assumed Debt is cross-defaulted, cross-collateralized, or
cross-guaranteed with any indebtedness other than indebtedness that
is included in and as part of the Tarragon Assumed Debt. The
representations and warranties contained in this
Section 3.2(d) with respect to Ansonia only, shall be limited
to Ansonia’s knowledge.
(e)
Compliance with Law . None of such Tarragon Contributor or
any Tarragon Company has received written notice that all or any
portion of the Tarragon Property violates or will violate in any
material respect any law, rule, regulation, ordinance, code or
interpretation of any Authority (collectively, “ Laws
”) (including, without limitation, those relating to zoning
and the requirements of Title III of the Americans with
Disabilities Act of 1990 (42 U.S.C. 12181, et seq.), or any
requirement of any insurer or board of fire underwriters or similar
entity, and to Tarragon’s knowledge, except to the extent
disclosed on Schedule 3.2(e) , there is no such
material violation. None of such Tarragon Contributor or any
Tarragon Company has received written notice of any special
assessment proceedings affecting the Tarragon Property, and to
Tarragon’s knowledge, there is no such assessment pending. To
Tarragon’s knowledge, all material licenses, permits,
approvals, variances, easements and rights of way, including,
without limitation, proof of dedication and authorizations all
Authorities having jurisdiction over the Tarragon Property
(collectively, the “ Tarragon Licenses ”)
required for the ownership, use or operation of the Tarragon
Property as presently used and operated or otherwise have been
validly issued and are in full force and effect, and none of such
Tarragon Contributor or the Tarragon Companies has received any
written notice, and otherwise Tarragon has no knowledge, of any
Action relating to the revocation or modification of any such
License. To Tarragon’s knowledge, each of the Tarragon
Licenses required for the ownership, use or operation of the
Tarragon Property as presently operated shall remain in full force
and effect and owned by the New Company following the contribution
of the Tarragon Property pursuant to this Agreement. To
Tarragon’s knowledge, no payments are owing to or on behalf
of any Authority or are anticipated to be payable to or on behalf
of any Authority pursuant to the Tarragon Licenses required for the
ownership, use or operation of the Tarragon Property as presently
operated, other than payments required in connection with renewals
or extensions of the Tarragon Licenses from time to time in the
ordinary course. The representations and warranties contained in
this Section 3.2(e) with respect to Ansonia only, shall be
limited to Ansonia’s knowledge.
(f)
Certain Title Matters . To Tarragon’s knowledge, as of
the Closing Date (i) the Tarragon Real Property is or will be
owned by one or more of the Tarragon Companies, (ii) the
Tarragon Real Property is not in violation of any of the easements,
covenants or restrictions affecting the Tarragon Property,
including, without limitation, the Permitted Exceptions and no
other party is in violation of any such easements, covenants or
restrictions, (iii) the Tarragon Real Property is not
dependent upon any adjacent property in order to be used
32
for its
intended purposes, including the operation of the Tarragon Real
Property, for access, parking, utilities or any other matter except
in circumstances where there is an adequate, legally enforceable
and insurable permanent easement providing the Tarragon Real
Property with the required rights of use of the adjacent property,
and (iv) the Tarragon Real Property will be contributed
subject only to the Tarragon Leases, Tarragon Contracts, Tarragon
Licenses, the Permitted Exceptions and any additional leases,
contracts and licenses permitted to be entered into pursuant to
Section 7.1. The representations and warranties contained in
this Section 3.2(f) with respect to Ansonia only, shall be
limited to Ansonia’s knowledge.
(g)
Personal Property . The list of Tarragon Personal Property
attached hereto as Schedule D-6 , is in all
material respects an accurate and complete list of all Tarragon
Personal Property. The representations and warranties contained in
this Section 3.2(g) with respect to Ansonia only, shall be
limited to Ansonia’s knowledge.
(h)
Leases . The Tarragon Rent Roll lists all Tarragon Leases
for any portion of the Tarragon Real Property or otherwise
affecting the Tarragon Real Property, and is accurate and complete
in all material respects. The copies of the Tarragon Leases which
have been delivered or made available to Northland are true,
correct and complete, constitute all outstanding Tarragon Leases
and include all subleases relating to the Tarragon Real Property.
All brokerage commissions or compensation in respect of any of the
Tarragon Leases have been, or prior to the applicable Closing will
be, paid by the applicable Tarragon Company to the extent due and
payable prior to such Closing. To Tarragon’s knowledge, none
of the Tarragon Companies is in material default in the performance
of its obligations under any of the Tarragon Leases (or any
agreements incorporated therein by reference) and there are no
circumstances which, with the passage of time or the giving of
notice, or both, would constitute an event of default by landlord
under any of the Tarragon Leases. The representations and
warranties contained in this Section 3.2(h) with respect to
Ansonia only, shall be limited to Ansonia’s knowledge.
(i)
Rent Roll . The Tarragon Rent Roll is true, complete and
correct as of the date indicated thereon, and the information set
forth therein is true and correct in all material respects as of
the date hereof. Except as set forth on the Rent Roll, as of such
date and with respect to the updated Rent Roll to be delivered at
Closing, as of the date of Closing, no tenant was in arrears in the
payment of rent due under the Tarragon Leases beyond any applicable
notice and cure periods. The representations and warranties
contained in this Section 3.2(i) with respect to Ansonia only,
shall be limited to Ansonia’s knowledge.
(j)
Options . To Tarragon’s knowledge, none of the
Tarragon Real Property is subject to any option or right of first
refusal or first opportunity to acquire any interest in the
Tarragon Property or any portion thereof. Neither such Tarragon
Contributor nor any Tarragon Company has granted to any Person any
option or right of first refusal or first opportunity to acquire
any interest in the Tarragon Real Property.
(k)
Contracts . True, complete and correct copies of all
Tarragon Contracts have been provided or made available to
Northland. Following each Closing there shall be no material
agreements or other obligations or liabilities with respect to all
or any portion of the Tarragon Property that are binding on the New
Company, the Tarragon Companies or the
33
Tarragon
Property following such Closing, other than the Tarragon Leases,
the Tarragon Contracts, the Permitted Exceptions, the Tarragon
Licenses and such additional leases, contracts and licenses as any
Tarragon Company may enter into in compliance with Section 7.1
after the date hereof. The representations and warranties contained
in this Section 3.2(k) with respect to Ansonia only, shall be
limited to Ansonia’s knowledge.
(l)
Hazardous Substances . Except as set forth on
Schedule 3.2(l) , neither such Tarragon
Contributor, nor any Affiliate thereof, has received written notice
from any Authority (nor to Tarragon’s knowledge is there any
circumstance, event or occurrence) with respect to, the generation,
storage, disposal, discharge, use, handling, removal, treatment or
management of any Hazardous Substances or Hazardous Wastes on or
from the Tarragon Property that would have or result in a Material
Adverse Effect.
(m)
Mechanic’s Liens . Except as disclosed on
Schedule 3.2(m) , all bills and claims for labor
performed and materials furnished to or for the benefit of the
Northland Property have been paid in full to the extent due and
payable prior to the date hereof and shall be paid in full at each
Closing. Except as disclosed on Schedule 3.2(m)
, there are no mechanic’s or materialmen’s liens
(whether or not perfected) on or affecting the Northland Property,
and none will exist at Closing. The representations and warranties
contained in this Section 3.2(m) with respect to Ansonia only,
shall be limited to Ansonia’s knowledge.
(n)
Non-Foreign Person . None of the applicable transferors of
Tarragon Property (as determined for the purposes of
Section 1445 of the Code) is a “foreign person” as
defined in Section 1445(f)(3) of the Code, nor are any subject
to withholding under Section 1445 of the Code.
(o)
Disclosure . The representations and warranties and the
statements and information contained in this Agreement, in the
Exhibits and Schedules hereto and in all of the materials delivered
or made available by such Tarragon Contributor to Northland and its
counsel, accountants, appraisers and consultants pursuant to this
Agreement or in connection with the due diligence investigations
conducted by or on behalf of Northland in connection with this
Agreement do not contain any untrue statement of a material fact
and, when taken together, do not omit to state a material fact
required to be stated therein or necessary in order to make such
representations, warranties, statements or information not
misleading in light of the circumstances under which they were
made.
(p)
Financial Statements . All operating statements delivered to
Northland by Tarragon Corporation were prepared by Tarragon
Corporation in the ordinary course of business, are complete,
accurate, true and correct copies of such operating statements in
the books and records of Tarragon Corporation and its subsidiaries,
and to such Tarragon Contributor’s knowledge such operating
statements fairly reflect in all material respects the results of
the operation of the Tarragon Property for the periods covered.
Since the date of the most recent internally prepared operating
statements referred to above, and except as otherwise expressly
contemplated by this Agreement (including the Tarragon
Restructuring) (i) there has been no material adverse change
in the condition, financial or otherwise, of the Tarragon Property
or the Tarragon Companies on a consolidated basis, taken as a
whole, whether or not arising in the ordinary course of business
and (ii) there has been no material change in the ownership of
the
34
Tarragon
Companies or any increase in the indebtedness of the Tarragon
Companies. The calendar year 2008 budgets delivered to Northland by
Tarragon reflect Tarragon’s good faith estimate, consistent
with past practice, for the operating results for the Tarragon
Properties for the 2008 calendar year. The representations and
warranties in this Section 3.2(p) with respect to Ansonia
only, shall be limited to Ansonia’s knowledge.
(q)
Pending Actions; Labor Disputes . There is no existing or,
to Tarragon’s knowledge, threatened Action of any kind
involving such Tarragon Contributor, any Tarragon Company or the
Tarragon Property which would have a Material Adverse Effect on any
Tarragon Company or the Tarragon Property. To Tarragon’s
knowledge, there are no labor troubles or complaints of unfair
labor practices pending with respect to any Person which could
materially adversely affect the Tarragon Property.
(r)
Taxes .
(i) Except as disclosed on
Schedule 3. 2(r)(i) , all Tax or
information returns required to be filed on or before the date
hereof by or on behalf of such Tarragon Contributor or the Tarragon
Companies (x) have been filed through the date hereof or will
be filed on or before the date when due in accordance with all
applicable Laws and (y) there is no Action pending against or
with respect to such Tarragon Contributor, the Tarragon Companies
or the Tarragon Property in respect of any Tax nor is any claim for
additional Tax asserted by any Tax Authority. All real estate Taxes
and assessments relating to the Tarragon Real Property and due and
payable have been paid and copies of most recent tax bills have
been delivered or made available to Northland. All other Taxes of
the Tarragon Companies that are due and payable have been
paid.
(ii) There are no liens for Taxes
with respect to any portion of the Tarragon Property, other than
liens for Taxes that are not yet due or payable.
(iii) On each Closing Date, after
giving effect to the Tarragon Restructuring, each Tarragon Company
is and has always been classified for federal income tax purposes
as either a partnership or an entity that is disregarded as
separate from its owner.
(iv) On each Closing Date, after
giving effect to the Tarragon Restructuring, no Tarragon Company
has any liability for the Taxes of any person under Treasury
Regulations Section 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by
contract or otherwise.
(v) Each Tarragon Contributor
acknowledges that none of Northland, the New Company or any
Affiliate shall assume any responsibility for the Tax consequences
of the transactions contemplated by this Agreement, the Limited
Liability Company Agreement and the Related Documents to such
Tarragon Contributor, other than to agree to report the
transactions for Federal and State Tax purposes consistently with
the manner agreed to by Northland and such Tarragon
Contributor.
35
(s)
Insurance . Tarragon Corporation has delivered or made
available to Northland all copies of all insurance policies and
arrangements with respect to the Tarragon Property.
(t)
Patriot Act . Neither such Tarragon Contributor, nor any
Tarragon Company, nor any member, partner or shareholder of any
Tarragon Company, nor, to Tarragon’s knowledge, any person or
entity with actual authority to direct the actions of any member,
partner or shareholder of Tarragon or any Tarragon Company,
(i) are named on any list of persons, entities and governments
issued by the Office of Foreign Assets Control of the United States
Department of the Treasury (“ OFAC ”) pursuant
to Executive Order 13224 – Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit, or
Support Terrorism (“ Executive Order 13224 ”),
as in effect on the date hereof, or any similar list known to
Seller or publicly issued by OFAC or any other department or agency
of the United States of America (collectively, the “ OFAC
Lists ”), (ii) are included in, owned by, controlled by,
knowingly acting for or on behalf of, knowingly providing
assistance, support, sponsorship, or services of any kind to, or
otherwise knowingly associated with any of the persons, entities or
governments referred to or described in the OFAC Lists, or
(iii) has knowingly conducted business with or knowingly
engaged in any transaction with any person, entity or government
named on any of the OFAC Lists or any person, entity or government
included in, owned by, controlled by, acting for or on behalf of,
providing assistance, support, sponsorship, or services of any kind
to, or, to Tarragon’s knowledge, otherwise associated with
any of the persons, entities or governments referred to or
described in the OFAC Lists. Notwithstanding the foregoing,
however, the representations set forth in this Section 3.1(t)
shall not apply to the publicly traded shares of Tarragon
Corporation and persons holding such shares.
(u)
Deposits . Neither such Tarragon Contributor nor any
Tarragon Company has received written notice of any violations of
the requirements of any Law relating to the holding, application or
collection of security deposits in respect of the Tarragon
Leases.
(v)
Tarragon Companies . The only activities conducted by the
Tarragon Companies since their inception have been the
construction, ownership and operation of the Tarragon Properties or
other properties similar in type and nature to the Tarragon
Properties, except as set forth on
Schedule 3.2(v) . None of the Tarragon Companies
has any liabilities or obligations other than those relating
directly to the ownership or operation of the Tarragon Property
owned by it. On the date hereof and at Closing, (i) the
Tarragon Company Interests will represent the only issued and
outstanding equity interests in the Tarragon Companies,
(ii) no persons other than the Tarragon Contributors will have
the option, conversion right or other right to receive any equity
interest in the Tarragon Companies and (iii) the Tarragon
Company Interests to be contributed by each Tarragon Contributor
will be owned by such Tarragon Contributor free and clear of all
liens and encumbrances.
(w)
Condominium Conversion . None of such Tarragon Contributor
or any Tarragon Company has made any filing with the applicable
Authority with respect to the conversion of any of the Tarragon
Properties to a condominium.
(x)
Solvency . None of such Tarragon Contributor or any Tarragon
Company has: (i) made a general assignment for the benefit of
creditors; (ii) filed any voluntary petition in
36
bankruptcy or suffered the filing of any involuntary petition by
such Tarragon Contributor’s or any Tarragon Company’s
creditors; (iii) suffered the appointment of a receiver to
take possession of all or substantially all of such Tarragon
Contributor’s or any Tarragon Company’s assets,
(iv) suffered the attachment or other judicial seizure of all,
or substantially all, of such Tarragon Contributor’s or any
Tarragon Company’s assets, (v) admitted in writing such
Tarragon Contributor’s or any Tarragon Company’s
inability to pay its debts as they come due; or (vi) made an
offer of settlement, extension, or composition to its creditors
generally.
(y)
Securities Representations .
(i) Such Tarragon Contributor is an
“accredited investor,” as such term is defined in Rule
501(a) of Regulation D under the Securities Act.
(ii) No such Tarragon Contributor, or
any of such Tarragon Contributor’s Affiliates, nor any Person
acting on such Tarragon Contributor’s or Tarragon
Contributor’s Affiliate’s behalf, was offered the
Common Units through any form of “general solicitation or
general advertising” (within the meaning of Regulation D
under the Securities Act) in connection with any offer or sale of
the Common Units.
(iii) Such Tarragon Contributor
understands and acknowledges that (i) no public market exists
for any of the Common Units and that it is unlikely that a public
market will ever exist for the Common Units, (ii) such
Tarragon Contributor is purchasing the Common Units for its own
account, for investment and not with a view to, or for offer or
sale in connection with, any distribution thereof in violation of
the Securities Act or other applicable securities laws, and
(iii) such Tarragon Contributor is aware that it may be
required to bear the economic risk of an investment in the Common
Units for an indefinite period of time.
(iv) Such Tarragon Contributor has
consulted with its own advisers as to the financial, tax, legal and
related matters concerning an investment in the Common Units and on
that basis believes that an investment in the Common Units is
suitable and appropriate for such Tarragon Contributor. Such
Tarragon Contributor and its advisers have such knowledge and
experience in financial, tax and business matters so as to enable
such Tarragon Contributor to utilize the information made available
to such Tarragon Contributor in connection with the investment
contemplated hereby to evaluate the merits and risks of an
investment in the New Company and to make an informed investment
decision with respect thereto. Such Tarragon Contributor is
familiar with the type of investment that the Common Units
constitutes and recognizes that an investment in the New Company
involves substantial risks, including significant risk of loss,
including the loss of the entire amount of such investment.
(v) Such Tarragon Contributor hereby
acknowledges that the Common Units are not and will not be
registered under the Securities Act or registered or qualified for
sale pursuant to applicable securities or Blue Sky laws of any
state or foreign jurisdiction by reason of a specific exemption
from the registration
37
requirements
thereof, the availability of which depends upon, among other
things, the bona fide nature of the investment intent and the
accuracy of the each Tarragon Contributor’s representations,
warranties and covenants set forth herein. Each Tarragon
Contributor further acknowledges that the Common Units will be
subject to transfer restrictions and may not be offered, sold,
transferred, pledged, hypothecated or otherwise assigned, in whole
or in part, without compliance with applicable federal securities
laws and the applicable securities or Blue Sky laws of any state or
foreign jurisdiction by the transferor and the transferee
(including, without limitation, the delivery of investment
representation letters and legal opinions reasonably satisfactory
to the New Company).
For purposes of this Agreement where
the term “to Tarragon’s knowledge,” or a phrase
of similar import, is used, such term shall mean, with respect to
representations and warranties made by Tarragon Corporation, the
“current actual knowledge” (as defined below) of the
following designees of Tarragon: William S. Friedman, Robert
Rothenberg and Eileen Swenson. For purposes of this Agreement where
the term “to Tarragon’s knowledge,” or a phrase
of similar import, is used, such term shall mean, with respect to
representations and warranties made by Ansonia, the “current
actual knowledge” (as defined below) of the following
designees of Ansonia: Robert Rothenberg and Richard Frary. As used
herein, the term “current actual knowledge” shall mean
only the actual, current, conscious and not constructive, imputed
or implied knowledge of such designee, without having made a review
of the files or other inquiry. Anything herein to the contrary
notwithstanding, such designee shall not have any personal
liability or obligation whatsoever with respect to any of the
matters set forth in this Agreement or any of the representations
herein being or becoming untrue, inaccurate or incomplete in any
respect.
3.3 Representations, Warranties
and Covenants of Northland . Each Northland Contributor, each
solely for itself and with respect to the Northland Company
Interests owned by it and the Northland Companies and Northland
Property that is the subject of such Northland Company Interests,
hereby represents, warrants and covenants to each Tarragon
Contributor and the New Company as of the date of this Agreement
and as of each Closing Date as follows:
(a)
Existence and Power . Such Northland Contributor and each of
the Northland Companies has been duly formed and is a validly
existing corporation, limited partnership or limited liability
company under the laws of the jurisdiction in which it was formed.
Such Northland Contributor and each of the Northland Companies has
all power and authority to enter into this Agreement and all other
documents to be executed and delivered in connection with the
transactions that are the subject of this Agreement, including,
without limitation, all Related Documents, to the extent they are
to be executed by such Northland Contributor and any Northland
Company, and to enter into and deliver and to perform its
obligations hereunder and under the Related Documents executed by
such Northland Contributor or any Northland Company.
(b)
Authorization; No Contravention . The execution and delivery
of this Agreement, the Limited Liability Company Agreement, and the
Related Documents executed by such Northland Contributor or any
Northland Companies and the performance of its respective
obligations under all of the foregoing constitutes, and have been
duly authorized by all requisite
38
organizational action, including, without limitation, by obtaining
the approvals and consents described in Section 2.2(c)
. This Agreement constitutes, and, the Limited Liability Company
Agreement when executed will constitute, and the Related Documents
executed by such Northland Contributor or any Northland Company
when executed will constitute, the valid, legal and binding
obligation of such Northland Contributor or applicable Northland
Company. None of this Agreement, the Limited Liability Company
Agreement, or the Related Documents executed by such Northland
Contributor or any Northland Company will violate any term of any
agreement, order or decree to which it is a party or by which such
Northland Contributors or any Northland Company is bound or to
which any Northland Property is subject. Except for the Northland
Lender Consents and the Northland Consents, no consent of any
lender, partner, shareholder, beneficiary, tenant, creditor,
investor, Authority or other Person is required in order for such
Northland Contributor to enter into this Agreement and consummate
the transactions contemplated herein.
(c)
Descriptive Information; Diligence . All documents delivered
by or on behalf of Northland to Tarragon, or made available to
Tarragon for review in connection with the transactions
contemplated by this Agreement and the Related Documents,
including, without limitation, all Northland Contracts and
Northland Leases, are true, correct and complete copies of all such
documents, as amended or modified, in Northland’s possession
or control, and there are no other documents relating to the
subject matter thereof. Except as disclosed to Tarragon in writing,
Northland has delivered or made available to Tarragon all of the
material books, records and files of or relating to the Northland
Companies and Northland Property.
(d)
Defaults and Assumed Debt . Except to the extent disclosed
on Schedule 3.3(d) , neither such Northland
Contributor nor any Northland Company is in monetary or material
nonmonetary default under any of the documents, recorded or
unrecorded, encumbering or affecting the Northland Property,
including without limitation, the Northland Licenses, the Northland
Debt Instruments, the Northland Leases and the Northland Contracts.
Northland has delivered or made available to Tarragon true,
complete and accurate copies of all of the material documents
evidencing, securing and otherwise executed in connection with all
or any portion of the Northland Assumed Debt. None of the Northland
Assumed Debt is cross-defaulted, cross-collateralized, or
cross-guaranteed with any indebtedness other than indebtedness that
is included in and as part of the Northland Assumed Debt.
(e)
Compliance with Law . None of such Northland Contributor or
any Northland Company has received written notice that all or any
portion of the Northland Property violates or will violate in any
material respect any law, rule, regulation, ordinance, code or
interpretation of any Authority (collectively, “ Laws
”) (including, without limitation, those relating to zoning
and the requirements of Title III of the Americans with
Disabilities Act of 1990 (42 U.S.C. 12181, et seq.), or any
requirement of any insurer or board of fire underwriters or similar
entity, and to Northland’s knowledge, except to the extent
disclosed on Schedule 3.3(e) , there is no such
material violation. None of such Northland Contributor or any
Northland Company has received written notice of any special
assessment proceedings affecting the Northland Property, and to
Northland’s knowledge, there is no such assessment pending.
To Northland’s knowledge, all material licenses, permits,
approvals, variances, easements and rights of way, including,
without limitation, proof of dedication and authorizations all
Authorities having jurisdiction over the Northland Property
(collectively, the “ Northland Licenses ”)
39
required
for the ownership, use or operation of the Northland Property as
presently used and operated or otherwise have been validly issued
and are in full force and effect, and none of such Northland
Contributor or the Northland Companies has received any written
notice, and otherwise Northland has no knowledge, of any Action
relating to the revocation or modification of any such License. To
Northland’s knowledge, each of the Northland Licenses
required for the ownership, use or operation of the Northland
Property as presently operated shall remain in full force and
effect and owned by the New Company following the contribution of
the Northland Property pursuant to this Agreement. To
Northland’s knowledge, no payments are owing to or on behalf
of any Authority or are anticipated to be payable to or on behalf
of any Authority pursuant to the Northland Licenses required for
the ownership, use or operation of the Northland Property as
presently operated, other than payments required in connection with
renewals or extensions of the Northland Licenses from time to time
in the ordinary course.
(f)
Certain Title Matters . To Northland’s knowledge, and
except as may be shown on any title reports or surveys delivered or
made available to Tarragon, as of the Closing Date (i) the
Northland Real Property is or will be owned by one or more of the
Northland Companies, (ii) the Northland Real Property is not
in violation of any of the easements, covenants or restrictions
affecting the Northland Real Property, including, without
limitation, the Permitted Exceptions and no other party is in
violation of any such easements, covenants or restrictions,
(iii) the Northland Real Property is not dependent upon any
adjacent property in order to be used for its intended purposes,
including the operation of the Northland Real Property, for access,
parking, utilities or any other matter except in circumstances
where there is an adequate, legally enforceable and insurable
permanent easement providing the Northland Real Property with the
required rights of use of the adjacent property, and (iv) the
Northland Real Property will be contributed subject only to the
Northland Leases, Northland Contracts, Northland Licenses, the
Permitted Exceptions and any additional leases, contracts and
licenses permitted to be entered into pursuant to
Section 7.1.
(g)
Personal Property . The list of Northland Personal Property
attached hereto in Schedules D-1 through
D-5 , is in all material respects an accurate and
complete list of all Northland Personal Property.
(h)
Leases . The Northland Rent Roll lists all Northland Leases
for any portion of the Northland Real Property or otherwise
affecting the Northland Real Property, and is accurate and complete
in all material respects. The copies of the Northland Leases which
have been delivered or made available to Tarragon are true, correct
and complete, constitute all outstanding Northland Leases and
include all subleases relating to the Northland Real Property. All
brokerage commissions or compensation in respect of any of the
Northland Leases have been, or prior to the applicable Closing will
be, paid by the applicable Northland Company to the extent due and
payable prior to such Closing. To Northland’s knowledge, none
of the Northland Companies is in material default in the
performance of its obligations under any of the Northland Leases
(or any agreements incorporated therein by reference) and there are
no circumstances which, with the passage of time or the giving of
notice, or both, would constitute an event of default by landlord
under any of the Northland Leases.
(i)
Rent Roll . The Northland Rent Roll is true, complete and
correct as of the date indicated thereon, and the information set
forth therein is true and correct in all material
40
respects
as of the date hereof. Except as set forth on the arrearages report
appended to the Rent Roll, as of such date and with respect to the
updated Rent Roll to be delivered at closing, as of the date of
Closing, no tenant was in arrears in the payment of rent due under
the Northland Leases beyond any applicable notice and cure
periods.
(j)
Options . To Northland’s knowledge, none of the
Northland Real Property is subject to any option or right of first
refusal or first opportunity to acquire any interest in the
Northland Property or any portion thereof. Neither such Northland
Contributor nor any Northland Company has granted to any Person any
option or right of first refusal or first opportunity to acquire
any interest in the Northland Real Property.
(k)
Contracts . True, complete and correct copies of all
Northland Contracts have been provided or made available to
Tarragon. Following each Closing there shall be no material
agreements or other obligations or liabilities with respect to all
or any portion of the Northland Property that are binding on the
New Company, the Northland Companies or the Northland Property
following such Closing, other than the Northland Leases, the
Northland Contracts, the Permitted Exceptions, the Northland
Licenses and such additional leases, contracts and licenses as any
Northland Company may enter into in compliance with
Section 7.1 after the date hereof.
(l)
Hazardous Substances . Except as set forth on
Schedule 3.3(l) , neither such Northland
Contributor, nor any Affiliate thereof has received written notice
from any Authority (nor to Northland’s knowledge is there any
circumstance, event or occurrence) with respect to the generation,
storage, disposal, discharge, use, handling, removal, treatment or
management of any Hazardous Substances or Hazardous Wastes on or
from the Northland Property that would have or result in a Material
Adverse Effect.
(m)
Mechanic’s Liens . Except as disclosed on
Schedule 3.3(m) , all bills and claims for labor
performed and materials furnished to or for the benefit of the
Northland Property have been paid in full to the extent due and
payable prior to the date hereof and shall be paid in full at each
Closing. Except as disclosed on Schedule 3.3(m)
, there are no mechanic’s or materialmen’s liens
(whether or not perfected) on or affecting the Northland Property,
and none will exist at Closing.
(n)
Non-Foreign Person . None of the applicable transferors of
Northland Property (as determined for the purposes of
Section 1445 of the Code) is a “foreign person” as
defined in Section 1445(f)(3) of the Code, nor are any subject
to withholding under Section 1445 of the Code.
(o)
Disclosure . The representations and warranties and the
statements and information contained in this Agreement, in the
Exhibits and Schedules hereto and in all of the materials delivered
or made available by such Northland Contributor to Tarragon and its
counsel, accountants, appraisers and consultants pursuant to this
Agreement or in connection with the due diligence investigations
conducted by or on behalf of Tarragon in connection with this
Agreement do not contain any untrue statement of a material fact
and, when taken together, do not omit to state a material fact
required to be stated therein or necessary in order to make
such
41
representations, warranties, statements or information not
misleading in light of the circumstances under which they were
made.
(p)
Financial Statements . All operating statements delivered to
Tarragon by each applicable Northland Contributor were prepared by
such Northland Contributor in the ordinary course of business, are
complete, accurate, true and correct copies of such operating
statements in the books and records of such Northland Contributor
and its subsidiaries, and to such Northland Contributor’s
knowledge such operating statements fairly reflect in all material
respects the results of the operation of the Northland Property for
the periods covered. Since the date of the most recent internally
prepared operating statements referred to above, and except as
otherwise expressly contemplated by this Agreement, (i) there
has been no material adverse change in the condition, financial or
otherwise, of the Northland Property or the Northland Companies on
a consolidated basis, taken as a whole, whether or not arising in
the ordinary course of business and (ii) there has been no
material change in the ownership of the Northland Companies or any
increase in the indebtedness of the Northland Companies. The
calendar year 2008 budgets delivered to Tarragon by Northland
reflect Northland’s good faith estimate, consistent with past
practice, for the operating results for the Northland Properties
for the 2008 calendar year.
(q)
Pending Actions; Labor Disputes . There is no existing or,
to Northland’s knowledge, threatened Action of any kind
involving such Northland Contributor, any Northland Company or the
Northland Property which would have a Material Adverse Effect on
any Northland Company or the Northland Property. To
Northland’s knowledge, there are no labor troubles or
complaints of unfair labor practices pending with respect to any
Person which could materially adversely affect the Northland
Property.
(r)
Taxes .
(i) All Tax or information returns
required to be filed on or before the date hereof by or on behalf
of such Northland Contributor or the Northland Companies (x) have
been filed through the date hereof or will be filed on or before
the date when due in accordance with all applicable Laws and
(y) there is no Action pending against or with respect to such
Northland Contributor, the Northland Companies or the Northland
Property in respect of any Tax nor is any claim for additional Tax
asserted by any Tax Authority. All real estate Taxes and
assessments relating to the Northland Real Property and due and
payable have been paid and copies of most recent tax bills have
been delivered or made available to Tarragon. All other Taxes of
the Northland Companies that are due and payable have been
paid.
(ii) There are no liens for Taxes
with respect to any portion of the Northland Property, other than
liens for Taxes that are not yet due or payable.
(iii) Except as disclosed on
Schedule 3.3(r) , each Northland Company is and
has always been classified for federal income tax purposes as
either a partnership or an entity that is disregarded as separate
from its owner.
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(iv) No Northland Company has any
liability for the Taxes of any person under Treasury Regulations
Section 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract or
otherwise.
(v) Each Northland Contributor
acknowledges that none of Tarragon, the New Company or any
Affiliate shall assume any responsibility for the Tax consequences
of the transactions contemplated by this Agreement, the Limited
Liability Company Agreement and the Related Documents to such
Northland Contributor, other than to agree to report the
transactions for Federal and State Tax purposes consistently with
the manner agreed to by Northland and such Tarragon
Contributor.
(s)
Insurance . Northland Corporation has delivered or made
available to Tarragon all copies of all insurance policies and
arrangements with respect to the Northland Property.
(t)
Patriot Act . Neither such Northland Contributor, nor any
Northland Company, nor any member, partner or shareholder of any
Northland Company, nor, to Northland’s knowledge, any person
or entity with actual authority to direct the actions of any
member, partner or shareholder of Northland or any Northland
Company, (i) are named on any list of persons, entities and
governments issued by the Office of Foreign Assets Control of the
United States Department of the Treasury (“ OFAC
”) pursuant to Executive Order 13224 – Blocking
Property and Prohibiting Transactions with Persons Who Commit,
Threaten to Commit, or Support Terrorism (“ Executive
Order 13224 ”), as in effect on the date hereof, or any
similar list known to Seller or publicly issued by OFAC or any
other department or agency of the United States of America
(collectively, the “ OFAC Lists ”),
(ii) are included in, owned by, controlled by, knowingly
acting for or on behalf of, knowingly providing assistance,
support, sponsorship, or services of any kind to, or otherwise
knowingly associated with any of the persons, entities or
governments referred to or described in the OFAC Lists, or
(iii) has knowingly conducted business with or knowingly
engaged in any transaction with any person, entity or government
named on any of the OFAC Lists or any person, entity or government
included in, owned by, controlled by, acting for or on behalf of,
providing assistance, support, sponsorship, or services of any kind
to, or, to Northland’ knowledge, otherwise associated with
any of the persons, entities or governments referred to or
described in the OFAC Lists.
(u)
Deposits . Neither such Northland Contributor nor any
Northland Company has received written notice of any violations of
the requirements of any Law relating to the holding, application or
collection of security deposits in respect of the Northland
Leases.
(v)
Northland Companies . Except as set forth on
Schedule 3.3(v) , the only activities conducted
by the Northland Companies since their inception have been the
construction, ownership and operation of the Northland Properties.
None of the Northland Companies has any liabilities or obligations
other than those relating directly to the ownership or operation of
the Northland Property owned by it. Northland Portfolio is the sole
holder of the Northland Portfolio Company Interests, and the
Northland Portfolio Company Interests are free and clear of all
liens and encumbrances. Northland Fund I is the sole holder of the
Northland Fund I Company Interests, and the Northland Fund I
Company Interests are free and clear of all
43
liens
and encumbrances. Northland Fund II is the sole holder of the
Northland Fund II Company Interests, and the Northland Fund II
Company Interests are free and clear of all liens and encumbrances.
Northland Fund III is the sole holder of the Northland Fund III
Company Interests, and the Northland Fund III Company Interests are
free and clear of all liens and encumbrances. NIC is the sole
holder of the NIC Company Interests, and the NIC Company Interests
are free and clear of all liens and encumbrances. Northland Austin
is the sole holder of the Northland Austin Company Interests, and
the Northland Austin Company Interests are free and clear of all
liens and encumbrances. Austin Investors is the sole holder of the
Austin Investors Company Interests, and the Austin Investors
Company Interests are free and clear of all liens and encumbrances.
Drake is the sole holder of the Drake Company Interests, and the
Drake Company Interests are free and clear of all liens and
encumbrances. Tatstone is the sole holder of the Tatstone Company
Interests, and the Tatstone Company Interests are free and clear of
all liens and encumbrances.
(w)
Condominium Conversion . Except as disclosed on
Schedule 3.3(w) , none of such Northland
Contributor or any Northland Company has made any filing with the
applicable Authority with respect to the conversion of any of the
Northland Properties to a condominium.
(x)
Solvency . None of such Northland Contributor or any
Northland Company has: (i) made a general assignment for the
benefit of creditors; (ii) filed any voluntary petition in
bankruptcy or suffered the filing of any involuntary petition by
such Northland Contributor’s or any Northland Company’s
creditors; (iii) suffered the appointment of a receiver to
take possession of all or substantially all of such Northland
Contributor’s or any Northland Company’s assets, (iv)
suffered the attachment or other judicial seizure of all, or
substantially all, of such Northland Contributor’s or any
Northland Company’s assets, (v) admitted in writing such
Northland Contributor’s or any Northland Company’s
inability to pay its debts as they come due; or (vi) made an
offer of settlement, extension, or composition to its creditors
generally.
(y)
Securities Representations .
(i) Such Northland Contributor is an
“accredited investor,” as such term is defined in Rule
501(a) of Regulation D under the Securities Act.
(ii) No such Northland Contributor,
or any of such Northland Contributor’s Affiliates, nor any
Person acting on such Northland Contributor’s or Northland
Contributor’s Affiliate’s behalf, was offered the
Common Units through any form of “general solicitation or
general advertising” (within the meaning of Regulation D
under the Securities Act) in connection with any offer or sale of
the Common Units.
(iii) Such Northland Contributor
understands and acknowledges that (i) no public market exists
for any of the Common Units and that it is unlikely that a public
market will ever exist for the Common Units, (ii) such
Northland Contributor is purchasing the Common Units for its own
account, for investment and not with a view to, or for offer or
sale in connection with, any distribution
44
thereof in
violation of the Securities Act or other applicable securities
laws, and (iii) such Northland Contributor is aware that it
may be required to bear the economic risk of an investment in the
Common Units for an indefinite period of time.
(iv) Such Northland Contributor has
consulted with its own advisers as to the financial, tax, legal and
related matters concerning an investment in the Common Units and on
that basis believes that an investment in the Common Units is
suitable and appropriate for such Northland Contributor. Such
Northland Contributor and its advisers have such knowledge and
experience in financial, tax and business matters so as to enable
such Northland Contributor to utilize the information made
available to such Northland Contributor in connection with the
investment contemplated hereby to evaluate the merits and risks of
an investment in the New Company and to make an informed investment
decision with respect thereto. Such Northland Contributor is
familiar with the type of investment that the Common Units
constitutes and recognizes that an investment in the New Company
involves substantial risks, including significant risk of loss,
including the loss of the entire amount of such investment.
(v) Such Northland Contributor hereby
acknowledges that the Common Units are not and will not be
registered under the Securities Act or registered or qualified for
sale pursuant to applicable securities or Blue Sky laws of any
state or foreign jurisdiction by reason of a specific exemption
from the registration requirements thereof, the availability of
which depends upon, among other things, the bona fide nature of the
investment intent and the accuracy of the each Northland
Contributor’s representations, warranties and covenants set
forth herein. Each Northland Contributor further acknowledges that
the Common Units will be subject to transfer restrictions and may
not be offered, sold, transferred, pledged, hypothecated or
otherwise assigned, in whole or in part, without compliance with
applicable federal securities laws and the applicable securities or
Blue Sky laws of any state or foreign jurisdiction by the
transferor and the transferee (including, without limitation, the
delivery of investment representation letters and legal opinions
reasonably satisfactory to the New Company).
For purposes of this Agreement where
the term “to Northland’s knowledge,” or a phrase
of similar import, is used, such term shall mean, with respect to
representations and warranties made by Northland Corporation, the
“current actual knowledge” (as defined below) of the
following designees of Northland: Lawrence R. Gottesdiener and
Steven P. Rosenthal. As used herein, the term “current actual
knowledge” shall mean only the actual, current, conscious and
not constructive, imputed or implied knowledge of such designee,
without having made a review of the files or other inquiry.
Anything herein to the contrary notwithstanding, such designee
shall not have any personal liability or obligation whatsoever with
respect to any of the matters set forth in this Agreement or any of
the representations herein being or becoming untrue, inaccurate or
incomplete in any respect.
3.5 Survival . The
representations and warranties of the Tarragon Contributors and the
Northland Contributors set forth in this Article 3 and
anywhere else in this Agreement or in
45
any
Related Document (unless expressly stated otherwise) shall survive
the Closing of the transaction contemplated in this Agreement and
the delivery of the Assignment and Assumption of Company Interests
by each of Tarragon and Northland for a period of fifteen
(15) months from and after the last Closing Date.
Consequently, each of the Tarragon Contributors and the Northland
Contributors stipulates and agrees that from and after such fifteen
(15) month period, it is entitled to and agrees to claim no
damages of any kind with respect to any alleged breach and/or
violation of any of such representations and/or warranties of the
other party, other than as to claims with respect to which it has
given the other party and the New Company written notice within
such fifteen (15) month period. Notwithstanding the foregoing,
each of the Tarragon Contributors and the Northland Contributors
hereby expressly waives, relinquishes and releases any right or
remedy available to it at law, in equity, under this Agreement or
otherwise to make a claim against the other party for damages that
it may incur, as the result of any of the representations or
warranties of the other party being untrue, inaccurate or incorrect
if (a) the party claiming such breach knew or is deemed to
know that such representation or warranty was untrue, inaccurate or
incorrect at the time of the Closing (and for such purpose,
(i) the knowledge of each Northland Contributor will be deemed
known by each other member of the same Northland Contributing
Group, (ii) the knowledge of each Tarragon Contributor will be
deemed known by each other member of the same Tarragon Contributing
Group, (iii) the knowledge of Northland will be deemed known
by the New Company in respect of any claim against any Tarragon
Contributor, but not otherwise, (iv) the knowledge of Tarragon
will be deemed known by the New Company in respect of any claim
against any Northland Contributor, but not otherwise and
(v) the knowledge or deemed knowledge of the New Company will
not limit the right of any Contributor to bring a direct claim
under Section 5.5, provided that the Contributor does not have
and is not deemed to have such knowledge), or (b) the damages
of the party claiming such breach as a result of such
representations or warranties being untrue, inaccurate or incorrect
are reasonably estimated to aggregate less than one percent (1%) of
the Equity Value of the applicable Contributor party alleged to be
liable for such breach as of the date of the claim; provided,
however, that in the event that the damages of a party exceed such
one percent (1%) threshold, such party will be entitled to claim
for all its damages ( i.e. from the first dollar of damage,
regardless of such threshold). Notwithstanding anything to the
contrary set forth herein, the aggregate liability of each
Contributor under the representations and warranties set forth in
this Article 3, together with all of the indemnification
obligations of such Contributor provided in this Agreement or in
any Related Document, shall not exceed fifty percent (50%) of the
Equity Value of such Contributor. The remedies set forth in this
Section 3.5, Article 5 and Article 6 comprise the
sole and exclusive remedies of a party hereto (or any person
claiming by, through or under such party, including any Indemnitee)
in respect of any breach of the representations, warranties or
covenants set forth in this Agreement or in any Related
Document.
3.6 Bermuda Island and
Northgate . Notwithstanding anything to the contrary herein or
in the Northgate Purchase Agreement or the Bermuda Island Purchase
Agreement, if the Bermuda Island property and/or the Northgate
property become additional “Northland Properties”
hereunder and/or Middletown Tarragon LLC becomes an additional
“Northland Company” hereunder, and/or the membership
interests in Middletown Tarragon LLC become additional
“Northland Company Interests”, each as described above
in Section 1.2, then none of the representations or warranties
set forth in this Article 3 will apply to such additional
Northland Properties, Northland Companies or Northland Company
Interests nor shall any of the Northland Contributors be deemed to
have made any such representations and warranties with
46
respect
thereto, except to the extent that any such representations or
warranties would, if made, have been breached by actions or
omissions taken or omitted to be taken by Northland at any time
after consummating such purchase under the Northgate Purchase
Agreement or the Bermuda Island Purchase Agreement, as applicable,
and such breach results in a Material Adverse Effect.
ARTICLE 4 — CLOSING ADJUSTMENTS
4.1 Prorations . At each
Closing, the following shall be apportioned and adjusted between
each Contributor, on the one hand, and the New Company, on the
other hand, as of 11:59 p.m. (Eastern Standard Time) as of the
last day of the calendar month immediately preceding the month in
which the applicable Closing occurs (the “ Prorations
Date ”), with the Contributor responsible for matters
relating to its Contributed Properties for the period prior to the
Prorations Date, and the New Company responsible for matters
relating to such Contributed Properties from and after the
Prorations Date, except as otherwise specified:
(a) rents
and additional rents under or in respect of Tenant Leases, as, when
and to the extent actually collected, on the basis of the period
for which payable under the applicable Tenant Lease and apportioned
on the basis of the actual number of days in such period, along
with security, pet, key and any other deposits held by the landlord
under the Tenant Leases;
(b) any
real property taxes, water and sewer rents and charges; any tax
credit or refund collected as a result of any real property tax
appeal; vault taxes or charges, elevator inspection charges and
other like and similar municipal taxes and charges, each on the
basis of the fiscal year or other period for which assessed, and
apportioned upon the basis of the actual number of days in such
year or period. If actual tax bills are not available, taxes shall
be apportioned based on the most recent tax bills available, with a
post-Closing adjustment to be made as soon as tax bills for the
fiscal year during which the Closing occurs become available;
(c) subject
to Section 4.5, electric, gas, steam and other public utility
charges for services furnished to the Contributed Properties, on
the basis of the actual number of days in any period covered by the
charge being apportioned (except that no apportionment shall be
made for any of such items as are furnished and charged by the
applicable utility company directly to tenants under the Tenant
Leases);
(d) all
charges under the Contracts, on the basis of the actual number of
days in any period covered by the charge being apportioned. The
Tarragon Contributors with respect to the Tarragon Properties, and
the Northland Contributors with respect to the Northland Properties
shall bear the cost of all installments or amounts of items which
are being apportioned under this Section which became due and
payable prior to the Prorations Date; and
(e) such
other items as are customarily apportioned between sellers and
purchasers of real properties of a type similar to the Contributed
Properties.
4.2 Commissions . Each
Contributor shall bear the cost of all unpaid commissions, fees and
other charges due on or prior to the Prorations Date to real estate
brokers or other
47
Persons
with respect to any Tenant Lease beginning on or prior to the
Prorations Date. The New Company shall be responsible for
commissions, fees, or other charges due to real estate brokers or
other Persons with respect to Tenant Leases, and any renewals,
extensions and expansions thereof, beginning after the Prorations
Date. At each Closing, the Equity Value of each Contributor will be
reduced by all security deposits which are then unapplied to
satisfy tenant obligations under Tenant Leases at such Contributed
Property, except to the extent that the applicable Contributed
Company holds such security deposit as of the Closing Date.
4.3 New Tax Rates . If the
Proration Date and the Closing Date for a Contributed Property is
before a new real property or other applicable tax rate or charge
of an Authority is fixed, then the apportionment of such tax or
charge at the Closing shall be based upon the tax rate for the
immediately preceding fiscal period applied to the latest assessed
valuation. Promptly after the new tax rate has been fixed, the
apportionment of such tax or charge made at the Closing shall be
recalculated and any adjustment to the Equity Value and the number
of Common Units issuable to the Contributors in respect of such
Contributed Property shall be made promptly after such
recalculation.
4.4 Tenant Leases . If any
tenant under a Tenant Lease is in arrears in the payment of rent,
or other charges, payments received from such tenant after the
applicable Closing shall be applied in the following order of
priority: first, to current rents and other sums due the New
Company as the current owner of the Property and landlord under the
Tenant Lease, and the balance to any delinquent sums owing to the
Contributor under the Tenant Lease in respect of the period prior
to the Prorations Date. If any payments from a tenant under a
Tenant Lease received by the New Company or the Contributor after
the Closing are payable to the other by reason of this Section,
then the appropriate sum shall be promptly paid to the other by
adjustment of the number of Common Units issued to the
Contributor.
4.5 Utility Charges . The
apportionment of utility charges shall be made upon the basis of
charges shown on the latest available bills of such utilities. The
charges shown on such available bills for periods prior to the
Prorations Date which have not been paid as of the Closing Date
shall be paid by the Contributed Company and credited in favor of
the New Company, and for the period from the date of each such last
available utility bill to the Prorations Date an apportionment
shall be made based on the amount charged for the period covered by
such last available bill. Notwithstanding the foregoing, each
Contributor with respect to its Contributed Property will use
reasonable efforts to cause the respective utility companies to
read their meters or fix their charges to the Prorations Date, in
which event (i) the Contributed Company shall pay such
charges, when billed, to the Prorations Date, and the amount of
such payment will be credited at Closing in favor of the New
Company, (ii) if the Contributed Company has paid any such
charges for any period subsequent to the Prorations Date, such
payments shall be credited in favor of the Contributor, and
(iii) the Contributed Company shall pay such charges from and
after the Prorations Date without any proration hereunder.
4.6 Utility Deposits . At the
Closing, to the extent not otherwise held in the name of the
Contributed Company, each Contributor shall assign to the New
Company, all deposits or escrows held for the account of such
Contributor (or its Affiliate) with respect to its Contributed
Property at or by any public utility company in connection with the
utility services furnished to the Contributed Property; and in such
case the Contributor shall be credited at Closing for the
48
amount
of deposits, or escrows so assigned. Any such deposits or escrows
held in the name of a Contributed Company shall be included in the
Cash adjustment of Equity Value pursuant to Section 1.1(c).
4.7 Post-Closing Receipt . If
any item covered by this Article cannot be apportioned because the
same has not been (or cannot be) fully ascertained on the Closing
Date, or if any error has been made with respect to any
apportionment, then such item shall be apportioned (or corrected,
as applicable) as soon as the same is fully ascertained and any
change in Equity Value and the number of Common Units to be issued
to a Contributor under Section 1.1 shall be adjusted by
issuing to such Contributor additional Common Units, or reducing
the number of Common Units issued to such Contributor.
4.8 Real Estate Tax Refunds .
Real estate tax refunds and credits received after a Closing which
are attributable to the fiscal tax year during which the Prorations
Date falls shall be apportioned between the Contributor, on the one
hand, and the New Company, on the other hand, pursuant to this
Article. There will be no proration of tax refunds or credits
relating to fiscal tax years previous to the one during which the
Prorations Date falls.
4.9 Special Assessments . If,
as of the Prorations Date, any of the Properties shall be (or shall
have become) subject to a special or local assessment or charge of
any kind (whether or not yet a lien), then (to the extent not
payable by the tenants) the New Company shall be credited at
Closing for any installments thereof due and payable prior to the
Prorations Date which have not been paid by the Contributed Company
prior to the Prorations Date; provided, however , that any
installment thereof attributable to a period from and after the
Prorations Date shall be apportioned at the Closing in the same
manner as for taxes under Section 4.1(b). The Contributed
Company shall be responsible for all installments of such
assessment attributable to the period from and after the Prorations
Date, without any proration credit in favor of the New Company
hereunder.
4.10 Escrow Balances and
Reserves . At each Closing, each Contributor will receive a
credit for any escrow balances and reserves held by a lender for
the account of a Contributed Company at Closing.
4.11 Straddle Periods.
(a)
In General . If, for any Income Tax purposes, the Taxable
period of any of the Contributed Companies does not terminate on
the relevant Prorations Date (any such period, a “
Straddle Period ”), Income Taxes of such Contributed
Company and Income Tax refunds or credits, if any, of such
Contributed Company attributable to its ordinary operations during
such Straddle Period shall be allocated to (i) the portion of
such Straddle Period up to and including the relevant Prorations
Date (the “ Pre-Closing Straddle Period ”), and
(ii) the portion of such Straddle Period subsequent to the
relevant Prorations Date (the “ Post-Closing Straddle
Period ”) in accordance with this Section 4.11(a).
Any Income Taxes and Income Tax refunds of a Contributed Company
that are attributable to those transactions that are in the nature
of capital transactions shall be allocated under the principles
described above based on the relevant Closing Date, instead of the
relevant Prorations Date. For purposes of the preceding sentences,
Income Taxes and any Income Tax refunds or credits for the
Pre-Closing Straddle Period and for the
49
Post-Closing Straddle Period of a Contributed Company will be
determined on the basis of an interim closing of the books as of
the close of business on the relevant Prorations Date or Closing
Date, as applicable, as if such Straddle Period consisted of one
Taxable period ending on the relevant Prorations Date or Closing
Date, as applicable, and a Taxable period beginning on the day
following the relevant Prorations Date or Closing Date, as
applicable.
(b)
Partnerships . For purposes of section 706 of the Code, any
item of income and deduction with respect to a Contributed Company
that is treated as a partnership for U.S. federal tax purposes
shall be allocated under the interim closing of the books method of
section 706 of the Code based on the Prorations Date, and any items
of such company that are in the nature of capital transactions
shall be allocated under the interim closing of the books method
under section 706 of the Code based on the Closing Date. The
portion of any such items of such Contributed Company attributable
to any period to the Contributor (or Contributors) up to and
including the relevant Prorations Date or Closing Date, as
applicable, shall be allocated to the Contributor (or Contributors)
of such Contributed Company, and the portion of such items of such
company attributable to the period after the relevant Prorations
Date or Closing Date, as applicable, shall be allocated to the New
Company.
4.12 Time Periods . Except as
otherwise provided herein, it is the intention of the parties that
each Contributor be responsible for all costs and expenses, and
obtain the benefit of all income, of its Contributed Companies and
Contributed Properties relating to the period up to the Prorations
Date, and that the New Company be responsible for such costs and
expenses, and obtain the benefit of such income, from and after the
Prorations Date, in each case on an accrual basis, but without
regard to non-cash items of income or expense, including
depreciation and amortization.
4.13 Adjustment of Equity
Value . On each Closing Date, for each Contributor and its
Contributed Companies and Contributed Properties, the net amount of
all proration credits, without duplication, under this
Article 4 in favor of such Contributor shall be netted against
the amount of all proration credits, without duplication, under
this Article 4 in favor of the New Company, and (i) if
the aggregate net proration credit is in favor of such Contributor,
then the Equity Value of such Contributor shall be increased by the
amount of such net proration credit pursuant to Section 1.1(c)
and (ii) if the aggregate net proration credit is in favor of
the New Company, then the Equity Value of such Contributor shall be
reduced by the amount of such net proration credit pursuant to
Section 1.1(c).
4.14 Survival . This
Article 4, and all rights and duties of the New Company and
the parties hereunder, shall survive Closing.
ARTICLE 5 — INDEMNIFICATION
5.1 By Contributors.
(a) From
and after the Closing Date, each Contributor (an “
Indemnitor ”) agrees severally to indemnify, defend
and hold harmless the New Company, each other Contributor, and each
such Contributor’s respective subsidiaries, Affiliates,
officers, directors, partners, members, managers, security holders,
stockholders, employees, representatives and
50
agents.
(collectively, the “ Indemnitees ”) from and
against all Losses which are incurred or suffered by any of them
(A) based upon, arising out of, in connection with or by
reason of the breach of any of the representations or warranties of
such Contributor, (B) based upon, arising out of, in
connection with or by reason of any liability or obligation
relating to the Contributed Companies or the Contributed Properties
contributed, directly or indirectly, by such Contributor of any
nature (absolute, accrued, contingent or otherwise) arising or
occurring with respect to any period prior to the Prorations Date,
(C) based upon, arising out of, in connection with or by
reason of the failure of such Contributor to perform or comply, in
whole or in part, with any of the covenants or agreements contained
herein or in any Related Document to be performed or complied with
by such Contributor on or prior to the Closing, and (D) based
upon, arising out of, in connection with or by reason of any Income
Taxes attributable to a Pre-Closing Tax Period of a Contributed
Company. From and after the First Closing Date, if there is Excess
Gain allocated to Tarragon Corporation or to Ansonia and recognized
prior to December 31, 2018, the New Company shall pay to
Tarragon Corporation or Ansonia, as the case may be, an amount
equal to the product of such Excess Gain and the tax rate applied
with respect to Tarragon Corporation or Ansonia, as applicable, in
determining any “Ansonia Tax Amount” or “Tarragon
Tax Amount” under the Tax Matters Agreement, such amount to
be paid in immediately available funds within thirty (30) days
after the filing of the federal income tax return of the New
Company for the taxable year in which such Excess Gain was
allocated.
(b) The
indemnity against Losses pursuant to Section 5.1(a) shall also
include interest on cash disbursements in respect thereof at an
annual rate of interest equal to a fixed rate of twelve and
one-half percent (12.5%) (the “ Reference Rate
”), based on actual days elapsed from the later of the date a
valid claim is made hereunder or the date of such disbursement
until the date the Indemnified Parties are fully reimbursed
therefor.
(c) Notwithstanding
the preceding, (i) the Indemnified Parties shall not be
entitled to any recovery unless a claim for indemnification is made
in accordance with Section 5.3 and within the time period of
survival set forth in Article 3 and the person seeking
indemnification complies with the procedures set forth in
Sections 5.3, 5.4 and 5.5, and (ii) if more than one
Indemnitor has an indemnification obligation in respect of the same
Contributed Company or Contributed Property, such indemnification
obligation shall constitute a several obligation of such
Indemnitors, in proportion to their respective Contribution
Percentages.
5.2 Intentionally Omitted
.
5.3 Indemnification Procedure
.
(a) In
the event that any Indemnitee shall incur or suffer any Loss in
respect of which indemnification may be sought by such party
pursuant to the provisions of this Article 5, the Indemnitee
shall assert a claim for indemnification by written notice (a
“ Notice ”) to the Indemnitor stating the nature
and basis of such claim. In the case of Losses arising by reason of
any third party claim, the Notice shall be given within
30 days of the filing of any such claim against the Indemnitee
or the determination by Indemnitee that a claim will ripen into a
claim for which indemnification will be sought, but the failure of
the Indemnitee to give the Notice within such time period shall not
relieve the Indemnitor of any liability that the
51
Indemnitor may have to the Indemnitee except to the extent that the
Indemnitor is prejudiced thereby and then only to the extent of
such prejudice.
(b) The
Indemnitee shall provide to the Indemnitor on request all
information and documentation reasonably necessary to support and
verify any Losses which the Indemnitee believes give rise to a
claim for indemnification hereunder and shall give the Indemnitor
reasonable access to all books, records and personnel in the
possession or under the control of the Indemnitee which would have
bearing on such claim.
(c) In
the case of third party claims for which indemnification is sought,
the Indemnitor shall have the option (x) to conduct any
proceedings or negotiations in connection therewith, (y) to take
all other steps to settle or defend any such claim (provided that
the Indemnitor shall not, without the consent of the Indemnitee,
settle any such claim on terms which provide for (A) a
criminal sanction or fine, (B) injunctive relief or
(C) monetary damages in excess of the amount that the
Indemnitor is required to pay hereunder) and (z) to employ
counsel, which counsel shall be reasonably acceptable to the
Indemnitee, to contest any such claim or liability in the name of
the Indemnitee or otherwise. In any event, the Indemnitee shall be
entitled to participate at its own expense and by its own counsel
in any proceedings relating to any third party claim; provided,
however, that if the defendants in any such action or claim include
both the Indemnitee and the Indemnitor and the Indemnitee shall
have reasonably concluded that there would be a conflict of
interest under DR 5-105 of the Code of Professional Responsibility
or other applicable federal or state law were the same counsel to
represent the Indemnitee and the Indemnitor, the Indemnitee shall
be entitled to be represented by separate counsel at the
Indemnitor’s expense; provided further, however, that such
action or claim shall not be settled without the Indemnitor’s
consent, which shall not unreasonably be withheld. The Indemnitor
shall, within 30 days of receipt of the Notice, notify the
Indemnitee of its intention to assume the defense of such claim.
Until the Indemnitee has received notice of the Indemnitor’s
election whether to defend any claim, the Indemnitee shall take
reasonable steps to defend (but may not settle) such claim. If the
Indemnitor shall decline to assume the defense of any such claim,
or shall fail to notify the Indemnitee within 30 days after
receipt of the Notice of the Indemnitor’s election to defend
such claim, the Indemnitee shall defend against such claim
(provided that the Indemnitee shall not settle such claim without
the consent of the Indemnitor, which consent shall not be
unreasonably withheld). The expenses of all proceedings, contests
or lawsuits in respect of the claims described in the preceding
sentence shall be borne by the Indemnitor but only if the
Indemnitor is responsible pursuant hereto to indemnify the
Indemnitee in respect of the third party claim and, if applicable,
only as required within the limitations set forth in
Section 5.1 or Section 5.2 as the case may be. Regardless
of which party shall assume the defense of the claim, the parties
agree to cooperate fully with one another in connection therewith.
In the case of a claim for indemnification made under
Section 5.1 or 5.2, (a) if (and to the extent) the
Indemnitor is responsible pursuant hereto to indemnify the
Indemnitee in respect of the third party claim, then within ten
days after the occurrence of a final non-appealable determination
with respect to such third party claim (or sooner if required by
such determination), the Indemnitor shall pay the Indemnitee (or
sooner if required by such determination), in immediately available
funds, the amount of any Losses (or such portion thereof as the
Indemnitor shall be responsible for pursuant to the provisions
hereof and (b) in the event that any Losses incurred by the
Indemnitee do not involve payment by the Indemnitee of a third
party claim, then, if (and to the extent) the Indemnitor is
responsible pursuant hereto to
52
indemnify the Indemnitee against such Losses, the Indemnitor shall
within ten days after agreement on the amount of Losses or the
occurrence of a final non-appealable determination of such amount
pay to the Indemnitee, in immediately available funds, the amount
of such Losses (or such portion thereof as the Indemnitor shall be
responsible for pursuant to the provisions hereof).
5.4 Cooperation in Defense .
Each party indemnified under any indemnity contained in this
Agreement shall cooperate in all reasonable respects in the defense
of the third-party claim pursuant to which the indemnifying party
is alleged to have liability.
5.5 Direct or Derivative
Claims . With respect to any indemnified Loss which has been
suffered (directly or indirectly) both by the New Company and by a
Contributor, the Contributor shall have the right to require, by
written demand upon the Board of Managers of the New Company, that
the claim for such indemnified Loss be brought by the New Company,
and if the Board of Managers does not bring such claim and
prosecute such claim in accordance with the directions of such
Contributor within fifteen (15) days, then such Contributor
may bring such claim on its own behalf, in which case such
Contributor will be deemed to have suffered a Loss equal to its pro
rata share of the Loss suffered by the New Company, based on its
proportionate ownership of the Common Units of the New Company as
of the final Closing. Nothing in this Section 5.5 shall
prohibit a Contributor from bringing a direct claim for Loss at any
time, regardless whether the New Company has also suffered a Loss
or brought a claim in respect of the same underlying matter;
provided, however, that any recovery by the New Company in respect
of such a claim shall be reduced by the amount of any direct
recovery by a Contributor in respect of the same underlying matter,
and such Contributor shall not participate through the New Company
in any such additional recovery by the New Company.
5.6 General . The parties
shall use reasonable efforts to mitigate any indemnified Loss in
connection with this Agreement. The parties shall also use
reasonable efforts to structure any indemnity payment in a manner
such that the Indemnitor will obtain any deduction or other tax
benefit arising from having made such indemnification payment in
order to avoid any duplication of after-tax benefit to the
Indemnitee. The amount of indemnified Loss incurred by the
Indemnitee shall be reduced by the amount of any insurance benefit
received by the Indemnitee or by the New Company in respect of such
Loss. Any liability for indemnification under this Agreement shall
be determined without duplication of recovery by reason of the
state of facts giving rise to such liability constituting a breach
of more than one representation, warranty, covenant or agreement.
No matter shall be the subject of an indemnification claim
hereunder to the extent that the Indemnitee has otherwise been
compensated therefor, including through the prorations or other
adjustments to Equity Value under Section 1.1.
5.7 Survival . This
Article 5 shall survive each Closing.
ARTICLE 6 — DEFAULTS AND REMEDIES
6.1 Defaults . In the event of
(i) a failure by a party to perform any of its material
obligations hereunder, which failure continues for more than
fifteen (15) days following receipt of notice thereof from the
other party or (ii) the inaccuracy of any representation or
warranty made by a party in this Agreement or in any document
delivered pursuant to the terms hereof to
53
the
extent such inaccuracy of such representation or warranty results
in or constitutes a Material Adverse Effect, then the other party
shall have the right to terminate its obligation to consummate the
transaction contemplated by this Agreement (or any remaining
portion thereof) by delivery of notice thereof to the other party.
Subject to the terms of this Article below, upon any such
termination or any termination otherwise permitted under this
Agreement, all rights and obligations of the parties under this
Agreement, other than those that by their terms survive
termination, shall terminate without recourse, and this Agreement
shall be of no further force or effect.
6.2 Remedies of Northland
.
In addition to its right to terminate
this Agreement, in the event of a failure any Tarragon Contributor
to perform its obligations to close on the contribution
transactions under this Agreement at any Closing, which failure
continues for more than fifteen (15) days following receipt of
notice thereof, then Northland shall have the right to
(i) seek specific performance of the terms of this Agreement,
and (ii) to the extent a specific performance remedy is not
available, to pursue any other remedy it may have at law or in
equity in connection with such failure. Notwithstanding anything in
the foregoing to the contrary, in the event that Northland elects
to seek damages for any failure, breach or default hereunder, then
the parties agree that Northland’s recovery for any and all
such defaults shall not exceed $5,000,000 in the aggregate against
all Tarragon Contributors (and such $5,000,000 limitation will be
applied severally to limit the liability of each Tarragon
Contributor, pro rata on the basis of their respective Equity
Values); provided, however, that in the event that any such
failure, breach or default is the result of the willful failure,
breach, default, misconduct or omission on the part of a Tarragon
Contributor, then the $5,000,000 aggregate limitation on damages
shall not be applicable to, and Northland shall be permitted to
recover any and all damages caused by such failure, breach or
default on the party of, such Tarragon Contributor. As a condition
precedent to Northland exercising any right it may have to bring an
action for specific performance hereunder, Northland must commence
such an action within ninety (90) days after Northland first
becomes aware of Tarragon’s default. Northland agrees that
its failure to timely commence such an action for specific
performance within such ninety (90) day period shall be deemed
a waiver by it of its right to commence an action for specific
performance as well as a waiver by it of any right it may have to
file or record a notice of lis pendens or notice of pendency
of action or similar notice against any portion of the applicable
Tarragon Property.
6.3 Remedies of Tarragon
.
In addition to its right to terminate
this Agreement, in the event of a failure any Northland Contributor
to perform its obligations to close on the contribution
transactions under this Agreement at any Closing, which failure
continues for more than fifteen (15) days following receipt of
notice thereof, then Tarragon shall have the right to (i) seek
specific performance of the terms of this Agreement, and
(ii) to the extent a specific performance remedy is not
available, to pursue any other remedy it may have at law or in
equity in connection with such failure. Notwithstanding anything in
the foregoing to the contrary, in the event that Tarragon elects to
seek damages for any failure, breach or default hereunder, then the
parties agree that Tarragon’s recovery for any and all such
defaults shall not exceed $5,000,000 in the aggregate against all
Northland Contributors (and such $5,000,000 limitation will be
applied severally to limit the
54
liability of each Northland Contributor, pro rata on the basis of
their respective Equity Values); provided, however , that in
the event that any such failure, breach or default is the result of
the willful failure, breach, default, misconduct or omission on the
part of a Northland Contributor, then the $5,000,000 aggregate
limitation on damages shall not be applicable to, and Tarragon
shall be permitted to recover any and all damages caused by such
failure, breach or default on the part of, such Northland
Contributor. As a condition precedent to Tarragon exercising any
right it may have to bring an action for specific performance
hereunder, Tarragon must commence such an action within ninety
(90) days after Tarragon first becomes aware of
Northland’s default. Tarragon agrees that its failure to
timely commence such an action for specific performance within such
ninety (90) day period shall be deemed a waiver by it of its
right to commence an action for specific performance as well as a
waiver by it of any right it may have to file or record a notice of
lis pendens or notice of pendency of action or similar
notice against any portion of the applicable Northland
Property.
6.4 Sole and Exclusive
Remedies . The remedies set forth in this Article 6,
together with those set forth in Section 3.5 and
Article 5 comprise the sole and exclusive remedies of a party
hereto (or any person claiming by, through or under such party,
including any Indemnitee) in respect of any breach of the
representations, warranties or covenants set forth in this
Agreement or in any Related Document.
ARTICLE 7 — FUTURE OPERATIONS
7.1 Operations . Except as
otherwise expressly permitted by this Agreement (including pursuant
to the Tarragon Restructuring or the Northland Restructuring), each
Tarragon Contributor with respect to the Tarragon Properties and
Tarragon Companies, and each Northland Contributor with respect to
the Northland Properties and the Northland Companies, hereby agrees
and covenants with respect to the Property and/or Company Interests
that have not already been contributed to the New Company, that
from the date hereof through each Closing or the earlier
termination of this Agreement:
(a) Neither
Tarragon nor Northland, and no Tarragon Company or Northland
Company, shall sell, encumber, further pledge, or otherwise
transfer or dispose of all or any part of the Tarragon Company
Interests, the Northland Company Interests, the Tarragon Property
or the Northland Property, or amend, modify or terminate any
Tarragon Operating Agreements or Northland Operating Agreements,
without the prior consent of the other party hereto.
(b) Neither
Tarragon nor Northland, and no Tarragon Company or Northland
Company, shall enter into, extend, renew, replace or modify any
contract, agreement or other arrangement with regard to the
Tarragon Property or the Northland Property which will be binding
on the New Company, the Tarragon Property or the Northland Property
after Closing unless such contract, agreement or other arrangement
(as so extended, renewed, replaced or modified) can be terminated
by the New Company without penalty or payment of any fee on not
more than thirty (30) days notice.
(c) Neither
Tarragon or Northland, and no Tarragon Company or Northland
Company, shall initiate or consent to any zoning changes, liens or
encumbrances of or against the Tarragon Property or the Northland
Property without the prior written consent of the other
55
party,
and shall give the other party copies of all notices received by
Tarragon or Northland with respect to any such matters.
(d) Each
of Tarragon, Northland, the Tarragon Companies and the Northland
Companies shall continue to manage, lease, market and operate the
Tarragon Property and the Northland Property in the ordinary course
of business in accordance with the management, leasing and
operation standards and practices currently in effect at the
Tarragon Property and the Northland Property, as applicable, and
shall continue to perform all of its obligations with respect to
the Tarragon Leases, Northland Leases, Tarragon Contracts and
Northland Contracts, as applicable.
(e) Each
of Tarragon, Northland, the Tarragon Companies and the Northland
Companies shall repair and maintain the Tarragon Property and the
Northland Property in its present condition, normal wear and tear
excluded and subject to Article 8, and continue to maintain
the insurance policies currently in effect with respect to any of
the foregoing or enter into new policies with substantially the
same coverage.
(f) Neither
Tarragon and Northland shall, or permit any Tarragon Company or
Northland Company, to enter into any new Tenant Lease or amend any
existing Tenant Lease, without the other party’s consent, not
to be unreasonably withheld, conditioned or delayed, unless
(i) same is on the current standard lease form for the
applicable Property; (ii) provides for payment of monthly rent
at the rates currently in effect for the applicable Property;
(iii) is for a term of no less than one year nor more than
15 months; and (iv) does not provide any “free
rent” or other concessions beyond those currently offered and
consistent with current practice with respect to the applicable
Property and only to the extent such “free rent” or
other concessions are not so-called “back-ended”.
(g) Each
of Tarragon and Northland will keep all debt service payments and
other payments owned in connection with the Tarragon Assumed Debt
and the Northland Assumed Debt, as applicable, current on the
Tarragon Property and the Northland Property and will not permit or
suffer to exist any default under any Tarragon Debt Instrument or
Northland Debt Instrument.
7.2 Notification of Certain
Matters . Tarragon shall give prompt notice to Northland, and
Northland shall give prompt notice to Tarragon, of (a) the
occurrence, or failure to occur, of any event that causes any
representation or warranty herein or in any document relating to
the transaction contemplated in this Agreement hereunder to be
untrue or inaccurate in any material respect at any time from the
date of this Agreement to each Closing Date, and b) any failure
Tarragon, on the one hand, or Northland, on the other hand, to
comply with or satisfy, in any material respect, any covenant,
condition or agreement to be complied with or satisfied by it under
any document relating to the transaction contemplated in this
Agreement.
ARTICLE 8 — RISK OF LOSS
8.1 Casualty . Each
Contributor assumes all risks for damage to or injury occurring to
its Contributed Property by fire, storm, accident, or any other
casualty or cause (a “ Casualty ”) until the
applicable Closing with respect to the Contributed Property has
been completed.
56
Immediately after a Contributor has received notice of the
occurrence of any Casualty between the date hereof and the
applicable Closing, such Contributor shall give the other
Contributors written notice thereof (a “ Casualty
Notice ”), which Casualty Notice shall state the type,
location and amount of damage to such Property, the portions of
such Property affected by the Casualty and such Contributor’s
good faith estimate of the loss of gross rental income that the
Property will suffer while such Casualty is being repaired. If the
affected Property is reasonably expected to suffer as a result of
such Casualty a loss of gross rental income (taking into account
any business interruption insurance proceeds) in excess of 20% of
the Property’s pro forma gross rental income for the twelve
(12) month period following the Casualty (a “
Material Casualty ”), then the Contributing Group
receiving such Casualty Notice shall have the right, exercisable
for a period of ten (10) Business days after its receipt of
such Casualty Notice, to elect to terminate this Agreement with
respect to such Property and any Company that owns, directly or
indirectly, only such Property (the parties agreeing to cooperate
in good faith to restructure the ownership of any Company that owns
both direct or indirect interests in such Property and any direct
or indirect interest in another Property so as to eliminate such
overlapping interests). If this Agreement is terminated with
respect to such Property and any such Company, none of the parties
shall have any further right or obligation hereunder in respect of
such Property or such Company, except as to provisions which by
their terms survive termination of this Agreement, but this
Agreement shall remain in effect with respect to all other
Properties and Companies. If the Contributing Group receiving such
Casualty Notice does not elect to terminate this Agreement as to
such Property and any such Company, or if such Casualty is not a
Material Casualty, then such Property shall remain subject to the
terms of this Agreement and shall be contributed to the New Company
by its Contributor, along with any insurance proceeds paid on
account of such Casualty (including rental interruption insurance,
but only for the period from and after the Prorations Date) not
expended to repair the property prior to the Closing Date, and the
New Company shall receive a credit against such Contributor’s
Equity Value in the amount of any deductible payable by such
Contributor or the applicable Contributed Company in connection
with casualty coverage.
8.2 Condemnation . If, prior
to Closing, all or any significant portion of any Property is
taken, or rendered unusable for its current purpose or reasonably
inaccessible by eminent domain (or is the subject of a pending or
contemplated taking which has not been consummated), (a “
Condemnation ”), then, upon receipt of written notice
of such action from any Authority, the Contributor of such Property
shall immediately give the other Contributors written notice
thereof (a “ Condemnation Notice ”), which
Condemnation Notice shall state the nature of such Condemnation,
the portions of such Property affected by the Condemnation and such
Contributor’s good faith estimate of the loss of gross rental
income that the Property will suffer as a result of such
Condemnation. If the affected Property is reasonably expected to
suffer as a result of such Condemnation a loss of gross rental
income in excess of 20% of the Property’s pro forma gross
rental income for the twelve (12) month period following the
Condemnation (a “ Material Condemnation ”), then
the Contributing Group receiving such Condemnation Notice shall
have the right, exercisable for a period of ten (10) Business
days after its receipt of such Condemnation Notice, to elect to
terminate this Agreement with respect to such Property and any
Company that owns, directly or indirectly, only such Property (the
parties agreeing to cooperate in good faith to restructure the
ownership of any Company that owns both direct or indirect
interests in such Property and any direct or indirect interest in
another Property so as to eliminate such overlapping interests). If
this Agreement is terminated with respect to such Property
and
57
any such
Company, none of the parties shall have any further right or
obligation hereunder in respect of such Property or such Company,
except as to provisions which by their terms survive termination of
this Agreement, but this Agreement shall remain in effect with
respect to all other Properties. If the Contributing Group
receiving such Condemnation Notice does not elect to terminate this
Agreement as to such Property and any such Company, or if such
Condemnation is not a Material Condemnation, then such Property
shall remain subject to the terms of this Agreement and shall be
contributed to the New Company by its Contributor, along with any
and all rights to the condemnation award in respect of such
Condemnation (other than any portion thereof relating to loss of
rental income for the period prior to the Prorations Date).
8.3 Portfolio Termination
Right . Notwithstanding anything to the contrary contained in
Section 8.1 or 8.2, in the event that the Contributed
Properties of either Contributing Group have suffered Material
Casualties or Material Condemnations resulting in the termination
of this Agreement with respect to such Properties representing more
that 20% of the gross asset value (as such gross asset value is set
forth on Schedule 1.1 ) of all the Properties of
such Contributing Group, then the other Contributing Group shall
have the right to terminate this Agreement by delivery of written
notice thereof to the other parties, whereupon this Agreement shall
terminate as to all Companies and Properties not contributed at a
previous Closing, and the parties shall cease to have any further
obligations or liabilities hereunder in respect thereof, other than
obligations which by their terms expressly survive termination of
this Agreement.
ARTICLE 9 — MISCELLANEOUS
9.1 Brokers . Each party to
this Agreement represents and warrants that neither it nor any of
its Affiliates has had any contact or dealings regarding the
Properties, or any communication in connection with the subject
matter of the transactions contemplated by this Agreement, through
any real estate broker or other person who can claim a right to a
commission or finder’s fee in connection with therewith. In
the event that any other broker or finder claims a commission or
finder’s fee based upon any contact, dealings or
communication, the party through whom or through whose Affiliate
such other broker or finder makes its claim shall be responsible
for such commission or fee and all costs and expenses (including,
without limitation, reasonable attorneys’ fees and
disbursements) incurred by the other party and its Affiliates in
defending against the same. The party through whom or through whose
Affiliate such other broker or finder makes a claim shall hold
harmless, indemnify and defend the other party hereto, its
successors and assigns, agents, employees, officers and directors,
and the Property from and against any and all Losses, arising out
of, based on, or incurred as a result of such claim. The provisions
of this Section shall survive each Closing or termination of the
parties’ obligations to consummate the transactions
contemplated by this Agreement.
9.2 Marketing . Each of
Tarragon and Northland agrees not to market the Properties for sale
during the term of this Agreement or entertain or discuss any offer
to purchase or acquire the Properties or the Interests with any
Person other than Northland, Tarragon and their Affiliates.
9.3 Entire Agreement; No
Amendment . This Agreement represents the entire agreement
among each of the parties hereto with respect to the subject matter
hereof. It is expressly understood that no representations,
warranties, guarantees or other statements shall be
58
valid or
binding upon a party unless expressly set forth in this Agreement.
It is further understood that any prior agreements or
understandings between the parties with respect to the subject
matter hereof have merged in this Agreement, which alone fully
expresses all agreements of the parties hereto as to the subject
matter hereof and supersedes all such prior agreements and
understandings. This Agreement may not be amended, modified or
otherwise altered except by a written agreement signed by the party
hereto against whom enforcement is sought. It is agreed that no
obligation under this Agreement which by its terms is to be
performed or continue to be performed after Closing and no
provision of this Agreement which is expressly to survive Closing
shall merge upon Closing, but shall survive Closing.
Notwithstanding the foregoing, after December 31, 2008, press
releases regarding the New Company that have been reviewed and
approved by the Board of Managers of the New Company shall not be
subject to the prior written approval of the parties hereto.
9.4 Certain Expenses . Each
party hereto will pay all of its own expenses incurred in
connection with this Agreement and the transactions contemplated
hereby (whether or not the Closing shall take place), including,
without limitation, all costs and expenses herein stated to be
borne by such party and all of its respective accounting, legal,
investigatory and appraisal fees. Tarragon shall be responsible for
paying (i) all amounts required to be paid to the holder of
the Tarragon Assumed Debt in connection with the assumption and/or
transfer of the Tarragon Assumed Debt as a result of the
transaction contemplated herein, (ii) all applicable State,
County and City transfer taxes and/or transfer fees due in
connection with the transfer of the Tarragon Property or assignment
of the Tarragon Company Interests to the New Company,
(iii) all costs associated with obtaining and issuing the any
title policies with respect to the Tarragon Properties, including,
without limitation, examination costs, commitment fees and
premiums, and (iv) all costs associated with obtaining
applicable UCC searches with respect to Tarragon or the Tarragon
Companies and all costs associated with obtaining any surveys of
the Tarragon Property, but in the case of items (i), (iii) and
(iv) above, only to the extent any of the foregoing is
required in order to obtain the Tarragon Lender Consents. Northland
shall be responsible for paying (a) all amounts required to be
paid to the holder of the Northland Assumed Debt in connection with
the assumption and/or transfer of the Northland Assumed Debt as a
result of the transaction contemplated herein, (b) all
applicable State, County and City transfer taxes and/or transfer
fees due in connection with the transfer of the Northland Property
or assignment of the Northland Company Interests to the New
Company, (c) all costs associated with obtaining and issuing
any title policies with respect to the Northland Properties,
including, without limitation, examination costs, commitment fees
and premiums, and (d) all costs associated with obtaining
applicable UCC searches with respect to Northland or the Northland
Companies and all costs associated with obtaining any surveys of
the Northland Property, but in the case of items (a), (c) and
(d) above, only to the extent any of the foregoing is required
in order to obtain the Northland Lender Consents. Any recording or
escrow fees incurred in connection with the transfer of title to or
contribution of the Tarragon Property or the Tarragon Company
Interests as contemplated by this Agreement shall be paid by
Tarragon. Any recording or escrow fees incurred in connection with
the transfer of title to or contribution of the Northland Property
or the Northland Company Interests as contemplated by this
Agreement shall be paid by Northland. All other costs and charges
in connection with the purchase and sale of the Properties
contemplated by this Agreement not otherwise provided for in this
Agreement shall be allocated by standard accounting and
conveyancing practices in the relevant jurisdiction in which each
such Property is located.
59
9.5 Notices . Any notice or
communication required under or otherwise delivered in connection
with this Agreement to any of the parties hereto shall be written
and shall be delivered to such party at the following
address:
If to Tarragon:
Tarragon
Corporation
423 West 55 th Street –
12 th
Floor
New York, NY 10019
Attn: William S. Friedman
Phone: (212) 949-5000
Fax: (646) 354-2171
with copies to:
Tarragon
Corporation
3100 Monticello, Ste. 200
Dallas, TX 75205
Attn: Kathryn Mansfield, Esq.
Phone: (214) 599-2250
Fax: (214) 599-2250
Jones Day
222 East 41 st Street
New York, NY 10017
Attn: Kent R. Richey, Esq.
Phone: (212) 326-3481
Fax: (212) 755-7306
If to Ansonia:
Ansonia LLC
c/o Tarragon Corporation
423 West 55th Street, 12th Floor
New York, NY 10019
Attn: Robert Rothenberg
Fax: (212) 687-1345
With a copy to:
Holland &
Knight LLP
195 Broadway
New York, New York 10007
Attn: Jim Spitzer, Esq.
Facsimile: 212-341-7292
60
If to Northland:
c/o Northland
Investment Corporation
2150 Washington Street
Newton, MA 02462
Attn: Steven P. Rosenthal
Phone: (617) 630-7240
Fax: (617) 630-7201
with a copy to:
Northland
Investment Corporation
2150 Washington Street
Newton, MA 02462
Attn: Suzanne Abair, Esq.
Phone: (617) 630-7275
Fax: (617) 630-7201
with a copy to:
Goodwin Procter
LLP
Exchange Place
53 State Street
Boston, MA 02109
Attn: Minta E. Kay, Esq. and Gilbert G. Menna, Esq.
Phone: (617) 570-1877 and (617) 570-1433
Fax: (617) 570-1231
All
notices, demands, solicitations of consent or approval, and other
communications hereunder shall be in writing and shall be
sufficiently given if personally delivered, transmitted by
facsimile, sent by electronic transmission or sent postage prepaid
by overnight courier or registered or certified mail, return
receipt requested. Notices shall be deemed to have been given when
personally delivered or when transmitted on a Business Day by
electronic transmission with confirmation of receipt or by
facsimile with machine generated confirmation of transmission
without notation of error, if sent before 5:00 p.m. local time of
the recipient, otherwise the following Business Day, or, if mailed
or sent by overnight courier, on the date on which received.
9.6 No Assignment . Except as
provided in this Section below, neither this Agreement nor any of
the rights or obligations hereunder may be assigned by any party
hereto without the prior written consent of the other
parties.
9.7 Governing Law . The laws
of the State of New York shall govern the validity, enforcement and
interpretation of this Agreement.
9.8 Multiple Counterparts .
This Agreement may be executed in multiple counterparts. If so
executed, all of such counterparts shall constitute but one
agreement, and, in
61
proving
this Agreement, it shall not be necessary to produce or account for
more than one such counterpart.
9.9 Further Assurances . From
and after the date of this Agreement and after the Closing, the
parties hereto shall take such further actions and execute and
deliver such further documents and instruments as may be reasonably
requested by the other party and are reasonably necessary to
provide to the respective parties hereto the benefits intended to
be afforded hereby, including, without limitation, all books and
records relating to the Property and the addresses of all
parties.
9.10 Miscellaneous . Whenever
herein the singular number is used, the same shall include the
plural, and the plural shall include the singular where
appropriate, and words of any gender shall include the other gender
when appropriate. The headings of the Articles and the Sections
contained in this Agreement are for convenience only and shall not
be taken into account in determining the meaning of any provision
of this Agreement. The words “hereof” and
“herein” refer to this entire Agreement and not merely
the Section in which such words appear. If the last day for
performance of any obligation hereunder is not a Business Day, then
the deadline for such performance or the expiration of the
applicable period or date shall be extended to the next Business
Day. All references to Sections, Articles, Exhibits or Schedules
are to Sections, Articles, Exhibits or Schedules of or to this
Agreement. The terms “include” and
“including” are to be construed as if followed by the
phrase “without limitation”, regardless whether such
phrase actually appears.
9.11 Invalid Provisions . If
any provision of this Agreement (except the provision relating to
Tarragon’s obligation to contribute the Tarragon Property,
Northland’s obligation to contribute the Northland Property,
the New Company’s obligation to issue the Common Units, the
invalidity of which shall cause this Agreement to be null and void)
is held to be illegal, invalid or unenforceable under present or
future laws, such provision shall be fully severable, this
Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part of
this Agreement, and the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by
the illegal, invalid or unenforceable provision or by its severance
from this Agreement.
9.12 Confidentiality;
Publicity . Each of Tarragon and Northland agrees to maintain
in confidence through Closing, unless otherwise required by
applicable Law, public reporting or listing requirements or
accounting or auditing standards to disclose, all material and
confidential information received from Tarragon or Northland or
otherwise regarding the Properties. In the event this Agreement is
terminated, each party shall promptly return to the other party all
materials delivered to such party. Tarragon and Northland agree
that, prior to the Closing Date, none of them, without the prior
written consent of the other, shall publicly or privately reveal
any information relating to the existence or terms and conditions
of the transactions contemplated hereby, except as permitted in
this Section. Each party agrees that nothing in this Section shall
prevent such party from disclosing or accessing any information
otherwise deemed confidential under this Section (i) in
connection with the enforcement of its rights hereunder, or
(ii) pursuant to any legal requirement, including, without
limitation, any securities Laws, any reporting or listing
requirement or any accounting or auditing standard. Tarragon and
Northland further agree that nothing in this Section shall prevent
any of them from disclosing or accessing any
62
information otherwise deemed confidential under this Section to its
respective agents, employees, counsel and other third parties to
the extent reasonably necessary to perform due diligence and
complete the transactions contemplated hereby.
9.13 Press Releases and Public
Announcements . Except as the disclosing party may determine to
be required by applicable law or any listing agreement with any
national securities exchange or The NASDAQ Stock Market, the
parties shall consult with each other before issuing any press
release or otherwise making public statements with respect to this
Agreement and the transactions contemplated by this agreement
including transactions and agreements relating to the formation of
the New Company and shall not issue any press release or make any
public announcement relating to the subject matter of this
Agreement or the New Company without the prior written approval of
the other party (which written approval shall not be unreasonably
withheld or delayed). The parties have agreed upon the form of
press release announcing the execution of this Agreement, the
formation of the New Company and the other transactions related
thereto.
9.14 Time of Essence . Time is
of the essence with respect to this Agreement.
9.15 No Recordation .
Northland and Tarragon each agrees that neither this Agreement nor
any memorandum or notice hereof shall be recorded and each of
Northland and Tarragon agrees (a) not to file any notice of
pendency or other instrument (other than a judgment) against the
Northland Property or the Tarragon Property or any portion thereof
in connection herewith and (b) to indemnify the other party against
all Losses incurred by the other party by reason of the filing of
such notice of pendency or other instrument. Notwithstanding the
foregoing, if the same is permitted pursuant to applicable Laws,
either party shall be entitled to record a notice of lis
pendens if such party is entitled to seek (and is actually
seeking) specific performance of this Agreement by the other party
in accordance with the terms of Article 6 hereof.
9.16 Representatives . NIC
shall act as the sole agent for the Northland Contributors and
shall be authorized to exercise all rights of each of the Northland
Contributors pursuant to this Agreement, including delivering any
notice or granting any consent or waiver hereunder, and the other
Contributors shall be entitled to rely on any action taken by NIC
as being taken on behalf of all of the Northland Contributors. The
rights of the Northland Contributors under this Agreement shall be
exercised only by NIC on behalf of the Northland Contributors, and
no other Northland Contributor shall be separately entitled to
exercise any such rights. A copy of any notice required to be
delivered hereunder to any Northland Contributor shall be required
to be delivered to only NIC. Tarragon Corporation shall act as the
sole agent for the Tarragon Contributors and shall be authorized to
exercise all rights of each Contributor of the Tarragon
Contributors pursuant to this Agreement, including delivering any
notice or granting any consent or waiver hereunder, and the other
Contributors shall be entitled to rely on any action taken by
Tarragon Corporation as being taken on behalf of all of the
Tarragon Contributors. The rights of the Tarragon Contributors
under this Agreement shall be exercised only by Tarragon
Corporation on behalf of the Tarragon Contributors, and no other
Tarragon Contributors shall be separately entitled to exercise any
such rights.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
63
IN WITNESS WHEREOF, the parties
hereto have executed this Contribution Agreement as an instrument
under seal as of the date and year first above written.
NORTHLAND:
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Northland Portfolio
L.P. |
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By: Northland
Portfolio Partners LLC, Its
General Partner
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By: |
/s/ Steven P. Rosenthal
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Northland Fund
L.P. |
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By: |
Northland Fund I Partners L.P.,
Its
General Partner |
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By: Northland Fund
I Partners, Inc., Its
General Partner
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By: /s/ Steven P.
Rosenthal
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Northland Fund II,
L.P. |
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By: |
Northland Fund II Partners LLC,
Its
General Partner |
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By: /s/ Steven P.
Rosenthal
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Northland Fund III,
L.P. |
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By: |
Northland Fund III Partners LLC,
Its
General Partner |
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By: /s/ Steven P.
Rosenthal
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64
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Northland Investment
Corporation |
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By:
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/s/ Steven P. Rosenthal |
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Northland Austin
Investors LLC |
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By:
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/s/ Steven P. Rosenthal |
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Austin Investors
L.P. |
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By:
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Northland Austin Partners LLC,
Its
General Partner |
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By: /s/ Steven P. Rosenthal |
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Drake Investors
L.P. |
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By:
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Northland Drake Partners LLC, Its
General Partner |
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By: /s/ Steven P. Rosenthal |
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Tatstone Investors
L.P. |
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By:
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Northland Tatstone Partners LLC,
Its
General Partner |
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By: /s/ Steven P. Rosenthal |
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TARRAGON:
Tarragon Corporation
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By:
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/s/ William S. Friedman |
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Name: William S. Friedman,
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Title: Chief Executive Officer
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ANSONIA LLC
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By: |
/s/ Robert P. Rothenberg |
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Robert P. Rothenberg |
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Member Manager |
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By: |
/s/ Richard S. Frary |
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Richard S. Frary |
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Member Manager |
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66
List
Schedules and Exhibit to Agreement to Contribute
Schedules
Schedule A-1 – List of Entities Owned by Northland
Portfolio
Schedule A-2 – List of Entities Owned by Northland Fund
I
Schedule A-3 – List of Entities Owned by Northland Fund
II
Schedule A-4 – List of Entities Owned by Northland Fund
III
Schedule A-5 – List of Entities Owned by NIC
Schedule A-6 – List of Entities Owned by Tarragon and
Ansonia
Schedule A-7 – List of Entities Owned by Tarragon Upon
Restructuring
Schedule B-1 – List of Real Property Owned by Northland
Portfolio Companies
Schedule B-2 – List of Real Property Owned by Northland
Fund I Companies
Schedule B-3 – List of Real Property Owned by Northland
Fund II Companies
Schedule B-4 – List of Real Property Owned by Northland
Fund III Companies
Schedule B-5 – List of Real Property Owned by NIC
Companies
Schedule B-6 – List of Real Property Owned by Tarragon
Companies
Schedule C-1 – List of Northland Property Names Included
in Intangibles
Schedule C-2 – List of Tarragon Property Names Included
in Intangibles
Schedule D-1 – List of Personal Property Owned by
Northland Portfolio Companies
Schedule D-2 – List of Personal Property Owned by
Northland Fund I Companies
Schedule D-3 – List of Personal Property Owned by
Northland Fund II Companies
Schedule D-4 – List of Personal Property Owned by
Northland Fund III Companies
Schedule D-5 – List of Personal Property Owned by NIC
Companies
Schedule D-6 – List of Personal Property Owned by
Tarragon Companies
Schedule E-1 – Northland Assumed Debt
Schedule E-2 – Tarragon Assumed Debt
Schedule F-1 – Northland Contribution Percentage
Schedule F-2 – Tarragon Contribution Percentage
Schedule G – Tarragon Restructuring
Schedule 1.1 – Calculation of Equity Value of Each
Party
Schedule 2.1(a) – Tarragon GE Assumed Debt
Schedule 2.1(c) – List of Tarragon Consents
Schedule 2.1(f) – Pending Tarragon Litigation
Schedule 2.1(h)(iv) – Tarragon Rent Roll for Each
Tarragon Property
Schedule 2.2(c) – List of Northland Consents
Schedule 2.2(f) – Pending Northland Litigation
Schedule 2.2(h)(iv) – Northland Rent Roll for Each
Northland Property
Schedule 3.2(d) – List of Tarragon Defaults
Schedule 3.2(e) – List of Tarragon Violations of
Laws
Schedule 3.2(l) – Tarragon Notices Regarding
Environmental Laws
Schedule 3.2(m) – List of Tarragon Mechanic Liens
Schedule 3.2(r) – Tarragon Tax Audit Exceptions
Schedule 3.2(v) – Intentionally Omitted
Schedule 3.3(d) – List of Northland Defaults
Schedule 3.3(e) – List of Northland Violations of
Laws
67
Schedule 3.3(l) – Northland Notices Regarding
Environmental Laws
Schedule 3.3(m) – List of Northland Mechanic Liens
Schedule 3.3(r) – Northland Corporate Entities
Schedule 3.3(v) – Activities of Northland Companies
Schedule 3.3(w) – Condominiums
Exhibits
Exhibit A – Form of Limited Liability Company Agreement
of New Company
Exhibit B – Form of Interim Management Agreement
Exhibit C – Form of Assignment
Exhibit D – Form of Tax Matters Agreement
Exhibit E – Form of Limited Liability Company Agreement
of Management JV
Exhibit F – Form of License Agreement
68
Exhibit A
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
NORTHLAND PROPERTIES LLC
a Delaware limited liability company
DATE :
, 2008
TABLE OF CONTENTS
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ARTICLE I
GENERAL PROVISIONS
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1 |
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Section 1.1
Organization
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Section 1.2
Name
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Section 1.3
Term
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Section 1.4
Purposes and Business
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Section 1.5
Principal Office
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2 |
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Section 1.6
Qualification in Other Jurisdictions
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2 |
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Section 1.7
Powers
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2 |
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ARTICLE II
DEFINITIONS
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2 |
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Section 2.1
Definitions
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2 |
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ARTICLE III
MEMBERS; INTERESTS AND UNITS
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Section 3.1
General
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Section 3.2
Powers of Members
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Section 3.3
No Other Persons Deemed Members
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Section 3.4
No Cessation of Membership Upon Bankruptcy, etc
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Section 3.5
Nature of a Member’s Interest; Units
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Section 3.6
Determination by the Board of Managers
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Section 3.7
Additional Units and Admission of Additional Members
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Section 3.8
Representatives
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ARTICLE IV
MANAGEMENT
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13 |
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Section 4.1
Board of Managers
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13 |
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Section 4.2
Powers of the Board of Managers
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14 |
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Section 4.3
Exercise of Authority; Guarantee
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Section 4.4
Meetings and Action of the Board of Managers
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Section 4.5
Expenses; Compensation of Board Members
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18 |
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Section 4.6
Unanimous Approval Requirement
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Section 4.7
Employees
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Section 4.8
Certain Loans by the Members
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Section 4.9
Tax Classification
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Section 4.10
Standards of Conduct and Modification of Duties; Certain
Transactions with Affiliates
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Section 4.11
Exculpation
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Section 4.12
Indemnification
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Section 4.13
Payment of Indemnification Expenses
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Section 4.14
Initial Public Offering
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ARTICLE V
CAPITAL CONTRIBUTIONS
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Section 5.1
Initial Contributions
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Section 5.2
Additional Capital Contributions
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Section 5.3
Form of Contributions
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Section 5.4
No Right to Interest or Return of Capital
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24 |
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Section 5.5
No Third-Party Rights
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Section 5.6
Limitations
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Section 5.7
Recourse Guaranty
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ARTICLE VI
CAPITAL ACCOUNTS, ALLOCATIONS OF INCOME AND LOSS
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Section 6.1
Capital Accounts
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Section 6.2
Allocations
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Section 6.3
Allocations for Tax Purposes
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Section 6.4
No Deficit Restoration by Members
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Section 6.5
Allocations When Interests Change
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Section 6.6
Allocation of Excess Nonrecourse Liabilities
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ARTICLE VII
DISTRIBUTIONS
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Section 7.1
Distributions
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Section 7.2
Liability for Amounts Distributed
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30 |
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Section 7.3
Distributions in Kind
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Section 7.4
Distributions Upon Liquidation
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Section 7.5
Withholding
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ARTICLE VIII
OTHER ACTIVITIES
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Section 8.1
General Provisions
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Section 8.2
Exclusivity
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ARTICLE IX
RIGHTS AND OBLIGATIONS OF MEMBERS
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Section 9.1
Limited Liability
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Section 9.2
Wrongful Distributions
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Section 9.3
Authority of Members
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Section 9.4
Confidential Information
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Section 9.5
Confidentiality Obligations
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Section 9.6
Exceptions to Confidentiality
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Section 9.7
Indemnification by Tarragon Corp
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ARTICLE X
TRANSFER OF COMPANY INTERESTS
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35 |
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Section 10.1
Transfer of Interests
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35 |
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Section 10.2
Substitute Members
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36 |
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Section 10.3
Obligations of Assignee
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36 |
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Section 10.4
Additional Requirements
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37 |
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Section 10.5
Allocation of Distributions Between Assignor and Assignee
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Section 10.6
Treatment of Assignees
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37 |
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Section 10.7
Withdrawal by Members
|
|
|
38 |
|
|
|
|
|
|
|
|
ARTICLE XI
REPORTING, RECORDS AND ACCOUNTING MATTERS
|
|
|
38 |
|
|
Section 11.1
Books and Accounts
|
|
|
38 |
|
|
Section 11.2
Records Available
|
|
|
38 |
|
|
Section 11.3
Financial Reports
|
|
|
38 |
|
|
Section 11.4
Reliance on Accountants
|
|
|
39 |
|
ii
| |
|
|
|
|
| |
|
Page |
|
Section 11.5
Tax Matters Member; Filing of Returns
|
|
|
39 |
|
|
Section 11.6
Tax Elections
|
|
|
40 |
|
|
Section 11.7
Fiscal Year
|
|
|
40 |
|
|
|
|
|
|
|
|
ARTICLE XII
DISSOLUTION AND LIQUIDATION
|
|
|
40 |
|
|
Section 12.1
No Dissolution
|
|
|
40 |
|
|
Section 12.2
Events Causing Dissolution
|
|
|
40 |
|
|
Section 12.3
General
|
|
|
40 |
|
|
Section 12.4
Priority
|
|
|
41 |
|
|
Section 12.5
Orderly Liquidation
|
|
|
41 |
|
|
Section 12.6
Source of Distributions
|
|
|
41 |
|
|
Section 12.7
Statements on Termination
|
|
|
41 |
|
|
|
|
|
|
|
|
ARTICLE XIII
DRAG-ALONG RIGHT, TAG-ALONG RIGHT AND RIGHT OF FIRST
REFUSAL
|
|
|
42 |
|
|
Section 13.1
Drag-Along Right
|
|
|
42 |
|
|
Section 13.2
Tarragon Tag-Along Right
|
|
|
43 |
|
|
Section 13.3
Northland Tag-Along Right
|
|
|
44 |
|
|
Section 13.4
Right of First Offer
|
|
|
45 |
|
|
|
|
|
|
|
|
ARTICLE XIV
AMENDMENTS
|
|
|
47 |
|
|
Section 14.1
Amendment to be Adopted Solely by the Board of Managers
|
|
|
47 |
|
|
Section 14.2
Amendment Procedures
|
|
|
47 |
|
|
Section 14.3
Amendments Requiring Member Approval
|
|
|
48 |
|
|
|
|
|
|
|
|
ARTICLE XV
MISCELLANEOUS
|
|
|
48 |
|
|
Section 15.1
Further Assurances
|
|
|
48 |
|
|
Section 15.2
Successors and Assigns
|
|
|
48 |
|
|
Section 15.3
Applicable Law
|
|
|
48 |
|
|
Section 15.4
Severability
|
|
|
49 |
|
|
Section 15.5
Counterparts
|
|
|
49 |
|
|
Section 15.6
Entire Agreement
|
|
|
49 |
|
|
Section 15.7
Construction
|
|
|
49 |
|
|
Section 15.8
Force Majeure
|
|
|
49 |
|
|
Section 15.9
Notices
|
|
|
49 |
|
|
Section 15.10
No Right of Partition or Redemption
|
|
|
50 |
|
|
Section 15.11
Third-Party Beneficiaries
|
|
|
50 |
|
|
Section 15.12
UCC Matters
|
|
|
50 |
|
|
Section 15.13
Representations and Warranties
|
|
|
50 |
|
iii
SCHEDULES AND EXHIBITS
| |
|
|
|
Schedule A
|
|
Names, Addresses, Units and Value of
Contribution of Members |
|
Schedule 5.2(c)
|
|
Illustrative Example of Contribution
Carry Forward |
| |
|
|
|
Exhibit A
|
|
Representatives |
|
Exhibit B
|
|
Unanimous Approvals |
|
Exhibit C
|
|
Board Members |
|
Exhibit D
|
|
Interim Management Agreement |
|
Exhibit E-1
|
|
Tarragon Recourse Guaranties |
|
Exhibit E-2
|
|
Northland Recourse Guaranties |
|
Exhibit F
|
|
Form of Pledge and Security
Agreement |
i
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
NORTHLAND PROPERTIES LLC
a
Delaware limited liability company
This Amended and Restated Limited
Liability Company Agreement (this “ Agreement ”)
is made as of the [___] day of [___], 2008, by and among the
Persons set forth in Schedule A . Such Persons,
together with any such additional parties as and when admitted to
the Company (as defined below) as members shall be individually a
“ Member ” and, collectively, the “
Members ”.
WHEREAS, Northland Properties LLC
(the “ Company ”) has been formed as a limited
liability company under the Delaware Limited Liability Company Act,
6 Del. c. Sec. 18-101, et seq. (as amended from time to time, the
“ Act ”) as of March 20, 2008;
WHEREAS, as of the date hereof, the
Company has consummated the First Closing as contemplated by and
defined in the Contribution Agreement (as defined below in
Section 2.1); and
WHEREAS, the Members wish to amend
and restate in its entirety the Limited Liability Company Agreement
of the Company dated as of March 20, 2008 and to set out fully
their respective rights, obligations and duties regarding the
Company and its assets and liabilities.
NOW, THEREFORE, in consideration of
the mutual covenants expressed herein, the parties hereby agree as
follows:
ARTICLE I
GENERAL PROVISIONS
Section 1.1 Organization
. The Company has been formed by the filing of its Certificate of
Formation with the Delaware Secretary of State pursuant to the Act.
The original Certificate of Formation states that the registered
agent and registered office of the Company in Delaware are
Corporation Service Company, 2711 Centerville Road, Suite 400,
Wilmington, Delaware 19808. The Board of Managers may at any time
designate another registered agent. Subject to the limitations set
forth in this Agreement, the Certificate of Formation may be
restated or amended by the Board of Managers (as defined in
Section 2.1) as an “authorized person” within the
meaning of the Act. The Certificate of Formation as so amended from
time to time is referred to herein as the “LLC
Certificate.” The Board of Managers shall deliver a copy of
the LLC Certificate and any amendments thereto to any Member who so
requests.
Section 1.2 Name . The
name of the limited liability company is “Northland
Properties LLC.” The business of the Company may be conducted
under the Company name or under any
other
names designated by the Board of Managers (as defined in
Section 2.1), with written notice to the Members.
Section 1.3 Term . The
term of the Company commenced on the date of the initial filing of
the LLC Certificate and shall continue until the fortieth (40
th )
anniversary of the date hereof (the “ Initial Term
”); provided that the Company may be dissolved
sooner in accordance with the provisions of this Agreement or by
operation of law. The Initial Term may be extended by the Board of
Managers.
Section 1.4 Purposes and
Business . The purpose of the Company is, directly or through
one or more Subsidiaries, to acquire, invest in, improve,
rehabilitate, lease, maintain, own, operate, manage, repair,
replace, finance, contribute, mortgage, encumber, hold, sell,
reposition, redevelop, exchange and/or otherwise deal in and with
real property related to multifamily residential rental properties,
including student housing and affordable housing, and Real Estate
Investments (as defined below in Section 2.1 below) and any
interests therein, and to engage in any and all other activities
related or incidental thereto (the “ Multifamily
Business ”). The Multifamily Business shall exclude
non-residential properties, “for sale” housing, and
construction and development of new multifamily residential rental
properties (“ Non-permitted Investments
”).
Section 1.5 Principal
Office . The principal office of the Company shall initially be
c/o Northland Investment Corporation, 2150 Washington Street,
Newton, MA 02462. The Board of Managers may change the principal
office of the Company at any time, with written notice to the
Members, and may cause the Company to establish other offices in
various jurisdictions and appoint agents for service of process in
such jurisdictions.
Section 1.6 Qualification in
Other Jurisdictions . The Board of Managers may cause the
Company and any Subsidiary to be qualified or registered under
applicable laws in such states as the Board of Managers determine
appropriate to avoid any material adverse effect on the business of
the Company and shall be authorized to execute, deliver and file
any certificates and documents necessary to effect such
qualification or registration, including without limitation the
appointment of agents for service of process in such
jurisdictions.
Section 1.7 Powers .
Subject to the provisions of this Agreement, the Company shall have
the power to do any and all acts necessary or convenient in
furtherance of the purpose of the Company, and shall have and may
exercise all of the powers and rights that can be conferred upon
limited liability companies formed pursuant to the Act.
ARTICLE II
DEFINITIONS
Section 2.1 Definitions .
The following terms shall have the meanings indicated or referred
to below, inclusive of their singular and plural forms except where
the context requires otherwise.
“ Acceptable Transfer
Terms ” shall have the meaning set forth in
Section 13.4(a).
2
“ Act ” shall have
the meaning set forth in the introductory statement.
“ Adjusted Capital
Account ” means, with respect to any Member, the balance,
if any, in such Member’s Capital Account after crediting to
such Capital Account any amounts that such Member is deemed
obligated to restore as described in the penultimate sentences of
Treasury regulation section 1.704-2(g)(1) and in Treasury
regulation section 1.704-2(i)(5).
“ Affiliate ”
means, with respect to any specified Person, any Person that,
directly or indirectly through one or more intermediaries,
Controls, is Controlled by or is under common Control with such
specified Person.
“ Agreement ”
shall have the meaning set forth in the introductory
statement.
“ Approve ,”
“ Approved ,” or “ Approval ”
shall refer to a proposed decision, action, report, budget,
election or any other matter that has received the approval by the
requisite Members or Board Members as set forth in this
Agreement.
“ Bankruptcy Event
” means (i) the commencement by Tarragon Corp of a
voluntary case under Title 11 of the United States Code as from
time to time in effect, or by Tarragon Corp authorizing, by
appropriate proceedings of its board of directors or other
governing body, the commencement of such a voluntary case;
(ii) Tarragon Corp filing an answer or other pleading
admitting or failing to deny the material allegations of a petition
filed against it commencing an involuntary case under said Title
11, or seeking, consenting to or acquiescing in the relief therein
provided, or by Tarragon Corp failing to controvert timely the
material allegations of any such petition; (iii) the entry of
an order for relief against Tarragon Corp in any involuntary case
commenced under said Title 11; (iv) Tarragon Corp seeking
relief as a debtor under any applicable law, other than said Title
11, of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration of
the rights of creditors, or by Tarragon Corp consenting to or
acquiescing in such relief; (v) the entry of an order by a
court of competent jurisdiction (1) by finding Tarragon Corp
to be bankrupt or insolvent, (2) ordering or approving
Tarragon Corp’s liquidation, reorganization or any
modification or alteration of the rights of its creditors, or
(3) assuming custody of, or appointing a receiver or other
custodian for all or a substantial part of Tarragon Corp’s
property and such order is not vacated or stayed on appeal or
otherwise stayed within sixty (60) days; (vi) the filing
of a petition against Tarragon Corp or any Subsidiary under said
Title 11 which shall not be vacated within sixty (60) days or
(vii) Tarragon Corp making an assignment for the benefit of,
or entering into a composition with, its creditors, or appointing
or consenting to the appointment of a receiver or other custodian
for all or a substantial part of Tarragon Corp’s
property.
“ Board Member ”
shall have the meaning set forth in Section 4.1(a).
“ Board of Managers
” shall have the meaning set forth in
Section 4.1(a).
“ Business Day ”
means any day excluding a Saturday, Sunday or any other day during
which there is no scheduled trading on the NASDAQ Global
Market.
“ Buying Northland
Members ” shall have the meaning set forth in
Section 13.4(a)(iii).
3
“ Capital Account
” shall have the meaning set forth in Section 6.1.
“ Change of Control
” means any (i) reorganization, merger, consolidation or
similar transaction of Tarragon Corp with or into another entity,
(ii) any sale, lease, exchange, or other disposition or
transfer of all or substantially all of the assets of Tarragon
Corp, (iii) individual, entity or “group” within
the meaning of Sections 13(d) and 14(d) of the Securities Act
becomes the “beneficial owner” (as such term is defined
in Rule 13d-3 under the Securities Act) of securities of
Tarragon Corp representing thirty (30%) or more of the combined
voting power of Tarragon Corp’s then outstanding securities
having the right to vote generally in an election of Tarragon
Corp’s Board of Directors, or (iv) at such time as both
William S. Friedman and Robert Rothenberg cease for any reason to
be members of the Board of Directors of Tarragon Corp.
“ Code ” means the
Internal Revenue Code of 1986, as amended from time to time, or any
successor federal income tax code.
“ Common Units ”
means a Unit or Interest without any preference with respect to the
amount and timing of any distribution from the Company as set forth
in this Agreement. The Company may have one or more classes of
Common Units.
“ Company ” shall
have the meaning set forth in the introductory statement.
“ Confidential
Information ” shall have the meaning set forth in
Section 9.4.
“ Consent of the Members
” means, with respect to any action requiring the approval of
a specified Percentage Interest of the Members, the written consent
or approval of Members holding Interests representing the specified
Percentage Interest.
“ Contribution Agreement
” means the Agreement to Contribute, dated as of March [
___] , 2008 among, Northland Portfolio L.P., Northland Fund
L.P., Northland Fund II, L.P., Northland Fund III, L.P., Northland
Corp, Northland Austin Investors LLC, Austin Investors L.P., Drake
Investors L.P., Tatstone Investors L.P., Tarragon Corp, and Ansonia
LLC.
“ Contributions ”
means, in respect of any Member, the aggregate amount of such
Member’s capital contributions made to the Company pursuant
to ARTICLE V.
“ Contributing Member
” shall have the meaning set forth in
Section 5.2(c).
“Contributor”
shall have the meaning set forth in Section 6.3(c).
“ Contribution
Transactions ” shall have the meaning set forth in
Section 3.1.
“ Control ”
(including its correlative meanings, “Controlling”,
“Controlled by” and “under common Control
with”) means possession, directly or indirectly, of the power
to direct or cause the direction of management or policies of a
Person whether through ownership of voting securities, by contract
or credit arrangement or otherwise. A Person shall be deemed to
Control (i) any general partnership or limited partnership
with respect to which the Person is the general partner or managing
partner, respectively, (ii) any limited liability company with
respect to which such Person is a manager or managing member and
(iii) such Person’s Immediate Family.
4
“ Controlled Affiliate
” means, with respect to any specified Person, any Person
that, directly or indirectly through one or more intermediaries,
Controls such specified Person.
“ Disclosure Obligations
” shall have the meaning set forth in Section 9.6.
“ Drag Along Notice
” shall have the meaning set forth in
Section 13.1.
“Exchange Act”
means the Securities Exchange set of 1934, as amended from time to
time, or any successor statute thereof.
“ Extraordinary
Transaction ” means (i) any reorganization, merger,
consolidation or similar transaction of the Company with or into
another entity where the outstanding voting securities of the
Company immediately before the transaction represent or are
converted into less than fifty percent (50%) of the outstanding
voting power of the surviving entity (or its parent corporation)
immediately after the transaction, (ii) any sale, lease,
exchange, or other disposition or transfer of all or substantially
all of the Properties and assets of the Company and its
Subsidiaries, (iii) any purchase by any Person or
“Group” (within the meaning of Sections 13(d) and 14(d)
of the Securities Act) of securities of the Company (either through
a negotiated securities purchase or a tender for such securities),
the effect of which is that such Person (or group of Persons) that
did not Beneficially Own (as such term is defined in
Rule 13d-3 under the Securities Act) a majority of the voting
power of the outstanding securities of the Company immediately
prior to such purchase beneficially owns at least a majority of
such voting power immediately after such purchase or (iv) an
initial public offering of greater than 50% of the outstanding
securities of the Company.
“ Fiscal Year ”
shall have the meaning set forth in Section 11.7
“ Funding Notice ”
means a written notice from the Board of Managers to any Member,
requiring such Member to fund or make Contributions pursuant to
Section 5.2.
“ Funding Election
Notice ” shall have the meaning set forth in
Section 5.2.
“ Immediate Family
” means with respect to any individual such
individual’s spouse, parents, grandparents, children,
grandchildren and siblings and any trust for any of their benefit
or any family partnership in which any of them participate.
“ Indemnified Party
” means any Person made a party to a proceeding by reason of
its status as a (A) Board Member, (B) Member
(C) officer of the Company and (D) such other Persons
(including Affiliates of any Member) as the Board of Managers may
designate from time to time (whether before or after the event
giving rise to potential liability), in its sole and absolute
discretion.
“ Initial Tarragon Board
Members ” means William S. Friedman and Robert
Rothenberg.
“ Initial Term ”
shall have the meaning set forth in Section 1.3.
5
“ Interest ” means
the entire limited liability company interest of a Member in the
Company at any particular time, including the right of such Member
to any and all benefits to which a Member may be entitled as
provided in this Agreement, together with the obligations of such
Member to comply with all the terms and provisions of this
Agreement. Interests shall be expressed as a number of Units of one
or more classes.
“ Interim Investments
” means cash, cash equivalent securities and other short-term
investments of Company funds held for future investment in Real
Estate Investments or other Company purposes.
“ Interim Management
Agreement ” shall have the meaning set forth in
Section 4.10(d).
“ Liquidating Agent
” shall have the meaning set forth in Section 12.3
“ LLC Certificate
” shall have the meaning set forth in Section 1.1.
“ Loan Request Notice
” shall have the meaning set forth in Section 4.8
“ Lock-Out Period
” means the period commencing on the date hereof and ending
on the earlier of (i) the fifth (5th) anniversary of the date
hereof, and (ii) the occurrence of an Extraordinary
Transaction.
“Lower Tier
Partnership” shall have the meaning set forth in
Section 6.3(c).
“ Majority Vote ”
shall have the meaning set forth in Section 4.4.
“ Management Company
” means Northland Properties Management LLC.
“ Member ” or
“ Members ” means any person named as a member
of the Company on Schedule A .
“ Multifamily Business
” shall have the meaning set forth in Section 1.4.
“ Net Capital Proceeds
” means proceeds from any sale, refinancing, insurance
recovery (other than for business interruption), eminent domain
award, casualty, condemnation or other similar capital event or
equity contribution, in excess of amounts required to pay debt then
due, transaction costs and such reserves as determined by the Board
of Managers.
“ Non-Contributing
Member ” shall have the meaning set forth in
Section 5.2(c).
“ Non-Permitted
Investments ” shall have the meaning set forth in
Section 1.4.
“ Northland Board
Members ” shall have the meaning set forth in
Section 4.1(a).
“ Northland Buyer
” shall have the meaning set forth in Section 13.1
“ Northland Corp ”
means Northland Investment Corporation, a Massachusetts
corporation, or a wholly owned subsidiary of Northland Corp.
6
“ Northland Initial
Interest ” means the final aggregate Common Unit
Percentage Interest of the Northland Members after giving effect to
the final “Closing” under the Contribution
Agreement.
“ Northland Members
” means the Persons designated as Northland Members on
Schedule A as of the date hereof and their permitted
successors or assigns who are expressly permitted hereunder to be
designated as “Northland Members”.
“ Northland Members
Representative ” shall have the meaning set forth in
Section 3.7.1.
“ Northland Principal
” means Lawrence Gottesdiener and Steven Rosenthal and upon
the death, disability or retirement of either of them, such
successor or replacement as may thereafter succeed to his authority
within Northland Corp.
“ Northland Sale ”
shall have the meaning set forth in Section 13.2(a).
“ Northland Tag-Along
Notice ” shall have the meaning set forth in
Section 13.3.
“ Northland Tag Seller
” shall have the meaning set forth in
Section 13.3(a).
“ Operating Cash Flow
” means, for a given period, all cash receipts of the Company
(other than “Net Capital Proceeds”) during such period,
in excess of the following items attributable to such period
(except to the extent any of the following are funded out of
reserves or proceeds from capital events): operating expenses, debt
service, expenditures on capital improvements and such amounts
determined by the Board of Managers to provide a reasonable reserve
for working capital needs or any other contingencies of the
Company.
“ Opinion of Counsel
” means an opinion in writing and in form and substance
reasonably satisfactory to the Board of Managers signed by legal
counsel either chosen by the Board of Managers or, if chosen by a
Member, reasonably satisfactory to the Board of Managers.
“Partnership
Interest” shall have the meaning set forth in
Section 6.3(c).
“ Percentage Interest
” means with respect to a Member holding a class or series of
Units, its interest in such class or series, as applicable,
determined by dividing the Units of such class or series owned by
such Member by the total number of Units of such class or series
then outstanding.
“ Person ” means a
corporation, governmental unit, association, retirement system,
international organization, joint venture, partnership, limited
liability company, trust or individual.
“ Preferred Units
” means a Unit or Interest with a preference with respect to
the amount and timing of any distribution from the Company as set
forth in this Agreement or any attachment hereto.
7
“ Property ” means
any and all real property (or any interest in real property) now or
hereafter owned by the Company or a Subsidiary and any and all
buildings, structures and improvements now or hereafter located
thereon, and shall include all related real and personal property
and assets.
“ Property Management
Agreement ” shall have the meaning set forth in
Section 4.10(d).
“ Real Estate
Investments ” means any direct or indirect, current or
contingent interest in, option or commitment to acquire or other
contract right relating to any type of real estate asset or real
estate related asset, including, without limitation, interests in
privately or publicly held operating companies and real estate
related businesses, commercial mortgage backed securities,
indebtedness secured by real property or secured by interests in
entities owning real property, equity interests in entities that
own or operate real property or other real estate-related assets,
and interests in any amounts escrowed, reserved or otherwise set
aside with respect to any real property or other real
estate-related assets. Notwithstanding the foregoing, however,
“Real Estate Investments” shall exclude any of the
foregoing that is related to real property or other real
estate-related assets if they would be Non-permitted
Investments.
“ Recourse Guaranty
” shall have the meaning set forth in Section 5.7.
“ REIT ” shall
have the meaning set forth in Section 4.2.2(a).
“ Related Party ”
means with respect to any Person, (i) any Person who directly
or indirectly through one or more intermediaries Controls, is
Controlled by, or is under common Control with such Person,
(ii) any Person who is a member of the Immediate Family of
such Person, or (iii) any Person in which such Person or one
or more members of the Immediate Family of such Person serves as a
trustee or general partner or in a similar fiduciary capacity.
Notwithstanding the foregoing, a Subsidiary shall not be considered
a Related Party of any Person solely on account of such
Person’s ownership interest in the Company.
“ Retained Liability
” shall have the meaning set forth in
Section 5.2(b).
“ ROFO Notice ”
shall have the meaning set forth in Section 13.4(a).
“ Sale ” shall
have the meaning set forth in Section 13.1.
“ Schedule of Members
” shall have the meaning set forth in
Section 11.1.
“ Selling Tarragon
Members ” shall have the meaning set forth in
Section 13.4(a).
“Subsidiary ”
means, with respect to any Person, any corporation, partnership,
limited liability company, association or other business entity of
which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or (ii) if a
partnership, limited liability company, association or other
business entity, a majority of the partnership or other
similar
8
ownership interest thereof is at the time owned or controlled,
directly or indirectly, by any Person or one or more Subsidiaries
of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership
interest in a partnership, limited liability company, association
or other business entity if such Person or Persons shall be
allocated a majority of partnership, limited liability company,
association or other business entity gains or losses or shall be or
control the managing director or general partner of such
partnership, limited liability company, association or other
business entity. Unless otherwise specified, references herein to a
Subsidiary shall mean a Subsidiary of the Company.
“ Target Interests
” shall have the meaning set forth in
Section 13.4(a).
“ Tarragon Board Members
” shall have the meaning set forth in
Section 4.1(a).
“ Tarragon Buyer ”
shall have the meaning set forth in Section 13.3(a).
“ Tarragon Corp ”
means Tarragon Corporation, a Nevada corporation.
“ Tarragon Corp Initial
Interest ” means the final Common Unit Percentage
Interest of Tarragon Corp after giving effect to the final
“Closing” under the Contribution Agreement.
“ Tarragon Initial
Interest ” means the final aggregate Common Unit
Percentage Interest of the Tarragon Members after giving effect to
the final “Closing” under the Contribution
Agreement.
“ Tarragon Members
” means the Persons designated as Tarragon Members on
Schedule A as of the date hereof and their permitted
successors and assigns who are expressly permitted hereunder to be
designated as “Tarragon Members”.
“ Tarragon Members
Representative ” shall have the meaning set forth in
Section 3.7.2.
“ Tarragon Sale ”
shall have the meaning set forth in Section 13.3(a).
“ Tarragon Tag-Along
Notice ” shall have the meaning set forth in
Section 13.2(a).
“ Tarragon Tag Seller
” shall have the meaning set forth in
Section 13.2(a).
“ Tarragon Units ”
shall have the meaning set forth in Section 13.1(a).
“ Tax Matters Agreement
” means that certain Tax Matters Agreement, dated as of the
date hereof, among the Company, Tarragon Corp and Ansonia
LLC.
“ Third Party ”
means any Person who is not a Member, or an Affiliate of any
Member, or the Immediate Family of any Member.
“ Transfer ” shall
mean any, direct or indirect, transaction by which a Member assigns
its Units to another Person, and includes a sale, assignment, gift,
donation, pledge, grant of a security interest in, exchange, or any
other disposition by law or otherwise.
“ Transfer Election
” shall have the meaning set forth in
Section 13.4(a).
9
“ Transfer Escrow Agent
” shall have the meaning set forth in
Section 13.4(b).
“ Transfer Documents
” shall have the meaning set forth in
Section 10.1(a).
“ Transfer Escrow
Deposit ” shall have the meaning set forth in
Section 13.4(b).
“ Transfer Response
Period ” shall have the meaning set forth in
Section 13.4(a).
“ Treasury Regulations
” means the Income Tax Regulations and Procedure and
Administration Regulations promulgated under the Code, as amended
from time to time.
“ Unit ” shall
mean a fractional, undivided share of the Interest of a Member
issued pursuant to this Agreement, entitling the holders thereof to
the relative rights, title and interests in the profits, losses,
deductions and credits of the Company at any particular time as are
set forth in this Agreement, and any and all other benefits to
which a holder thereof may be entitled as a Member as provided in
this Agreement. Units shall include Common Units, and any other
classes or series of Units established by the Board of Managers
after the date hereof. Fractional Units may be issued by the
Company.
“ Unanimous Approval
” or “ Unanimously Approved ” means the
written consent or approval at a duly called meeting of the Board
of Managers of each Northland Board Member and, so long as there
are Tarragon Board Members on the Board of Managers, at least one
of the Tarragon Board Members.
“ Withholding Payment
” shall have the meaning set forth in Section 7.5.
ARTICLE III
MEMBERS; INTERESTS AND UNITS
Section 3.1 General . The
names, addresses and Units held by the Members are set forth on
Schedule A , as of immediately following the execution
of this Agreement and the closing of the transactions contemplated
by each Contribution Agreement (the “ Contribution
Transactions ”). The Board of Managers shall amend and
revise Schedule A from time to time to properly reflect
any changes to the information included therein, including to
reflect the admission or substitution of Members. Any amendment or
revision to Schedule A or to the Company’s
records to reflect information regarding Members shall not be
deemed an amendment to this Agreement.
Section 3.2 Powers of
Members . Except as otherwise provided in this Agreement, no
Member shall have the right or power to: (i) withdraw or
reduce its contribution to the capital of the Company;
(ii) cause the dissolution and winding up of the Company; or
(iii) demand or receive property in return for its capital
contributions. No Member, in its capacity as such, shall take any
part in the control of the affairs of the Company, undertake any
transactions on behalf of the Company, or have any power or
authority to act for or on behalf of, or to bind, the Company. The
rights, duties and liabilities of the Members shall be as provided
in the Act, except as otherwise expressly provided in this
Agreement.
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Section 3.3 No Other Persons
Deemed Members . Unless admitted to the Company as a Member as
provided in this Agreement, no Person shall be, or shall be
considered, a Member. The Company may elect to deal only with
Persons so admitted as Members (including their duly authorized
representatives). Any distribution by the Company to the Person
shown on the Company’s records as a Member or to its legal
representatives, shall relieve the Company of all liability to any
other Person who may be interested in such distribution by reason
of any other Transfer by the Member, or for any other reason.
Section 3.4 No Cessation of
Membership Upon Bankruptcy, etc . A Person shall not cease to
be a Member of the Company upon the happening, with respect to such
Person, of any of the events specified in §18-304 of the Act.
Upon the occurrence of any event specified in §18-304 of the
Act, the business of the Company shall be continued pursuant to the
terms hereof without dissolution.
Section 3.5 Nature of a
Member’s Interest; Units . A Member’s Interest
(including a Member’s Units) shall for all purposes be
personal property. The Units to be initially issued to the Members
as of the date of this Agreement and the closing of the
transactions contemplated by the Contribution Agreement are shown
on Schedule A . All Units of a particular class shall
have identical rights in all respects as all other Units of such
class except, in each case, as specified in this Agreement. Unless
and until the Board of Managers shall determine otherwise, Units
shall be uncertificated and recorded in the books and records of
the Company (including Schedule A ). If at any time the
Board of Managers shall determine to certificate Units, such
certificates will contain such legends as the Company shall
reasonably determine are necessary or advisable.
Section 3.6 Determination by
the Board of Managers . Whenever in this Agreement, any
decision, approval, determination or action is to be undertaken by
the Board of Managers, such decisions, approvals, determinations or
actions shall require only a Majority Vote; provided
that , the decisions, approvals, determinations, or actions
set forth on Exhibit B (and only those set forth on
Exhibit B ) shall require Unanimous Approval by the Board of
Managers.
Section 3.7 Additional Units
and Admission of Additional Members.
Section 3.7.1
Issuance or Creation of Additional Units and Admission of
Additional Members.
(a) The
Company may issue additional Units and other Interests of the
Company (or options or convertible securities with respect thereto)
for any purpose and at any time and from time to time for such
consideration and on such terms and conditions as the Board of
Managers shall determine in its sole discretion, and may admit as
additional Members the Persons to whom such additional Units or
other Interests are issued. Upon the issuance pursuant to and in
accordance with this ARTICLE III of any Units or other Interests,
the Board of Managers may amend any provision of this Agreement,
and authorize any Person to execute, acknowledge, deliver, file and
record, if required, such documents, to the extent necessary or
desirable to reflect the admission of any additional Member to the
Company or the authorization and issuance of such Units or other
Interests (or options or convertible securities with respect
thereto).
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(b) Each
additional Unit or other Interest authorized to be issued by the
Company pursuant to Section 3.7.1(a) may be issued in one or
more classes, or one or more series of any such classes, with such
designations, preferences, rights, powers and duties (which may be
senior to existing classes and series of Units or Interests), as
shall be fixed by the Board of Managers in its sole discretion,
including (i) the right to share in Company profits and losses
or items thereof; (ii) the right to share in Company distributions;
(iii) the rights upon dissolution and liquidation of the
Company; (iv) whether, and the terms and conditions upon
which, the Company may or shall be required to redeem the Unit or
other Interest (including sinking fund provisions);
(v) whether such Unit or other Interest is issued with the
privilege of conversion or exchange and, if so, the terms and
conditions of such conversion or exchange; (vi) the terms and
conditions upon which each Unit or other Interest will be issued,
evidenced by certificates and assigned or transferred; and (vii)
the right, if any, of the holder of each such Unit or other
Interest to vote on Company matters, including matters relating to
the relative designations, preferences, rights, powers and duties
of such Unit or other Interest.
Section 3.7.2
Conditions to Admission . No additional Member shall be
admitted to the Company (a) in connection with newly issued
Units or other Interests, unless and until such prospective
additional Member has executed a signature page counterpart to this
Agreement and an acceptance of all of the terms and conditions of
this Agreement, and such other documents or instruments as may be
required to effect the admission in the Board of Managers’
reasonable judgment or (b) in connection with a Transfer of
Units or other Interests, unless and until all the conditions of
ARTICLE X are satisfied, and such prospective additional Member
executes and delivers to the Company the documentation contemplated
by Section 10.2.
Section 3.8
Representatives .
Section 3.8.1
Northland Members . Northland Corp shall act as the sole
agent for the Northland Members and shall be authorized to exercise
all rights of each of the Northland Members pursuant to this
Agreement, including delivering any notice or granting any consent
or waiver hereunder, and the other Members shall be entitled to
rely on any action taken by Northland Corp as being taken on behalf
of all members of the Northland Members. The rights of the
Northland Members under this Agreement shall be exercised only by
Northland Corp on behalf of the Northland Members, and no other
member of the Northland Members shall be separately entitled to
exercise any such rights. A copy of any notice required to be
delivered hereunder to any member of the Northland Members shall be
required to be delivered to only Northland Corp. Northland Corp
hereby designates the individual identified as such on
Exhibit A as its “ Northland Members
Representative ”. Northland Corp may from time to time by
written notice to Tarragon Corp redesignate its Northland Members
Representative.
Section 3.8.2
Tarragon Members . Tarragon Corp shall act as the sole agent
for the Tarragon Members and shall be authorized to exercise all
rights of each member of the Tarragon Members pursuant to this
Agreement, including delivering any notice or granting any consent
or waiver hereunder, and the other Members shall be entitled to
rely on any action taken by Tarragon Corp as being taken on behalf
of all members of the Tarragon Members. Notwithstanding the
foregoing, the Tarragon Representative shall not be authorized on
behalf of Ansonia LLC to respond to calls for the making of loans
pursuant to Section 4.8 or a call for additional capital
Contributions pursuant to Section 5.2. The rights of the
Tarragon Members
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under
this Agreement shall be exercised only by Tarragon Corp on behalf
of the Tarragon Members, and no other member of the Tarragon
Members shall be separately entitled to exercise any such rights. A
copy of any notice required to be delivered hereunder to any member
of the Tarragon Members shall be required to be delivered only to
Tarragon Corp; provided, however, that notices to Ansonia LLC shall
be delivered directly to Ansonia LLC. Tarragon Corp hereby
designates the individual identified as such on
Exhibit A as its “ Tarragon Members
Representative ”. Tarragon Corp may from time to time by
written notice to Northland Corp redesignate its Tarragon Members
Representative.
ARTICLE IV
MANAGEMENT
Section 4.1 Board of
Managers
(a) The
business and affairs of the Company shall be managed under the
direction of a board of managers (the “ Board of
Managers ”), who shall be the managers of the Company.
Subject to the provisions of this Section 4.1, the Board of
Managers shall consist of five (5) individuals (each, a
“ Board Member ”) comprised as follows:
(i) three (3) Board Members designated by Northland Corp
(together, with their permitted successors, the “
Northland Board Members ”) and (ii) two
(2) Board Members designated by Tarragon Corp (together with
their permitted successors, the “ Tarragon Board
Members ”). Each Board Member shall be a
“manager” within the meaning of the Act. The names of
the individuals who shall serve as the initial Northland Board
Members and the initial Tarragon Board Members (the “
Initial Tarragon Board Members ”) are set forth on
Exhibit C . A Tarragon Board Member shall be a Board
Member only so long as such individual is serving as a member of
the Board of Directors of Tarragon Corp. If not nominated for
continuing service on the Board of Directors of Tarragon Corp,
(except, in the case of the Initial Tarragon Board Members who
shall, subject to the provisions of this Section 4.1, serve on
the Board of Managers until they no longer serve on the Board of
Directors of Tarragon Corp.), the term of such Tarragon Board
Member shall immediately end and the vacancy created thereby will
be filled by Tarragon Corp, subject to the reasonable approval of
such replacement Tarragon Board Member by the Northland Board
Members; provided , however , that the Northland
Board Members shall not have the right to withhold such approval
for a proposed replacement Tarragon Board Member who is then
serving as a director or senior officer of Tarragon Corp unless the
participation of such proposed replacement on the Board of Managers
is reasonably likely, in the reasonable judgment of Northland Corp,
to have a material adverse effect on the ability of the Company or
its Subsidiaries to raise equity or debt financing from Third
Parties. Notwithstanding any provision set forth herein to the
contrary, upon the happening of any of a Bankruptcy Event, the
Tarragon Board Members shall immediately resign and all Board
Members shall be appointed by Northland Corp.
(b) Any
vacancy on the Board of Managers with regard to the Northland Board
Members shall be filled by Northland Corp. Subject to the
provisions of this Section 4.1, any vacancy on the Board of
Managers with regard to the Tarragon Board Members shall be filled
by Tarragon Corp.
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(c) In
the event that the Percentage Interest owned by Tarragon Corp
hereafter falls below forty percent (40%) of the Tarragon Corp
Initial Interest, then the Tarragon Board Members shall immediately
resign and Tarragon Corp shall have no right to appoint any
individuals to the Board of Managers. The resulting vacancy or
vacancies shall be filled by Northland Corp.
(d) Solely
for the purpose of computing whether Tarragon Corp has fallen below
the 40% threshold set forth in Section 4.1(c), (i) any
Units transferred by Tarragon Corp as a result of the exercise by
the Northland Members of their drag-along rights under
Section 13.1 shall be excluded when determining the number of
Units owned by Tarragon Corp and (ii) all Units transferred by
Tarragon Corp in such Sale shall be excluded from the total number
of Units then outstanding when computing Tarragon Corp’s
Percentage Interest.
(e) The
Board of Managers may at any time increase the size of the Board of
Managers; provided , however , that the Board of
Managers shall not exceed nine (9) members. The vacancies
created by any increase shall be filled by individuals appointed by
the Board of Managers and shall be deemed to be Northland Board
Members.
Section 4.2 Powers of the
Board of Managers .
Section 4.2.1
General Authority . Except as otherwise provided in this
Agreement and subject to Unanimous Approval, if required in
accordance with Exhibit B , the Board of Managers shall
have complete and exclusive control of the management and conduct
of the business of the Company and the authority to do all things
necessary or appropriate to carry out the purposes of the Company
without any further act, vote or approval of any Member and shall
have all rights and powers with respect to the Company which may be
vested in a Board of Managers under Delaware law. Any contract,
instrument or act of the Board of Managers on behalf of the Company
shall be conclusive evidence in favor of any third party dealing
with the Company that the Board of Managers has the authority,
power, and right to execute and deliver such contract or instrument
and to take such action on behalf of the Company.
Section 4.2.2
Authority for Specific Actions . Without limiting the
authority of the Board of Managers pursuant to Section 4.2.1,
subject to Unanimous Approval if required in accordance with
Exhibit B , the Board of Managers, upon a Majority
Vote, is authorized to take the following actions on behalf of the
Company and its Subsidiaries:
(a) to
hold assets of the Company in the name of one or more trustees,
nominees, other agents or, directly or indirectly, through one or
more Subsidiaries, and to cause any Subsidiary to have such tax
status as the Board of Managers may deem appropriate, including
treatment as a real estate investment trust (a “ REIT
”) as defined in Code Section 856;
(b) to
cause the Company to acquire, improve, develop, redevelop,
rehabilitate, repair, replace, mortgage, hold, sell, own, lease,
operate, maintain, exchange, and otherwise deal with the
Properties, the Company’s interest in any Subsidiary and/or
any other property, assets, investments or Real Estate Investments
at any time owned by the Company, and any real and personal
property incidental thereto and in interests therein, and any
property, asset or investment received in exchange therefor,
including, without limitation, an interest in any
14
entity
to which any Property is transferred in accordance with this
Agreement, as the Board of Managers, in its discretion, deems to be
necessary or desirable to carry out the purpose of the
Company;
(c) to
cause the Company to form, organize, acquire, invest in, own,
manage, operate, convert, merge, combine, consolidate, divide,
restructure, sell, exchange and otherwise deal with one or all of
the Properties, Subsidiaries and/or Real Estate Investments;
(d) to
cause the Company to pledge, assign, sell, exchange, transfer
and/or otherwise deal with any or all of the Properties and/or the
Company’s interest in any of the Subsidiaries;
(e) to
cause the Company to contribute, sell, exchange, assign and/or
transfer one or all of the Properties to one or more real estate
investment trusts and/or other entities in exchange for cash,
notes, stock and/or other equity and/or debt interests in any such
real estate investment trusts and/or other entities;
(f) to
cause the Company to merge, combine with, consolidate with, be
acquired by and/or otherwise become a part of, one or more real
estate investment trusts and/or other entities in exchange for
cash, notes, stock and/or other equity and/or debt interests in
such real estate investment trusts, other entities and/or
Affiliates of any of the foregoing;
(g) to
convert the Company to a corporation, to hold an initial public
offering of shares or stock in the Company and/or to sell the
Company, whether or not in exchange for cash or an ownership
interest in such other entity;
(h) to
borrow money and to authorize any Subsidiary to borrow money, and
issue evidences of indebtedness, letters of credit and guaranties
in connection with the business and affairs of the Company and/or
any Subsidiary, to guarantee the obligations of any Subsidiary or
any third party (including, without limitation, debt guaranties,
nonrecourse guaranties of any nature, completion guaranties and
environmental guaranties), to cause any Subsidiary to guarantee the
obligations of the Company, other Subsidiaries and other third
parties, to secure any such borrowings, indebtedness and/or
guaranties by mortgages, pledges or other liens on the Properties
or any assets of the Company or the Subsidiaries, to enter into
participating debt arrangements and to authorize one or more of the
Subsidiaries to enter into participating debt arrangements, to
enter into convertible debt arrangements and to authorize one or
more of the Subsidiaries to enter into convertible debt
arrangements, to hedge interest rate changes on borrowings, to use
as collateral for any such obligations the capital commitments to
the Company or Subsidiaries and any other assets of the Company and
its Subsidiaries, and to prepay in whole or in part, refinance,
increase, modify or extend such obligations;
(i) to
refinance, prepay (in whole or in part), recast, modify, renew,
extend and/or restructure any mortgage on the Properties or any
other indebtedness of the Company and/or one or more of the
Subsidiaries and to execute any documents in connection
therewith;
(j) to
maintain such insurance as the Board of Managers may deem
appropriate to protect the Properties and the other assets and
interests of the Company, the
15
Subsidiaries and the Indemnified Parties and to satisfy any
contractual undertakings of the Company or any Subsidiary;
(k) subject
to Section 4.6 and Section 4.10, to enter into
transactions with Affiliates;
(l) to
provide interim financing as the Board of Managers deems
appropriate in connection with making, holding or disposing of Real
Estate Investments;
(m) to
operate, provide and manage such other businesses and services as
the Board of Managers, in its discretion, deems necessary or
desirable in connection with any of the Properties or any assets of
the Company and/or any of the Subsidiaries;
(n) to
enter into construction management, property management, leasing,
development, servicing and special servicing or other service
provider arrangements with respect to the Properties or any assets
of the Company or any Subsidiary, including, without limitation, a
management agreement with Northland Properties Management LLC and
agreements that provide for incentive compensation, subject in each
case to compliance with Sections 4.6 and 4.10, as
applicable;
(o) to
acquire, by purchase, lease or otherwise, any and all property
which may be necessary or desirable to carry out the business of
the Company and/or any of the Subsidiaries;
(p) to
lease and re-lease any or all of the Properties in whole or in
part, including, subject to Section 4.10, leases to Members
and their Affiliates;
(q) to
sell, convey, assign, transfer, exchange (for other property and/or
for interests in any entity to which any or all of the assets of
the Company or the Subsidiaries may be transferred) or otherwise
dispose of any or all of the assets of the Company, including any
or all of the Properties and/or any of the Company’s
interests in any of the Subsidiaries, and to enter into brokerage
agreements with others (including Members and their Affiliates)
relating thereto, and pay customary brokerage commissions and other
fees and expenses in connection therewith;
(r) to
take all actions appropriate to the liquidation of the Company
and/or any of the Subsidiaries;
(s) to
establish reserves for any Company purposes, including, without
limitation, for tenant improvements, leasing commissions, capital
improvements, repairs, replacements, renovations and working
capital, and to fund such reserves with any assets of the Company
or its Subsidiaries, including without limitation, borrowed
funds;
(t) to
pay to the Members and/or their Affiliates any and all fees,
reimbursements, interest payments and loan repayments expressly
permitted under the terms of this Agreement;
16
(u) to
pay, extend, renew, modify, adjust, submit to arbitration,
prosecute, defend, compromise, or confess judgment upon such terms
as it may determine and upon such evidence as it may deem
sufficient, any debt obligation, suit, liability, cause of action
or claim, including taxes, either in favor of or against the
Company and/or any of the Subsidiaries;
(v) to
make decisions for and act on behalf of the Company and/or its
Subsidiaries in dealing with the Internal Revenue Service and other
tax authorities;
(w) to
cause the Company and/or any of the Subsidiaries to make or revoke
any of the tax elections provided for under the Code or the
Treasury Regulations;
(x) to
pay full and/or partial recourse debts and obligations prior to
nonrecourse debts or obligations;
(y) to
invest all funds of the Company and/or its Subsidiaries;
(z) to
admit additional Members to the Company in accordance with
Section 3.7, including, without limitation, through the
issuance of additional Units or Interests in the Company in
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